Draghi, the ECB’s president, said on Thursday that the bank’s governing council was unanimously willing to announce more unconventional measures, signaling the possibility of creating electronic money – or quantitative easing – should a deteriorating economy make it necessary. Speaking in Frankfurt, he said: “Should it become necessary to further address risks of too prolonged a period of low inflation, the governing council is unanimous in its commitment to using additional unconventional instruments within its mandate. “The governing council has tasked ECB staff and the relevant eurosystem committees with ensuring the timely preparation of further measures to be implemented, if needed.”   Eurozone inflation is 0.4%, far short of the central bank’s target of close to 2%.  Draghi added that the ECB balance sheet would continue to expand in the coming months and was likely to reach early 2012 levels, suggesting a further €1tn to be pumped into the economy. Despite announcing no new measures this month, Draghi’s comments were enough to push the euro to a two-year low against the dollar and to cheer investors around Europe, with most of the major European markets, including the FTSE 100, closing up.  After recent reports of a rift between the president and some of the council’s minority over his leadership style, economists said this was a show of unity from Draghi and the ECB governing council.   “Draghi’s press conference was a demonstration of unity and readiness to act at the ECB,” said Christian Schulz, senior economist at Berenberg. “The governing council now closed the ranks and emphasized their easing bias. [It] is clearly getting more enthusiastic about balance sheet expansion and quantitative easing.”  Draghi also played down the idea of a north-south divide emerging among eurozone countries: “Not at all,” he said when asked if there was a split.

IMF economists know there are not enough rich people to fund today’s governments even if 100 percent of the assets of the 1 percent were expropriated. That means that all households with positive net wealth—everyone with retirement savings or home equity—would have their assets plundered under the IMF’s formulation.  Second, such a repudiation of private property will not pay off Western governments’ debts or fund budgets going forward. It will merely “restore debt sustainability,” allowing free-spending sovereigns to keep tapping the bond markets until the next crisis comes along—for which stronger measures will be required, of course.  Third, should politicians fail to muster the courage to engage in this kind of wholesale robbery, the only alternative scenario the IMF posits is public debt repudiation and hyperinflation. Structural reform proposals for the Ponzi-scheme entitlement programs that are bankrupting us are nowhere to be seen.  If ever there were a roadmap for prompting massive capital flight and emigration of productive citizens toward capitalism’s nascent frontiers in Asia, this is it.

It seems Central Banks and the IMF are clueless on how to proceed and a policy going forward. A glaring example of the current mess is one how the implied cost of borrowing for Spain and Italy for five years, which is close to the average maturity of their debt, is now lower than the cost of borrowing for the same period for the US and the UK. We see this when looking at the yield on five-year government bonds, which is 1.33% for Spain, 1.44% for Italy, 1.65% for the US and 2.02% for the United Kingdom. It was not long ago when Spain and Italy were basket cases close to collapse because of legitimate fears of default on the poisonously intertwined debts of their respective banks and governments.  The debts of Spain and Italy are not "made of gold" in fact their economies have massive issues that could fracture the entire euro-zone. If they were to stand alone it is blatantly obvious the risk of default by Spain and Italy is significantly greater than for the UK and US. This makes it seem a bit insane that "investors" are willing to buy the debts of Spain and Italy at a price that makes them appear more creditworthy than the US and UK. This is why the issue of world debt is again creeping to the forefront. Yes, the myth of an economic recovery is flawed and that is reflected in the massive growth of inequality across the world.  The Bank for International Settlements, which is the central bank for central banks, issued a report recently saying world debt levels are too high, and that continuing the current low interest rate policy has too many bad effects. Something needs to be done to normalize monetary policy. Everyone  is making statements about the issue of how to fix our current economic problems. Janet Yellen, Federal Reserve Chair, and Christine Lagarde, managing director or the International Monetary Fund both appear clueless as how to forge a new path forward.   Both these so called economic leaders have it seems long ago abandoned austerity as the answer and thrown under the bus anything that resembles tough love. Getting  back to the main point of this post, how is this debt crisis, and the likely outcome, different from previous crises?  One big difference is the economies of the world have become more intertwined leaving us open to more problems from contagion. Another is that we have tried to put patches on the problems for six years and after printing money at an unbelievable rate we are still unable to achieve a decent rate of growth.   Central banks are responsible for having made credit cheap in recent years because of all the "almost-free' money they've created since the financial crisis of 2007-08. Still it required the reckless lending and investing by financial institutions such as banks and hedge funds to push asset prices up to these high levels. This leads to the risk that asset prices will tumble, at just the wrong inconvenient moment, causing serious harm to these financial institutions and wreaking their ability to finance the economic activity crucial to our prosperity. In many ways it might appear we are back where we started six years ago only this time our base is weaker and the intertwined interest of contagion even greater.

Politicians and business leaders everywhere are now calling for new growth initiatives, but the governments' arsenals are empty. The billions spent on economic stimulus packages following the financial crisis have created mountains of debt in most industrialized countries and they now lack funds for new spending programs.  Central banks are also running out of ammunition. They have pushed interest rates close to zero and have spent hundreds of billions to buy government bonds. Yet the vast amounts of money they are pumping into the financial sector isn't making its way into the economy.  Be it in Japan, Europe or the United States, companies are hardly investing in new machinery or factories anymore. Instead, prices are exploding on the global stock, real estate and bond markets, a dangerous boom driven by cheap money, not by sustainable growth. Experts with the Bank for International Settlements have already identified "worrisome signs" of an impending crash in many areas. In addition to creating new risks, the West's crisis policy is also exacerbating conflicts in the industrialized nations themselves. While workers' wages are stagnating and traditional savings accounts are yielding almost nothing, the wealthier classes -- those that derive most of their income by allowing their money to work for them -- are profiting handsomely.

According to the latest Global Wealth Report by the Boston Consulting Group, worldwide private wealth grew by about 15 percent last year, almost twice as fast as in the 12 months previous.

The data expose a dangerous malfunction in capitalism's engine room. Banks, mutual funds and investment firms used to ensure that citizens' savings were transformed into technical advances, growth and new jobs. Today they organize the redistribution of social wealth from the bottom to the top. The middle class has also been negatively affected: For years, many average earners have seen their prosperity shrinking instead of growing. Harvard economist Larry Katz rails that US society has come to resemble a deformed and unstable apartment building: The penthouse at the top is getting bigger and bigger, the lower levels are overcrowded, the middle levels are full of empty apartments and the elevator has stopped working.

DOWN WITH VICTOR PONTA - DO NOT VOTE THIS SHEISTER !!!!

Hundreds of Romanians abroad faced humiliation on Sunday as they had to wait in long queues at voting stations in many cities across Europe in an attempt to cast their ballots in the presidential elections. Unprecedentedly bad organisation saw many of them incapable of voting after waiting for hours. The responsibility for the organisation of voting abroad belonged to Romania's Foreign Ministry according to the law regulating presidential elections. So question marks appeared about a supposed intention to undermine voting abroad, as the Romanian diaspora is known for voting against the Social Democrats, who are now led by prime minister Victor Ponta, the leading candidate in these elections. Paris, London, Brussels and even New York, among other cities, saw queues of hundreds of Romanian citizens trying to cast their votes on Sunday. In Paris, police was called as about 1,000 people were still waiting to vote as time came for closing polls (9.00 p.m. local time). In London, a major fail hit the embassy where the voting station was organised as a voting official called pensioners to vote first - but none was to be found in line (the elderly are known to generally favor the Social Democrats), according to reports on Sunday evening. The situation caused major uproar in Romanian media, as the PSD and TV stations supporting Victor Ponta blamed the situation on ambassadors who were named by incumbent President Traian Basescu, Ponta's rival. That is, despite that embassies serving only as host to polling stations, with the Foreign Ministry being in charged with the organisation. As polls closed in Bucharest, Traian Basescu called for the resignation of Ponta's Foreign minister and of the minister in charge with the Diaspora. Other candidates called major irregularities about the situation abroad. And several hundred people gathered late on Sunday to protest in front of the Foreign Ministry, chanting slogans against PM Ponta and urging authorities to let Romanians abroad to vote. In his first speech after the announcement of exit polls, PM Ponta claimed that the duty to organise elections abroad fell with electoral authorities, despite Romanian legislation saying that his government and Foreign Ministry were the ones in charge. His claim was rejected by the head of the central electoral office. The vote of the Romanian diaspora - known to be against Ponta and his Social Democrats - is of major importance as it might considerably narrow the difference between Ponta and the opposition candidate with the most votes, Klaus Iohannis.

MADRID - The number of people registered as unemployed in Spain increased by 79,154 people in October in comparison with September, according to data published on Tuesday by the Spanish Ministry of Employment and Social Security.  The figure meant that unemployment increased by 1.78 percent from September to October, bringing the total number of unemployed people to 4,526,804. The rise was mainly due to the end of the tourist peak season in the country, which traditionally causes a rise in unemployment.  Unemployment increased in all sectors except in construction, where it fell by 8,975 people. It rose by 24,606 people in the agriculture sector, by 61,224 people in the services sector, and by 3,043 people in the industry sector.

According to the ministry, the number of unemployed men increased by 40,459 people to a total of 2,136,227 people, while the number of unemployed women increased by 38,695 people to a total of 2,390,577.  Spain's Prime Minister Mariano Rajoy emphasized on Tuesday that the number of people registered as unemployed in October was 284,579 people less than the same time last year.

 

LONDON - Eurozone manufacturing purchasing managers' index (PMI) was at 50.6 in October, up from September's 14-month low of 50.3, reported Markit on Monday.

The eurozone manufacturing sector remained in a state of near-stagnation in October, as weak demand continued to restrict growth of both output and employment across the board, Markit reported.  Only four countries' manufacturing industries signaled expansion during October; they were Ireland, the Netherlands, Spain and Germany.  Irish PMI remains far out in front and is ticking higher following a slight easing in September. Germany was the only other nation to show improved overall manufacturing performance in October.  But national PMI data highlighted the ongoing performance disparities between countries.  The downturn in France snowballed and Italy fell back into contraction. Austria fell further from the rest of the pack as its PMI sank to a two-year low.

"Final manufacturing PMIs for October suggest that global growth may be slowing a little at the start of Q4, dragged down by the euro-zone's chronic problems," said Andrew Kenningham, global economist at Capital Economics, a London-based economic research company.  Rob Dobson, Senior Economist at Markit said: "The performance of eurozone manufacturing remained broadly flat at the start of the final quarter, as the sector struggles to recover the traction lost following its mid-year slowdown. Manufacturing is therefore unlikely to provide any meaningful boost to the currency union's anaemic GDP growth."   Markit is a global provider of financial information services. It produced the Eurozone Manufacturing PMI based on original survey data collected from a representative panel of around 3,000 manufacturing firms.

LISBON - The Troika of international lenders will complete their first assessment of the Portuguese economy since the country ended its bailout program in May this year, according to Portuguese media reports.   The center of the debate during the Troika's one-week visit has been the state budget for 2015.   According to local media, the three financial heads, namely the European Commission, the International Monetary Fund and the European Central Bank, are likely to praise the government for positive results but will also call on the country to stick to budgetary control measures and targets set out in May.   The country is expecting its economy to grow 1.5 percent next year. In light of this, the budget will see certain tax raises, such as that on tobacco, alcohol and fuel while others will lower, such as the tax companies pay for employees.   Personal income tax will only be cut if the government manages to clamp down on tax evasion and fraud, it said.   Portugal is attempting to cut its budget deficit from 4.9 percent in 2013 to four percent of GDP this year and to 2.5 percent next year.  The debt-laden country signed a 78-billion-euro bailout (about 97 billion U.S. dollars) with the Troika in May 2011 and this program officially ended in May this year, marking a "clean exit" without a credit line.

Chancellor George Osborne has insisted the UK will pursue its "national interest" in Europe despite German warnings about its future in the EU.

Mr Osborne said the British people wanted concerns about EU immigration and access to benefits addressed.  The German government has insisted the right of EU nationals to live and work in other member states is sacrosanct.  Angela Merkel has reportedly said she would rather see the UK leave the EU than allow a quota system for migrants.  The BBC's Europe Editor Gavin Hewitt said the German chancellor wanted the UK to stay in.  But he said an article in Der Spiegel news magazine, which quoted German government sources as saying she feared the UK was near a "point of no return", signalled Berlin's view that British calls for curbs on the free movement of people was a "red line" that could not be crossed.  David Cameron wants to renegotiate the terms of the UK's continued membership before holding an in-out referendum, if he remains in power after next year's general election.  The prime minister, who is expected to set out his next steps on immigration before Christmas, has insisted freedom of movement of workers would be "at the very heart" of his renegotiation strategy.  Der Spiegel reported that Mr Cameron was now looking at a plan to stretch the EU rules "to their limits" in order to ban migrants who do not have a job, and to deport those who are unable to support themselves after three months.

Speaking to journalists on Monday, Mrs Merkel's spokesman - Steffen Seibert - said this was "not a bilateral matter between Germany and Britain but between Britain and all of its European partners".

It was up to the UK to "clarify" what wider role it wanted to play in the EU, he added.

Mr Osborne said a Conservative government would always "do what is in the interest of our country and our economy" but the UK would approach future negotiations in a "calm and rational" way.

Tory backbencher David Davis: Merkel's warning is "bloodcurdling"

"What we have today is a story based on speculation about what Angela Merkel might have said about something David Cameron might say in the future," he told BBC Breakfast.

"The Germans understand the disquiet caused among the British people when you have people coming from other parts of Europe to claim our benefits who do not necessarily have jobs to go to."