European Union negotiators reached agreement on the bloc’s 2015 budget under a deal that also provides increased funds to pay outstanding 2014 bills.   The accord on the EU’s 141 billion-euro ($174 billion) spending plan for next year followed U.K. resistance to paying a 2.1 billion-euro surcharge to the 2014 budget. Under a compromise reached last month, Britain and eight other countries would have until Sept. 1, 2015, to transfer their extra payments without being charged interest.  “This agreement allows us to safeguard the budgets of member states and facilitates the search for resources for growth,” Italian Finance Minister Pier Carlo Padoan, whose government currently holds the rotating EU presidency, told reporters today in Brussels. The deal allows the bloc “to avoid any future problems,” he said.   The 2015 budget accord needs formal approval by EU governments and the European Parliament later this month.  The negotiated package “provides for an increase of payments by 3.5 billion euros to tackle the unprecedented scale of unpaid bills” in this year’s spending plan, the EU said in a statement. The increase in payments is covered by additional revenue from fines, a surplus from the 2013 budget and the revised estimates of surcharges on EU nations, which were the result of a changes to economic-output data dating as far back as 1995.  After Britain objected to the size of its surcharge, a new system is being implemented that will give EU nations that face surcharges from the bloc the right to gain nine extra months to pay the amounts in the event of “exceptional circumstances.”

Off-shore lending in US dollars has soared to $9 trillion and poses a growing risk to both emerging markets and the world's financial stability, the Bank for International Settlements has warned.

The Swiss-based global watchdog said dollar loans to Chinese banks and companies are rising at annual rate of 47pc. They have jumped to $1.1 trillion from almost nothing five years ago. Cross-border dollar credit has ballooned to $456bn in Brazil, and $381bn in Mexico. External debt has reached $715bn in Russia, mostly in dollars. A chunk of China's borrowing is disguised as intra-firm financing. This replicates practices by German industrial companies in the 1920s, which hid their real level of exposure as the 1929 debt trauma was building up. "To the extent that these flows are driven by financial operations rather than real activities, they could give rise to financial stability concerns," said the BIS in its quarterly report.   "More than a quantum of fragility underlies the current elevated mood in financial markets," it warned. Officials are disturbed by the "risk-on, risk-off, flip-flopping" by investors. Some of the violent moves lately go beyond stress seen in earlier crises, a sign that markets may be dangerously stretched and that many fund managers do not really believe their own Goldilocks narrative.

After two bailouts totaling  €240bn (£192bn) since 2010, Greece wanted to switch back to market financing from the start of next year.   In October the government proposed breaking free of all financial oversight, but investors took fright at the suggestion, causing a sudden spike in the country’s bond yields.   The alternative is a back-up credit line from the eurozone that Athens could tap in an emergency. However, the troika, concerned about a potential €2bn budget gap in Greece’s finances, has asked for more information on pension reform before granting the measure. Greece has also brought forward presidential elections to December 17, which could see the conservative-led government replaced by the Syriza party. Alexis Tsipras, Syriza’s leader, has fought his political campaign on an anti-troika ticket.

Oil and Gas: Consequential loss – Another parenthetical profits dilemma - In yet another “consequential loss clause” case that will be of interest to the oil and gas industry, the English High Court confirmed that it would construe such a clause in a manner that assumed that a direct loss of profits was not intended to fall within excluded “consequential loss” unless the clause clearly indicated this was the case.  As a result, the words “Neither party will be liable to the other for any indirect or consequential loss, (both of which include, without limitation, pure economic loss, loss of profit, loss of business, depletion of goodwill and like loss)” were insufficient to exclude a claim for loss of profit directly following from the breach.   In May 2011, Polypearl Limited (“Claimant”) and E.ON Energy Solutions Limited (“Defendant”) entered into two written agreements, a Master Agreement ("Master Agreement") containing general terms and conditions for the supply of certain cavity wall insulation products (the “Products”); and an Insulation Scheme Event Transaction Document ("ISETD").   The Defendant argued that it was not obliged to purchase a set quantity of products under the ISETD and denied that it was in breach of its terms. The Defendant also submitted that, if it was required to purchase that set quantity, the Claimant’s losses were excluded under the Master Agreement, as a loss of profits. The wording of the relevant exclusion clauses in the Master Agreement stated:

(10.1) "Neither party will be liable to the other for any indirect or consequential loss, (both of which include, without limitation, pure economic loss, loss of profit, loss of business, depletion of goodwill and like loss) howsoever caused (including as a result of negligence) under this Agreement, except in so far as it relates to personal injury or death caused by negligence".

Decision

The Court considered that the wording of Clause 10.1 of the Master Agreement in parenthesis was ambiguous since it was not clear whether the wording in parenthesis meant that all loss of profits claims were excluded (whether or not such losses were indirect losses), or whether the wording in parenthesis referred to indirect loss of profits claims only.

However, the Court decided that the words in parenthesis were subordinate to the phrase "indirect or consequential loss" and were not an attempt to place a direct loss in the indirect category since it was very unlikely that businessmen would intend to exclude liability for direct loss and the clause must therefore be construed in accordance with common business sense. Clear words would be required if the parties intended to abandon remedies for all losses (and therefore for any breach of the agreement), and the clause did not clearly indicate this.

The Claimant’s losses of profits were held to be direct losses since such losses were the most obvious losses arising from the Defendant’s breach.

The Courts construe exclusion clauses strictly and absent express wording to exclude a particular type of loss, the Courts will be slow to give an expansive interpretation to an exclusion clause in a contract and will not deem a claim for direct loss of profits to be a claim for indirect loss of profits, unless express wording is included. The case provides further illustration that if the parties intend to exclude claims for a specific type of loss, then this should be very clearly stated within such a clause.

Aficionados of “consequential loss clause” debates will recognise that a similar parenthetical dilemma was resolved in the same manner by the High Court in Markerstudy Insurance Co v Endsleigh Insurance Services [2010] EWHC 281 (Comm).

Interestingly in Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm) the High Court also recently decided that losses relating to a failure to take delivery of crude under Section 50 of the Sale of Goods Act, were not a “loss of profits” that could be captured by a widely drafted exclusion clause that expressly excluded direct loss of profit.

The “will they, won’t they” saga over European economic stimulus continues. Analysts are divided over whether the European Central Bank will announce a bigger boost for the struggling economies of the eurozone at its monthly meeting on Thursday.  The ECB is already buying asset-backed securities (bundles of bonds) in an attempt to stimulate lending, but many economists would like to see some more aggressive stimulus to pull the eurozone out of its current economic morass. Figures released last Friday revealed that unemployment in the 18-country currency zone is stuck at 11.5%. In Italy the jobless count has risen to 13.2%, while in Greece and Spain, a quarter of the working population is out of work. But Jens Weidmann, the ECB’s hawk-in-chief, said that central banks didn’t have “an Aladdin’s lamp that you just have to rub to make all wishes come true”, dampening hopes that the bank might announce a full-blown quantitative easing programme next week. The head of the ECB, Mario Draghi, is likely to step up his calls for further economic reform within troubled eurozone countries. In a speech last week he warned that lack of reform could create a permanent divergence within the currency union, which would have “potentially damaging consequences for us all”... In reality, the central bankers (guided by anonymous stockholders) and their "paid for" puppet politicians have managed in a few years to turn all of Europe into a nightmare mirror image of the USA! They have torn up the social safety nets, wreaked havoc on economies, brought in cheap labor from third-world countries, created homelessness and unemployment, destroyed small business, manipulated currency and stock markets, expanded the dangerous drug trade, child porn, and on and on. Club Med's economy is in "the toilet" thanks to the central bank owners - and now the vulture bastards are making money off of the "bones" of dying countries like Greece! Presumably the BoE, the FED and the ECB - disguised as governmental agencies - are there to regulate the banking industry? That's like asking a coke addict to regulate the amount of cocaine coming out of Columbia!  Minimum wage, temporary jobs and wild speculation in the markets have replaced “real growth” while central banks such as the BoE, the FED, the IMF and the FED-backed ECB have created “A sow’s ear from a silk purse” when it comes to the major and minor economies of the civilized world:

1. Austerity in Europe has halted growth and is destroying ClubMed ***

2. Control by Signor Draghi and other Goldman Sach’s henchmen in Brussels prohibit fair referendums in Europe

3. When the Fed so much as hints about an exit from stimulation, the world's stock markets begin to panic

4. Japan's desperate stimulus plus devaluation is already looking fragile with major buying attacks on the Yen

5. QE hasn't had any lasting economic effect in the USA or Great Britain

6. Negative Flash PMI data from China along with uncertainty about the US Federal Reserve’s bond-buying program saw Russian stocks slump

7. The ECB forced German central banks to bear the brunt of the bailouts – thus depleting taxpayer’s savings, having weaker nations blame Germany for the austerity, and destroying Germany’s export markets!

It is time to open central banking books for two overall reasons: either they are totally incompetent imbeciles or this depression is being orchestrated for financial gain and control of sovereign nations. Whatever the answer may be, banking officials need to be reviewed by independent government panels and then removed for crimes against humanity.

After all, these bankers have steeled themselves to loss of life and livelihood for generations – the rest of us need to steel ourselves to getting rid of them pronto before their scheme for ultimate control is finalized. For a start, fair referendums need to be allowed in all EU nations for an end to this “Euro Madness” and a return to individual currencies printed directly by government treasuries.

European stocks tumbled after Mario Draghi, head of the eurozone's central bank, failed to give a concrete sign that it would undertake sovereign quantitative easing following a highly-anticipated policy meeting.  Spain’s IBEX index fell as much as 1.5pc, the FTSE MIB dropped as much as 1.6pc and both Germany’s DAX and London’s FTSE 100 slid 0.4pc after Mr Draghi said the European Central Bank (ECB) would reassess the impact of existing economic stimulus measures “early next year” .  The euro also climbed on signs that Mr Draghi was in no hurry to inject further stimulus. It climbed as high as $1.24, having fleetingly touched a two-year low as the ECB President began to speak.  He said: “Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council remains unanimous in its commitment to using additional unconventional instruments within its mandate.”   At the same time, the ECB slashed its forecasts for Eurozone growth. The economy is now expected to grow by 0.8 pc this year, 1pc next year and 1.5pc in 2016.   As expected, the bank did not cut rates, with the main refinancing rate staying at an all-time low of 0.05pc and the deposit rate at -0.2pc. ... In order to drag the Euro Zone out of the economic mire more than 5 billion Euros of QE is required. This is never, never, never going to happen! The most likely outcome for the Euro Zone is a prolonged period of disinflation\deflation. We are going to import Euro Zone deflation, it is already here, visit your local Lidl supermarket and check out the prices.... The press conference ended with Draghi slapping down the idea that a sovereign QE program  would be illegal.  "Not to pursue our mandate would be illegal, he replies."  Hi Ho Hi Ho it's off to court we go!  Further his comments that QE did not even need a majority vote will infuriate AFD and perhaps many more in Germany.  Can't wait for the German court to rule on this after the ECJ return their answer to the German court's question.  Maybe Draghi assumes that QE is ultra vires and is just 'talking the talk' to calm things down until the legal reality come known. After all, his dubious but famous 'do what ever it takes' comment, also awaits the same determination, but no one can deny the fact that his 'talk' saved the EU (or the €) at that time.... Mario has slashed growth predictions to almost to no growth - 0.8% in 2015. The revised down numbers for 2016, 2017 barely matter.   I do not think Mario has any effective measures he can undertake. The till says 'NO SALE'.  TLTRO uptake will be risible in a few days time and in those countries where it is just a giggle, the carry trade will be used to Botox bank balance sheets and not to lend to the private sector, so no consumer demand incentive there.   ABS - is he sure there are any, or enough assets to act as collateral for the balance sheet the ECB has got to have to become a lender of last resort in a non-growth €Z.   Sovereign bonds are almost a joke, especially as, if wrong will accept correction, he has to buy in some form of national proportionality. Germany first, France second, Italy third, Spain (perhaps not too bad) fourth.  More currency. Well he'd better pick the right nations to do it to unless he wants intra-euro capital flows in the shoots of spring.   Mario seems to have no means of exciting any consumer demand left so that export items can be bought or supply chain imports purchased to unblock this incestuous, nigh protectionist, 'single market' trading circle that all 18 highly divergent economies are monolithically, irrespectively and overly locked into because of the misshapen bairn hatched out of Brusstraslux.  I suspect there is an acceptance of a long period of deflation and non-FDI, not that the imperial court in Brusstraslux could care and the only measures we will see are the arraignment of taxpayers savings, pensions and a whole plague of new taxes. 'Cypress' will be the new funding source. Hopefully the last gasp but it will be a very long one.

Everyone came to realize that efforts to deepen Ukraine's ties with the EU had failed. But no one at the time was fully aware of the consequences the failure would have: that it would lead to one of the world's biggest crises since the end of the Cold War; that it would result in the redrawing of European borders; and that it would bring the Continent to the brink of war. It was the moment Europe lost Russia.  For Ukraine, the failure in Vilnius resulted in disaster. Since its independence in 1991, Ukraine has strived to orient itself towards the EU while at the same time taking pains to ensure that those actions don't damage its relations with Moscow. The choice between West and East, which both Brussels and Moscow have forced Kiev to make, has had devastating consequences for the fragile country.  But the impact of that fateful evening in Vilnius goes far beyond Ukraine's borders. Some 25 years after the fall of the Berlin Wall and almost 70 years after the end of World War II, Europe is once again divided. The estrangement between the Russians and the Europeans is growing with Moscow and the West more inimical toward each other today than during the final phase of the Cold War. It's a reality that many in Europe have long sought to ignore. The story of the run-up to Vilnius is one filled with errors in judgment, misunderstandings, failures and blind spots. It is a chronicle of foreign policy failure foretold -- on all sides. Russia underestimated the will of Ukrainians to steer their country toward the EU and was overly confident in its use of its political power over Kiev as a leverage.  For its part, the EU had negotiated a nearly 1,000-page treaty, but officials in Brussels hadn't paid close enough attention to the realities of those power politics. Even in Berlin, officials for too long didn't take Russian concerns -- about the encroachment of NATO and the EU into Eastern Europe -- seriously enough. The idea that Moscow might be prepared to use force to prevent a further expansion of the Western sphere of influence didn't seem to register with anyone.

With the special role it plays and the special responsibility it has for Europe, the meltdown also represented a failure for Germany. Foreign policy has long been considered one of Chancellor Angela Merkel's greatest strengths, but even she ignored the warning signs. Merkel has proven herself over the years to be a deft mediator who can defuse tensions or work out concrete solutions. But crisis management alone is not enough for good foreign policy. Missing in this crisis was a wider view and the ability to recognize a conflict taking shape on the horizon. Instead, officials in Berlin seemed to believe that because nobody wanted conflict, it wouldn't materialize.

Merkel did say at the summit that, "The EU and Germany have to talk to Russia. The Cold War is over." But the insight came too late.