Schauble supports a European government,which clearly means that Merkel does too. Both of them know well that such a government will be dominated by the Germans, know the the Krauts will have the major voice in policy decisions.The notion that voters in E.U. states might not care for sovereignty losses, in effect to Germans seems to be of little concern to them and to to Trichet.  Recently Merkel called for 'More Europe' with sovereignty surrenders, an echo of what a former Chancellor Gerhard Schroeder called for last year a United States Of Europe.To repeat ,any USE would be German dominated so in effect what Merkel , Schauble,Schroeder want is a United States Of Germany,which would give Merkel much more scope for her arrogance and meddling in the internal matters of other states, like telling voters in France to back Sarkozy..Where will she next meddle will she try in in the UK in 2014, imagine the vitriolic reaction, I would love it?  Last year Merkel told David Cameron to accept a financial transactions tax,it is not for any German to tell a British P.M. even one as weak as Cameron what to do.  It is I think inevitable that in the U.K. an E.U. referendum is inevitable despite the lying reasons from Cameron, Clegg, Milliband for not holding one,I want to cast my vote.If eurosceptism continues to grow such a vote might be to leave the E.U.,I have a feeling that in many E.U. members such a result would be welcome....  For starters, the Stability and Growth Pact (SGP), intended to ensure sound fiscal policies in the eurozone, was never correctly implemented. On the contrary, in 2003 and 2004, France, Italy and Germany sought to weaken it. The European commission, the European Central Bank and the small and medium-sized eurozone countries prevented the SGP from being dismantled, but its spirit was gravely compromised.  Moreover, eurozone governance did not include monitoring and surveillance of competitiveness indicators – trends in nominal prices and costs in member states, and countries' external imbalances within the eurozone. (In 2005, long before the crisis, I called, on behalf of the ECB's governing council, for appropriate surveillance of a number of national indicators, including unit labour costs). A third source of weakness is that no crisis-management tools were envisaged at the euro's launch. For much of the world at the time, "benign neglect" was the order of the day, particularly in the advanced economies. Finally, the high correlation between the creditworthiness of a particular country's commercial banks and that of its government creates an additional source of vulnerability, which is particularly damaging in the eurozone.

WSJ - BERLIN—German Chancellor Angela Merkel said Friday she wants to keep Greece in the euro zone through a tough regime of painful austerity even as Greek Prime Minister Antonis Samaras made an impassioned appeal that after six years of recession his beleaguered country needs air to breathe. The two leaders were speaking after talks in the Berlin chancellery, capping a week in which Berlin and Athens exchanged verbal blows in the media over whether Greece should be allowed to slow down its efforts to overhaul its economy and cut its deficit. Mr. Samaras has argued in a series of high-profile interviews that Greece needs time to get its economy growing again, but Ms. Merkel insists that Greece must stick to its commitments. Follow every article, blog post, video and tweet on the debt crisis from our reporters across Europe."I want Greece to remain a part of the euro zone and that's what I am working on," said Ms. Merkel. "We expect from Greece that the promises that were made are implemented, that actions follow words." Mr. Samaras commented angrily about the "toxic statements" from some German politicians who have called on Greece to leave the euro zone. He said such comments only added to the wariness of investors and made it harder for Greece to carry out privatizations, a necessary source of revenue to cut Greece's debt. He promised that Greece would fulfill the obligations it made six months ago in exchange for a €173 billion ($217.36 billion) bailout, but added it would only be possible if the Greek economy starts growing again.

In a strongly worded report to German parliamentarians, Wolfgang Schaeuble explained that the €159bn Greek bail-out was a one-off. He said: "In the future such purchases must only take place under very tight conditions, when the European Central Bank establishes that there are extraordinary circumstances in financial markets and dangers to financial stability." Mr Schaeuble echoed German Chancellor Angela Merkel, who said the union's bail-out fund, the European Financial Stability Facility (EFSF), should not be allowed to engage in "unconditional" buying of bonds from stricken members. Traders interpreted the letter as a strong signal Germany could not be depended upon for standing by the euro indefinitely. Just a week after European authorities united to rescue Greece, experts fear authorities are already again struggling to contain the region's sovereign debt crisis. Cyprus threatened to become the fourth eurozone country to need a bail-out after Standard & Poor's downgraded its debt further into junk territory, lowering it to CC from CCC. The rating agency raised concerns that Cyprus' large exposure to Greek bonds - which is among the highest in the eurozone - might hamper its ability to service its own sovereign debt. According to the European Banking Authority, Bank of Cyprus holds €2.4bn in Greek debt and Marfin Popular Bank holds €3.4bn. Yields on Cypriot bonds maturing in 2014 soared to 10.18pc - above the borrowing rates of Ireland and Portugal, which have both been bailed out.

Egypt's uprising has sent powerful shockwaves across the Middle East , with two deaths reported in street clashes in Iran and Bahrain and violent demonstrations in Yemen, as further protests and strikes erupted across Egypt. Thousands of Iranians defied a government ban and volleys of teargas to join a rally in Azadi Square in the centre of Tehran. The protests were the biggest since those that erupted after the disputed 2009 presidential elections. Mir Hossein Mousavi, leader of the Iranian Green movement, was placed under house arrest, as was Mehdi Karroubi, another prominent opposition figure. Protest rallies were also held in Isfahan and Shiraz. Iran's Islamic regime has hailed the uprisings in Egypt and Tunisia, though neither involved organised activity by Islamist opposition movements. Both protests were led by young people seeking political freedoms and an end to autocracy – just like many Iranian demonstrators. Large numbers of police and security forces, wearing riot gear and many mounted on motorbikes, were stationed around Tehran's main squares. Mobile phone connections were down in the area of the protests.

OECD - Fast growing economies

Fast-growing economies in the east should spend the vast savings accumulated through trade on their own people rather than use it to accumulate bonds and shares in the west, an influential thinktank said today.
The organisation for Economic Co-operation and Development (OECD) warned that policies designed to rebalance currencies would fail unless countries adopted more far-reaching and fundamental reforms.
The Paris-based research group, often described as the rich nations' thinktank, said in a webcast that world leaders needed to go beyond discussions about currencies at the G20 summit in South Korea next week and examine conflicts that hold back growth in the world economy.
It said: "Structural reforms, such as the strengthening of social safety nets and the development of financial markets in emerging economies, should be employed to reduce their savings and dependence on financial markets in advanced economies. The OECD sees structural reforms, such as the liberalisation of product markets, also as crucial to recover the output losses associated with the crisis and to help put public finances back on a sustainable path."
The pace of the global economy recovery had slowed since earlier this year, the OECD said, while public debt in most OECD countries was set to reach all-time highs.
"With support from fiscal stimulus fading, output and trade have softened," it said. "Average GDP growth across OECD countries is expected to be between 2.5% to 3% this year, between 2% and 2.5% in 2011 and between 2.5% and 3% in 2012. Activity is projected to vary widely across countries, particularly within the euro area.
"The US is expected to gain considerable momentum in 2012, while the Japanese recovery is expected to lose some steam. In many emerging-market economies growth is continuing robustly, although at a slightly slower pace than earlier in the recovery.
With public deficits and debt at "unsustainable levels", stabilising debt relative to GDP in most countries would require a historical consolidation effort of between 6% to 9% of GDP, said OECD secretary general Angel Gurría. "But in fact even more is needed to bring debt back to sustainable levels."
The OECD, which has promoted free trade as a route to promoting growth and easing poverty, urged the eurozone to cut taxes on employment that could reduced their ability to bring down unemployment over the next few years.
It also backed moves in the west to cut public spending as a way to "strengthen the cost-effectiveness of expenditures that enhance growth, in areas such as health care, education, innovation and infrastructure development".
Gurría said interest rates would remain at historic lows until 2012 and could be maintained at low levels if the world economy continued to struggle over the medium term.
Monetary easing by the US, the UK and Japan will brings its own problems as investors turn away from low-yielding western markets, the OECD warned. "Continued monetary easing in many advanced economies prompts capital flows to emerging economies where they risk creating asset bubbles while putting upward pressure on their exchange rates. The recent unilateral interventions in foreign exchange markets and the resulting volatility could prompt protectionist responses. Better to reach a common understanding on how global imbalances are to be reduced."