It changes by the hour ....what a circus !!! lies and deceit and that's all !!

Good news for the European economy: retail sales were much stronger than expected in August.

Eurostat reported that retail sales volumes rose by 0.7% in the euro area, and 0.4% across the wider European Union in August. July's data was also revised higher, showing consumers weren't as cautious about spending as first thought.

Eurozone retail sales to August 2013 Photograph: /Eurostat

Eurostat's data shows that non-food shopping was strong, rising by 0.6% in the eurozone. That covers items such as computers, clothing and medical products.

The data also showed an increase in fuel purchases, suggesting a rise in motor journeys. Spending on "automotive fuel in specialized stores" (that's petrol stations to you and me) was up by 0.9% across euro members.

The eurozone recovery is gathering pace, with its private sector firms reporting the biggest leap in activity since June 2011 last month.

Data firm Markit's monthly surveys of companies across the single currency showed a solid rise in activity.

New business has picked up, and the rate of job cuts may finally be slowing to a halt.

Markit's monthly survey of activity came in at 52.2, up from August's 51.5. Both service sector firms and manufacturers said conditions were better.

Photograph: Markit

Here's some key factoids from the report (online here)

Ireland: 55.7 2-month low
Germany: 53.2 2-month low
Italy: 52.8 29-month high
France: 50.5 20-month high
Spain: 49.6 2-month low

The news comes hours after China's service sector output hit a 6-month high.

Chris Williamson, chief economist at Markit, said the eurozone data showed Europe's recovery on track, despite Spain's private firms faltering after a better August.

From New York's Liberty Island to Alaska's Denali national park, the US government closed its doors as a bitter budget fight left hundreds of thousands of federal workers idle and halted all but the most critical government services for the first time in nearly two decades.

A midnight deadline to avert a shutdown passed amid congressional bickering, casting doubt on Americans' ability to get government services ranging from federally-backed home loans to supplemental food assistance for children and pregnant women.

For many employees of the federal government, Tuesday's shutdown meant no more pay as they were forced onto unpaid furloughs. For those still working, it meant delays in getting paid.

Park ranger and father-to-be Darquez Smith said he already lived paycheck-to-paycheck while putting himself through college.

"I've got a lot on my plate right now — tuition, my daughter, bills," said Smith, 23, a ranger at Dayton aviation heritage national historical park in Ohio. "I'm just confused and waiting just like everyone else."

The impact of the shutdown was mixed — immediate and far-reaching for some, annoying but minimal for others.

In Colorado, where flooding killed eight people this month, emergency funds to help rebuild homes and businesses continued to flow — but federal worker furloughs were expected to slow it down.

National Guard soldiers rebuilding washed-out roads would apparently be paid on time — along with the rest of the country's active-duty personnel — under a bill passed hours before the shutdown. Existing social security and Medicare benefits, veterans' services and mail delivery were also unaffected.

Other agencies were harder hit — nearly 3,000 Federal Aviation Administration safety inspectors were laid off, along with most of the National Transportation Safety Board's employees, including accident investigators who respond to air crashes, train collisions, pipeline explosions and other accidents.

Almost all of NASA shut down, except for mission control in Houston, and national parks closed along with the Smithsonian museums and the National Zoo. Even the zoo's popular pandacam went dark.

As the shutdown loomed on Monday, visitors to popular parks made their frustration with elected officials clear.

The US government was forced to begin closing swathes of non-essential services on Tuesday morning after frantic rounds of late night political sparring failed to avert the first federal shutdown in nearly two decades.

As a midnight deadline to extend Congressional spending authority ticked ever closer, Republicans staged a series of last-ditch efforts to use a once-routine budget procedure to force Democrats to abandon their efforts to extend US health insurance.

Three separate attacks on the Affordable Care Act, known as Obamacare, were staged by the House of Representatives, only to be rejected in turn by the Democrat-controlled Senate, which accused Republicans of holding the country to ransom.

Shortly before midnight, Senate majority leader Harry Reid marked the end of the process by rejecting House calls for formal talks to reconcile their conflicting positions, arguing it was impossible to negotiate with a “gun to our heads”.

“This is a very serious time in the history of our country,” Reid said. “Millions of people are going to be affected tomorrow and the Republicans are still playing games”

An estimated 800,000 federal workers will be forced to stay at home from Tuesday under a stalemate that could drag on for days and disrupt services as varied as national parks and the US space programme.

The White House has drawn up a list of essential staff who are legally allowed to carry on working, but President Barack Obama warned that a shutdown would have an immediate affect on the fragile US economy.

“We do not have a clear indication that Congress will act in time for the president to sign a Continuing Resolution before the end of the day tomorrow, October 1,” said a White House statement issued shortly before midnight. 

“Therefore, agencies should now execute plans for an orderly shutdown due to the absence of appropriations. We urge Congress to act quickly to pass a Continuing Resolution to provide a short-term bridge that ensures sufficient time to pass a budget for the remainder of the fiscal year, and to restore the operation of critical public services and programs that will be impacted by a lapse in appropriations.”

Obama also issued a statement to military employees after signing a Republican-proposed law that exempts active-duty servicemen from the effects of the shutdown, but will not protect civilian workers.

“I know the days ahead could mean more uncertainty, including possible furloughs,” Obama said. “You and your families deserve better than the dysfunction we’re seeing in Congress.”

House speaker John Boehner denied that Republican tactics were responsible for the shutdown, insisting Democrats were to blame for refusing to negotiate over Obamacare.

“I didn't come here to shut down the government,” Boehner told one of several heated House debates. 

“I came here to fight for a smaller, less costly and more accountable federal government. But here we find ourselves in this moment dealing with a law that’s causing unknown consequences and unknown damage to the American people and to our economy. And that issue is Obamacare.”

But Democrats are confident that US public opinion will continue to hold Republicans to blame for what could be days of disruption until a deal can be struck.

They argue that Republicans are using underhand methods to overturn a law that was passed four years ago, ratified by the supreme court and endorsed by voters at the last presidential election.

Senator Bernie Sanders, of Vermont, said: “If we surrender to hostage-taking tonight, these guys would be back within a couple of weeks without a shadow of a doubt. What we are dealing with tonight is an extraordinary anti-democratic act.” 

Lies and deceit ....

Besides the 26 trillion Dollars pumped by The FED in Budesbank, The ECB pumped more than €1 trillion (£840bn) of liquidity into the banks through two long-term refinancing operations (LTROs) to stabilize financial markets, in December 2011 and February 2012,  The move has come to be seen as the first step towards bringing Europe’s crisis under control and was reinforced by Mr Draghi’s promise in July last year to do “whatever it takes” to save the euro. Yesterday(MOn, addressing the European Parliament, he said: “We are ready to use any instrument, including another LTRO if needed, to maintain short-term money market rates at a level which is warranted by our assessment of inflation in the medium-term.”  His fresh commitment is likely to allay any lingering concerns about the state of Europe’s banks, which face another stress test in the coming months. His comments came amid signs of improvement in the eurozone economy. Business activity in the region picked up to a 27-month high in September, the closely-watched purchasing managers’ index (PMI) showed. Meanwhile, European markets edged lower as traders awaited news from Germany after Chancellor Angela Merkel’s election victory over the weekend. Traders urged her to strike a coalition deal swiftly to stop bail-out fears spreading among the eurozone’s troubled nations. Markets expect Ms Merkel’s Christian Democrats to go into partnership with the Social Democrats, the main opposition party, but observers noted that it took two months to negotiate an agreement last time the parties worked together. Given the fragile eurozone, traders called for Ms Merkel to move fast. Peter Schaffrik, head of European rates strategy at RBC Capital Markets, said: “If finding a new government takes too long, markets might get jumpy as regards the stability of the German government, particularly with key European issues – the Portuguese, Irish and Greek programmes – coming up for a negotiation." ... They will do whatever it takes to save the € up to and including - the theft of people's money in their bank accounts as per Cyprus - after all the sheep didn't protest - they just accepted their shearing without a murmur - and so will all the other sheep in the corrupt EU.

...of bankers and crisis...

There will be another banking crisis, because bankers who enriched themselves in the process of causing the last one have paid no price. There can be no bigger incentive to speculate on risky deals than the knowledge that if it goes pear shaped some one else gets the bill. There will always be banking crises for as long as the current system is in place - the system that gives commercial banks an effective monopoly on money creation, that allows them to make loans with money that they don't have, that allows them to charge interest on making loans with their fictive money, and which means that everyone - individuals, businesses and governments are massively and permanently in debt.  Amazingly, there is a simple solution. One that was proposed by economist Iriving Fisher in the 1930s, and which has been shown to be workable by two of the IMF's top economists. It involves removing the power to create money from commercial banks, and handing that power to a responsible publicly administered body that would adjust the amount of money in the economy so that the system runs smoothly.  These are the ideas being proposed by Positive Money. It's about time these ideas were discussed openly in the media. As long as politicians are in cahoots with economists, rating agencies and banks, we will have repeat crises. As demonstrated in the excellent Inside Job documentary, bankers no longer assume responsibility if their companies go bankruptcy due to amendments to legislation. This was started by Thatcher and continued by Blair in the UK and by Clinton and Bush in the USA. Deregulation is to blame. Nobody from either major parties in the UK or the USA has condemned the bankers for their underlying role in the global financial crisis and the fact that bankers continue to pay themselves huge bonuses show that nothing has changed. As long as bankers can bet against the welfare of their companies, as in the Lehman crisis, confident that they will not go to prison for causing billions in losses to the economy, nothing will change, unfortunately. The ratings agencies got off without any censure for backing mortgage securities that were high-risk and, as it turned out, completely worthless. The banks selling these securities to the public were simultaneously hedging their risks by basically betting that the securities would lose value. For some reason, such behavior is not condemned by the politicians of all hues. And bankers continue to make fortunes from simple betting. Even worse, now they pay even less tax than they used to.

Italian GDP revised down - The Italian recession is deeper than thought. New data released this morning shows that the economy shrank by 0.3% in the second quarter of 2013, worse than the 0.2% first estimated. That means that Italian GDP is 2.1% less than a year ago, not the 2% as initially thought.

As if prime minister Enrico Letta didn't have enough to worry about with Silvio Berlusconi's fate still in the balance.

 ISTAT, Italy's statistics body, reported that household spending continued to shrink in the face of Italy's economic woes, falling by 0.4% during the April-June quarter.

Capital spending and imports also dropped, by 0.3% quarter-on-quarter in both cases.

The year-on-year data underlined how Italy's economy has suffered over the last 12 months. Consumption is down by 2.4%, capital expenditure is 5.9% lower, while imports are down 4.6%. Exports are 0.2% higher than a year ago.

Here are the details:

Over in the bond markets, Italian government borrowing costs have risen above Spain's for the first time in 18 months. It means Italy is being priced as a (slightly) bigger risk than Spain, in a sign that the Berlusconi Conundrum is dragging Italy towards a new crisis. Italian 10-year bond yields are trading at 4.485% this morning compared to 4.481% for Spain. That's must be a minor relief for Madrid, whose borrowing costs have been pushed up by allegations of government corruption and fears over bad bank debts.

China's National Bureau of Statistics has accused a county government in southern China of faking economic data by coercing local companies to boost industrial output figures, state media have reported. Luliang county in southern Yunnan province pressured 28 local companies to report 6.34bn Yuan (£665m) of industrial output last year, while according to "initial calculations" the true figure was less than half of that, the state newswire Xinhua reported on Thursday night. "Companies complained that if they did not fraudulently report higher data their reports would be returned by local government departments," it said, citing a National Bureau of Statistics report. "They also said that fake reports would ensure they would enjoy favorable policies such as securing bank loans."

The county government itself reported fake investment data, Xinhua added. Analysts say that phony economic data is nearly ubiquitous in China, as officials are promoted based on their ability to present favorable numbers. "You have an incentive system that encourages the falsification of data," said Fraser Howie, the co-author of Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise. "We known that for literally decades provincial GDP figures have never totaled the national GDP figures – you have a fundamental mismatch of those numbers." "Anybody who's working with Chinese statistics runs up against problems, inconstancies, and incomplete data," Howie added. "There are just black holes in information gathering." Howie said that while false data was a long-running national problem, Chinese authorities may launch selective crackdowns every few months to demonstrate vigilance. "It could be that this is a particularly egregious case, it could be that there's political infighting, it could be that this leaked somewhere else first," he said. He drew a parallel to President Xi Jinping's anti-corruption drive, which critics have dismissed both as lip service and as a political purge. "Its like the corruption thing – they're not going after nobody, but they're certainly not going after everybody," he said. "Yunnan is far away, nobody really goes there, nobody really cares. It's not like this happened right in Beijing, at the heart of things."

The European Central Bank (ECB) has improved its outlook for the eurozone economy this year. It now expects the single-currency area to shrink 0.4% compared to its previous forecast in June of a 0.6% contraction. The ECB on Thursday held interest rates at 0.5% despite tentative signs that the eurozone is recovering.

The 18-nation bloc emerged from recession in the second quarter of this year, with growth of 0.3% recorded between April and June. 

ECB president Mario Draghi said: "I am very, very cautious about the recovery. I can't share enthusiasm. It is just the beginning. Let's see, these shoots are still very, very green."

The euro fell to a six-week low against the US dollar after Mr Draghi's comments. Explaining the drop, Adam Cole, head of currency strategy at RBC Capital Markets, said: "He didn't pay any lip service to the better data that we've had in recent weeks. He also reiterated the forward guidance from a month ago."

In July, Mr Draghi said interest rates are likely to remain low for an "extended period". It was the first time the central bank issued so-called forward guidance on interest rates, but the bank has not given any indication on how long an "extended period" might be.

That will in part depend on how European economies fare over the coming months. In the second quarter of the year, Germany and France saw stronger-than-expected growth of 0.7% and 0.5%, respectively.

But weaker economies, including Spain, Italy, and the Netherlands, all saw output fall. The ECB expects the recovery to be gradual over the rest of the year, and strengthen in 2014.

Consumer prices in the single currency bloc rose 1.3pc in the year to August, a fall from July’s 1.6pc and below expectations of a fall to 1.4pc, largely driven by lower energy costs.  The drop, bringing inflation well below the bank’s target of just under 2pc, gives the bank plenty of room to cut its interest rate again and is likely to place the issue at the center of next week’s debate.  Board members have sent out mixed messages in the run-up to their next meeting. Executive board member Peter Praet, speaking earlier this month, said the bank “had not reached the lower bound on our key interest rates” and had not “run out of ammunition”.  Cyprus’ Panicos Demetriades also said another cut was still “on the cards”.   However, more recent remarks by board member Ewald Nowotny indicated that the nascent recovery in the eurozone will prevent the ECB from lowering rates. “I would not see many arguments now for a rate cut,” he said.  Joblessness in the euro area stayed at its record-high of 12.1pc in July, though the headline figure masks huge variations stretching from just 4.8pc in Austria to 27.6pc in Greece.  The overall rate has now remained unchanged for four straight months.  While signals of economic strength are not yet eroding unemployment in the bloc, they are boosting business sentiment, which this month rose sharply, even in some countries where unemployment is still high.  Confidence among business managers in the eurozone polled by the European Commission climbed for a fourth successive month in August.  Meanwhile, in Portugal, the government has vowed to meet its cost-cutting targets under its EU-IMF bail-out programme despite opposition to its austerity package, which suffered a third major setback on Thursday when the constitutional court blocked a bill allowing it to fire public sector workers.

Suggestions of a reduction to the US Fed's quantitative easing programme has pushed five-year yields to 1.53% today, from 0.65% in May. By comparison the yield on a five-year euro mid-swaps has gone to 1.19% from 0.61%. Some Asian bond issuers are now suggesting more euro-denominated bonds could be issued as a result.  One banker told Reuters: “There is no talk of tapering in Europe, so interest rate volatility should be smaller than in the [US] Treasury market.”  Cross currency basis swaps from euros to dollars has also improved, meaning that funding in euros is becoming cheaper for the many Asian issuers that routinely swap back to dollars.  China and Japan have emerged as the leaders of an exodus from US Treasuries in June following the first signals from the US central bank that it could end its stimulus packages, new data shows.  The two nations accounted for nearly all the record $40.8bn of net foreign selling. The sales were part of a $66.9bn of net sales by foreigners of long-term US securities in June – the fifth straight month of outflows. China, the largest foreign creditor reduced its holdings to $1.276tn and Japan reduced its holdings for the third month in a row to $1.08tn.....no doubt the Bank for International Settlements in Basel are behind this story. The central bankers bank has been forcing banks to increase their capital reserves for several years. This action has largely assisted the global recession. Banks unable to lend. The Basel 1,2 and 3 accords are now fully in action, the latest one coming into action earlier this year. The BIS operated outside government control. Meeting in Switzerland no Swiss officials are allowed to attend their meeting's. They are accountable to no one and control the global economy. The fed is just a private consortium of banking families pulling the chain of the US. Expect more bank mergers as they struggle to meet the higher and higher capital reserve targets set by the BIS.

Stock market jitters = lots of opportunities for traders to sell something, buy it back, sell it again a bit later, buy it back again, sell something they don't even own, place a bet on the volatility all this buying and selling causes, fire up the computers to buy and sell at the speed of light, and pocket millions in commissions for totally socially useless activity.... Commissions that come from our pension funds.
Happy days in the "City" - trebles all round.

There is no alternative other than let the free market loose and wait for the consequences.

The Governments prevented a crash by Q.E. and bail outs. Government action has saved the day. Left to the "free market", would have resulted in catastrophe. The USA is still pumping Billions every month into the system to prevent a crash....to keep the system going. There is no alternative other than let the free market loose and wait for the consequences. Obviously this cannot be allowed to happen, so we are living through a era o protectionism....the phrase "kicking the can", just means keeping the system going....stock markets and house prices are maintained because the alternative is too frightening. What is the alternative, to maintaining the "free market" and low wages in the face of global competiveness...

Answer... a global depression with mass unemployment.

Why is the free market having to be supported and "too big to fail" having to be bailed out.?...This is the new phenomenon...a game changer...Governments propping up a market that cannot be allowed to fail...How long can this be maintained or is the patient cured,?

I would hazard a guess and say that the real cause of all this is due to....

• 1)  DEBT of unimaginable proportions...AND GROWING.
• 2) Unsustainable growth...we are at a tipping point in human history...where resources are unable to meet demand...Peak oil, peak food production etc.....the importance of the exponential, when there is a limit....The limit has been reached.
• 3)  We now live in an overpopulated World.
• 4)  The lack of productive jobs...With the advent of the computer and the internet (another game changer), millions of "workers", for want of a better word, are now sitting in front of a computer screen...the operative word here is "sitting".
• 5)  The consumer society cannot continue consuming and growing with limited resources.
• 6)  The rise of the city...Now nearly half the world's population are concentrated in cities...These cities are pure consumers../they don't produce anything and are not self sustaining. As these growing cities compete for resources, there could be trouble.
• 7)  The rise of China...the tiger awakes...So what is the answer.?....Austerity...we must learn to live within our means....painful but necessary....otherwise it is keep printing the money and propping up dinosaurs...as we are seeing today.

The Bank of International Settlements did nothing to prevent this crisis, which it failed to foresee. On the contrary, it and its members in the 'central bankers' club' supported and promoted the economic dogmas, such as the 'efficient market', that led to the crisis. Why should anyone have faith in what in now says about how to get out of a mess it helped to create? We must learn to live within our means...but we won't.

Trouble ahead.

Earlier this year, the Pentagon publicly accused China for the first time of being behind attacks on the US. The Washington Post reported last month that Chinese hackers had gained access to the Pentagon's most advanced military programs. The director of national intelligence, James Clapper, identified cyber threats in general as the top national security threat. Obama officials have repeatedly cited the threat of cyber-attacks to advocate new legislation that would vest the US government with greater powers to monitor and control the internet as a means of guarding against such threats. One such bill currently pending in Congress, the Cyber Intelligence Sharing and Protection Act (Cispa), has prompted serious concerns from privacy groups, who say that it would further erode online privacy while doing little to enhance cyber security. In a statement, Caitlin Hayden, national security council spokeswoman, said: "We have not seen the document the Guardian has obtained, as they did not share it with us. However, as we have already publicly acknowledged, last year the president signed a classified presidential directive relating to cyber operations, updating a similar directive dating back to 2004. This step is part of the administration's focus on cybersecurity as a top priority. The cyber threat has evolved, and we have new experiences to take into account. "This directive establishes principles and processes for the use of cyber operations so that cyber tools are integrated with the full array of national security tools we have at our disposal. It provides a whole-of-government approach consistent with the values that we promote domestically and internationally as we have previously articulated in the International Strategy for Cyberspace. "This directive will establish principles and processes that can enable more effective planning, development, and use of our capabilities. It enables us to be flexible, while also exercising restraint in dealing with the threats we face. It continues to be our policy that we shall undertake the least action necessary to mitigate threats and that we will prioritize network defense and law enforcement as the preferred courses of action. The procedures outlined in this directive are consistent with the US Constitution, including the president's role as commander in chief, and other applicable law and policies."

Another global economic crash?

"Was jittery Thursday a foretaste of another global economic crash?

The sharp slide in share prices was either a blip in the road to recovery or a sign that the unwinding of quantitative easing will lead to disaster. Our writers argue it out" - the Telegraph on Sunday. The banking system, sovereign debt, equity markets are all FUBAR and bare no relation to the underlining fundamentals from where price discovery should come from. That is the problem and much of it has to do with ZIRP/QE, Draghi mouthing off, which although stops any immediate crash it is still just blowing bubbles and 'can kicking' where at any point to try to unwind from that position still leaves a gap between there and real growth coming back to stop the shortfall when ZIRP/QE Draghi on a buying spree taper away from their positions. Five years on from the WFC they are no nearer to fixing the problem, or the disaster of the euro. My guess is that eventually in the coming years governments will choose from the inflation poison chalice, rather than the default poison chalice, they nearly always do. Fiat money will become very devalued, and to my mind they have already set off on this path with orchestrated currency wars, and the printing presses a rolling If another big financial crash occurs I wonder what all those experts in the astrology like subject known has economics will be citing has the cause, let alone the required solutions. Not that the accountants, politicians, top business people, and goodness knows who else have demonstrated any more competence, except to ensure that the people that are made to pay for the disaster are those least responsible for it, and least able to afford to pay. Am I the only one who is coming to the conclusion that much of the human world is being run by self serving ego maniacs?

But more importantly the facts behind Thursdays ''market blip'' relates to leverage and debt. After the 2008 crash we have failed to de-leverage, the losses have been largely hidden by accounting tricks or taken over by the taxpayer. Instead of de-leveraging and re-capitalizing the banks QE and ZIRP have resulted in a massive leveraged derivative bubble now waiting to burst.

Thursdays blip might be the realization that.

1. That despite 5 years of recession endless money printing we are still seeing no real growth, outside of that provided via stimulus then it may be that these policies of QE and ZIRP are in fact failed policies, when the markets realize this investors will start to control interest rates not Bernanke and other central bankers.

2. Despite Abe's shock and awe policies Japanese rates doubled on Wednesday, Thursday. If markets suspect (and I think they do) that Japanese monetary policies are failing as indicated by rising rates, then we maybe witnessing the beginning of the end for Japan and the rest of the world! why?

3. When investors realize QE and ZIRP have failed we will see the 1.5 quadrillion dollar derivative market melt down and it wont be an ordinary unwinding. Chaos is not a word that will describe the result as counter parties evaporate and the world banking system collapses....

Funny how words change their meaning. I remember watching a Fred Astaire Ginger Rogers film on Channel 4 one Saturday afternoon called 'The Gay Divorce'. Of course the word 'Gay' has changed completely since the 1930s and it was all very comic.

In contemporary mainstream economics the word 'recovery' seems also to have undergone a transmutation. Once upon a time it meant falling unemployment, increasing investment, rising wages and prices, all based upon official statistics you could actually believe.

Today recovery means asset price bubbles, wage repression, pension repression, grinding down the poor the sick and the old, stubborn levels of unemployment/underemployment, a massive liquidity trap, counterfeit statistics from the Bureau of Labor Statistics, and the Office Of National Statistics - but hey, stock markets are booming, companies are sitting on piles of cash, share buybacks are all the rage, the financial elite is raking it in again, the tax avoidance industry has never been healthier or more ubiquitous. Yes this is some Central Bank engineered 'recovery'.

What really amazes me is the degree to which financial commentators are taken in by such blatantly crude propaganda. Which reminds me of the old saying: ‘You cannot hope to bribe or twist (thank God!) the British journalist. But, seeing what the man will do un-bribed, there's no occasion to.'Of course there are exceptions, but the majority of commentators and opinion formers seem satisfied to simply spew out the 'official' Pollyanna rubbish. The reason for this is that they actually believe it themselves.

Source - Hotnews.ro - good analysis

A few days ago, Welt am Sonntag published a statement by Kai Konrad, economic advisor to Chancellor Merkel, by which he expressed his doubt about the chances of survival of the unified currency for more than five years. According to Konrad, the international press has also taken on the statements of the president of Bundesbank, Jens Weidmann, according to whom Europe would need about 10 years to overcome the debt crisis. Fortunately, Europe's "rescue" from the straitjacket of the Euro may come a lot faster. A secret report of the Bundesbank, sent to the Federal Constitutional Court in December 2012, recently "leaked" in the pages of the financial daily Handelsblatt. In this report, the "Bundesbank launched punctual attacks against every statement made by Mario Draghi to justify the program of Direct Monetary Transactions", Ambrose Evans-Pritchard wrote in The Telegraph. The authenticity of the report was confirmed by the Bundesbank, according o a piece of news by Reuters.
Upon the announcement of the DMT program, Draghi justified the buying of the government bonds by saying that "the major interest rate differential should not be tolerated". For the Bundesbank, which is concerned that the unlimited bond buying program undermines the independence of the ECB, "a uniform level of the interest rates is not desirable", the article of Handelsblatt writes. The reason is simple: the differences between the interest rates of the various government bonds should reflect the economic performance of the country in question. Given the fact that "risk and responsibility should not be decoupled", as recently stated by Chancellor Merkel, the Bundesbank estimates that it is this very principle that violates the European rescue plan. The document of the Central Bank of Germany also mentions that the buying of bonds issued by troubled countries involves the risk of major losses for the ECB, if they were forced to leave the Eurozone. Such an event is no longer conceivable for the Bundesbank.  For analyst Harvinder Sian, of RBS, "the Bundesbank report borders on economic warfare", and the markets could react negatively amid the uncertainty concerning the approval of the Direct Monetary Transactions of the ECB. Even though the disagreements between Weidmann and Draghi are nothing new, especially since the president of the Bundesbank was singled by the chairman of the ECB as the only opponent of the plant to monetize European sovereign debts, "the aggressive tone of the report shocked the economists", according to Evans-Pritchard. As if all the criticism of the Bundesbank concerning the desperate measures proposed by Draghi wasn't enough, the document of the German Central Bank also contains the supreme "heresy": "The ECB does not have a mandate to maintain the current structure of the monetary union", as its only goal is price stability. This was also the opinion of government advisor Kai Konrad: "It is Europe that matters to me. Not the euro".  The German constitutional court will decide on the legality of the DMT plan on June 12th, 2013, about two months prior to the German general elections. The decision of the Court of September 2012, concerning the constitutionality of the European Stability Mechanism has also included an important clarification: "The acquisition of government bonds by the ECB, directed towards the financing of the national budgets, is prohibited, because it breaks the interdiction of monetizing debt", as written by The Telegraph. "A decision of the Constitutional Court against the TMD will mean the end of the Euro", said Mats Persson, of Open Europe, for The Telegraph, and German historian Michael Stürmer sees the report of the Bundesbank as "an attempt to reaffirm its predominant role in the Eurosystem".  The report sent to the Constitutional Court of Germany by the Bundes-bank will undoubtedly generate numerous political conflicts, both domestically and on a European level, and the "friends" of the European currency will find it increasingly difficult to protect their positions.  It is not out of the question that by the end of this year, we will see a rare convergence of the European authorities: the Euro has to die for Europe to live. 

Excellent news ..."adios" investments in European Banks ....hahahaha...what an idiot !!!!

Plans from Brussels put the onus on bank depositors, rather than the taxpayer, to bear the costs of bank failures.   "Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Mr Rehn, the European Economic and Monetary Affairs Commissioner.   "But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of €100,000 (£85,000) is sacred, deposits smaller than that are always safe."   Mr Rehn was referring to a directive being drafted by the European Commission on bank safety which would set out investor liability in the law of member states.   He was speaking in an interview with Finnish TV after Cyprus last month forced richer depositors to suffer heavy losses in order to secure a €10bn bail-out from the EU and the International Monetary Fund. ... Cyprus had initially planned to make people with deposits under the crucial €100,000 mark to take a cut also before performing backtracking in the face of an outcry. Smaller deposits are supposed to be protected by state guarantees. Mats Persson, director of think-tank Open Europe said: "Rehn was only re-stating what's in an EU proposal tabled in 2012, which quite sensibly suggests a mechanism whereby first, investors and secondly, large depositors - rather than taxpayers - foot the bill when a bank goes bust.   “However, there's so much uncertainty around the precedent set by the Cyprus bail-out that his comments may still cause some jitters."   Mr Rehn also said that the European Central Bank should launch fresh action to help boost the recession-hit euro zone economy....

Cyprus will not be the model for future EU bailouts
Cyprus will no be the model for future EU bailouts
Cyprus will n be the model for future EU bailouts
Cyprus will be the model for future EU bailouts.
EU word games.
Just like all Humpty Dumpty outfits - when they use a word it means whatever they want it to mean.

ECB's purchase of Club Med bond amounts to "monetisation" of public debt in countries shut out of global markets, whatever the claims of Mario Draghi. "We see at least a risk that the eurozone is on a path to become more like Argentina (which of course is why German central bankers are most concerned). The provinces overspend and are always bailed out by the central government. The result is a permanent fiscal imbalance for the central government, which then results in monetization of the debt by the central bank and high inflation," it said. In America, the Fed would face huge pressure to hold onto its bonds rather than crystalize losses as yields rise -- in other words, to recoil from unwinding QE at the proper moment. The authors argue that it would be tantamount to throwing in the towel on inflation, the start of debt monetisation, or "fiscal dominance". Markets would be merciless. Bond vigilantes would soon price in a very different world. Investors have of course been fretting about this for some time. Scott Minerd from Guggenheim Partners thinks the Fed is already trapped and may have to talk up gold to $10,000 an ounce to ensure that its own bullion reserves cover mounting liabilities. What is new is that these worries are surfacing openly in Fed circles. The Mishkin paper almost certainly reflects a strand of thinking at Constitution Avenue, so there may be more than meets the eye in last week's Fed minutes, which rattled bourses across the world with hints of early exit from QE. Mr Bernanke is not going to snatch the punch bowl away just as the US embarks on fiscal tightening this year of 2pc of GDP, one of the most draconian budget squeezes in the last century. But he may have concluded that the Fed is sailing too close to the wind, and must take defensive action soon. Monetarists say this is a specious debate -- arguing that the losses on the Fed balance sheet are an accounting irrelevancy -- but Bernanke is not a monetarist. What matters is what he thinks.

If this is where the Fed is heading, the world is at a critical juncture. The US economy has not yet reached "escape velocity", and in fact shrank in the 4th quarter of 2012. Brussels has slashed its eurozone forecast, expecting a second year of outright contraction in 2013. The triple "puts" of the last eight months -- Bernanke's QE3, Mario Draghi's Club Med bond rescue, and Beijing's credit blitz -- have done wonders for asset markets but have not yet ignited a healthy cycle of world growth. Nor can they easily do do since the East-West trade imbalances that caused the 2008-2009 crisis remain in place.

We know from a body of scholarship that fiscal belt-tightening in countries with a debt above 80pc to 90pc of GDP is painful and typically self-defeating unless offset by loose money. The evidence is before our eyes in Greece, Portugal, and Spain. Tight money has led to self-feeding downward spirals. If bondyields are higher thannominal GDP growth, the compound effects are deadly.

America may soon get a first taste of this, carrying out the epic fiscal squeeze needed to bring its debt trajectory back under control with less and less Fed help. Gross public debt will hit 107pc of GDP by next year, and higher if the recovery falters as pessimists fear. With the fiscal and monetary shock absorbers exhausted -- or deemed to be -- the only recourse left is to claw back stimulus from foreigners, and that may be the next chapter of the global crisis as the Long Slump drags on.

Professor Michael Pettis from Beijing University argues in a new book -- "The Great Rebalancing: Trade, Conflict, and the Perillous Road Ahead" - that the global trauma of the last five years is a trade conflict masquerading as a debt crisis.

There is too much industrial plant in the world, and too little demand to soak up supply, like the 1930s. China is distorting the global system by running investment near 50pc of GDP, and compressing consumption to 35pc. Nothing like this has been seen before in modern times. This has nothing to do with the "Confucian" work ethic or a penchant for stashing away money. Fifty years ago the stereotype was the other way round. Confucians were seen as feckless. In fact, Chinese families never get the money in the first place. The exorbitant Chinese savings rate is due to a structure of taxes, covert subsidies, and banking rules. Variants of this are occuring in many of the surplus trade states. Germany is doing it in a more subtle way within Euroland. The global savings rate is almost 25pc and climbing to fresh records each year. The overstretched deficit states in the Anglo-sphere and Club Med are retrenching but others are not picking up enough of the slack. Germany has tightened fiscal policy to achieve a budget surplus. This is untenable. In the Noughties the $10 trillion reserve accumulation by Asian exporters and petro-powers flooded the global bond market. At the same time, the West offset the deflationary effects of the cheap imports by running negative real interest rates.

WELL....recovery from what? How the goalposts have been shifted!

“The financial markets are calmer this morning. But there's plenty of chatter about how the eurozone crisis is back -- if indeed it ever went away...”

Or indeed, if there ever really was one!

The analysis in this blog is utterly misleading rubbish, cleaving the British public from any genuine appreciation of what’s going on in the rest of Europe. And it started out so promisingly too. A pity it has descended into some sort of parrochial branch of an Ambrose Evans-Pritchard-style ‘euro-hate’/ Ukip fundamentalist party rag.  Last week, the financial press was full of ‘scratch my head’ stories, trying to explain why the stock markets had climbed to such dizzying heights, against all the struggling fundamentals. Could it be all the fake electronic money sloshing around and having an effect? Could it have anything to do with bonus season?  The quiet but dramatic drop in Sterling since Christmas was clearly a bit of sly competitive devaluation – market traders can’t drive it down that far that fast without some seriously organized large trades.

Yesterday, this blog told us with front page, headline confidence that ‘the eurozone crisis was back’ – that political instability over Berlusconi and Rajoy had shaken the markets and caused both the FTSE and the Euro to fall.

 But today, the markets are not just ‘calm’, both the FTSE and Euro are UP again. So what’s happened now? Have the traders simply forgotten yesterday’s news? Has the “eurozone crisis” gone away again? Have the “worries” slipped from their gnat-brained memories? Or were they just taking big fat profits from recent gains and using “Eurozone worries” as an excuse? (There were plenty of negative Eurozone stories last week, which had absolutely no effect whatsoever on the rising market.)

 Could anyone please remind me again, what exactly the “Eurozone Crisis” actually is these days? I mean, what exactly is it that we are supposed to fear? I thought it was originally a fear about Greece or Portugal or Ireland not being able to service their debt and defaulting, thus toppling banks and the financial system like a series of dominos, but since everybody now has a means of printing unlimited new money, that no longer looks likely to happen. So what unspecified event is it exactly that we now have to fear that justifies the claim “the eurozone crisis is back”?

 Are France and Spain going to be swallowed by sink-holes? Are the heads of European governments going to turn into Triffids and eat their own electorate? Really, I mean what precisely is the specific nature of “the Eurozone crisis” now?

 It seems to me, that the only real threat now, is of compliant junk reporting driving up bond yields to a point at which bond buyers rub their hands with glee.

 This is a crisis of Landfill Consumerism, and we’re ALL implicated up to our necks - it's not just a localised problem for the eurozone.

Call a halt to this pro-market, pro-Tory partisan rubbish blog and open up a rolling blog on the WORLD crisis. It might actually prove to be a better way of documenting, blow-by-blow, the changes the world is currently going through. Investigate all aspects…what do the stocks of resources look like? Raw materials, energy, water, etc? Who’s lying to whom and why? How can the environment possibly cope with a ‘return to growth’, given what we now know about the destructive force of our current business models? You know… some independent analysis, which doesn't merely reflect the stories that the financial markets want to tell.

Eurozone leaders met for the umpteenth time in October in their latest attempt to shore up the faltering economies of Europe and restore confidence in the euro.

Since the onset of the financial crisis in 2008, there has been an almost constant string of meetings among top policymakers in a concerted effort to resolve the debt crisis that has decimated the Greek economy and dragged the eurozone to the brink of its second recession in three years.

These include meetings of the Eurogroup, Economic and Financial Affairs Council (known as Ecofin) and European Council, as well as full-blown European Union summits.

And yet still the crisis rumbles on, with Spain looking increasingly likely to follow Greece, the Republic of Ireland and Portugal in seeking a bailout as it struggles to bring its debts under control.

So what have all these meetings, talks, lengthy negotiations and summits been in aid of? What have they actually achieved?

Bankers have long pilloried policymakers for their inability to get to grips with the crisis and implement effective reforms to solve it. But do they have a point?

Decide for yourselves with our handy summary of the major eurozone meetings held since Athens first called on its neighbours for help.

Tying disparate countries to one exchange rate simply makes no sense

When will the polititians realize that tying disparate countries to one exchange rate simply makes no sense?... How can Greece share a currency and monetary framework with Germany? A totally idiotic concept. The Euro is the PROBLEM !!! A single currency cannot provide a solution. The eurozone was dealt a fresh blow as Moody’s Investors Service downgraded the region’s rescue funds and unemployment hit a new record high. The ratings agency cut its rating on the European Stability Mechanism to AA1 from AAA and maintained a negative outlook. It also lowered the European Financial Stability Facility’s provisional rating to (P)AA1 from (P)AAA. Moody’s said its decision was driven by its recent downgrade of France, because the credit risk and ratings of the rescue funds were “closely aligned to those of its strongest supporters” ...Klaus Regling, managing director of the ESM and chief executive of EFSF, said Moody’s decision was “difficult to understand.” He added: “We disagree with the rating agency’s approach which does not sufficiently acknowledge ESM’s exceptionally strong institutional framework, political commitment and capital structure.” It came as the EU’s statistics office said eurozone unemployment rose to 11.7pc in October from 11.6pc in September.... Have idiotic and arrogant politicians worldwide not realised that ideological half ars.ed constructions like the EU and the EZ always fail ? Are we really surprised that it was Europe with its history of fascism, communism, military dictatorship and undemocratic statist and authoritarian governments which has given birth to two of the most appalling and undemocratic constructions of the 20th century, the EU and the EZ ? They will fail just like the USSR failed. "Klaus Regling, managing director of the ESM and chief executive of EFSF said:  Moody’s decision was “difficult to understand.” They should get someone with more understanding. I wonder what he gets paid for having so little of the stuff? 150,000€ a year?.... Well, I must write to the EU and tell them that my 90 year-old Gran is currently available. She used to run a market stall and so understands economics. Sadly, she is now showing signs of senile dementia, but even so, it must be worth a go compared to the current lot.

The reporting in germany on the government response to developments at the IMF conference:

-Merkel refused to comment on the suggestion of a two year extension, saying she'd await the troika report.
-Schäuble ruled out OSI, sounded extremely unconvinced about a two year extention for Greece, and basically said things were going better than the media presented it.
-Brüderle (FDP Floor-Leader) said that he didn't see a majority in the Bundestag for a 3rd Greek Bailout. Which is polite language for "we're not voting for it". The CSU would be against, but has made no public comment. Plenty in the CDU would be against too, but the majority will hold to Merkel's line. The SPD are for it, as I think are the Greens.

So it looks like another one of those wrapped-together-with-sticky-tape temporary coalitions, to get it through the Bundestag. And probably bundled together with other applications from Spain, Slowenia, Cyprus.

European Central Bank policymaker Jörg Asmussen has argued against Greece leaving the eurozone, at the IMF/World Bank shindig in Tokyo.   Asmussen argued that Athens was making good progress.  The Greek authorities have to demonstrate that they can continue to stick to their commitments... This is the best way out of its crisis: for Greece to reform within the euro area....CNN is also focusing on the growing divisions between the IMF and the eurozone over austerity....Its correspondent, Andrew Stevens, writes from Tokyo:The EU will produce its own conclusions about the impact of austerity measures next month. Whether that brings us any closer to a consensus is hard to judge.....Remember the old joke about economists: if you laid all the economists in the world end-to-end you still wouldn't reach a conclusion.  But this is no joking matter. Millions of Europeans have fallen into poverty or at least economic hardship as a result of the current austerity programs.