Iceland's government is now set to make a second attempt at revoking the country's EU application. The country's ruling coalition first decided to submit a bill to stop EU accession early last year, sparking major protests in the capital, Reykjavik.   Iceland is expected to withdraw its application to become a member of the European Union, the Reykjavik Grapevine reported Monday, citing the country's prime minister.   "Participating in EU talks isn't really valid anymore. Both due to changes in the European Union and because it's not in line with the policies of the ruling government to accept everything that the last government was willing to accept. Because of that, we're back at square one," Icelandic Prime Minister Sigmundur David Gunnlaugsson was cited as saying by the magazine.  In an interview with the Icelandic Morgunbladid newspaper on Monday, Birgir Armannsson, chairman of the Foreign Affairs Committee in Iceland's parliament, stated that "it is not unexpected that the prime minister is likely to present a new parliamentary resolution to revoke the membership application."   Iceland applied to join the European Union in 2009 and began formal negotiations the following year. After the 2013 elections, the country's new center-right government decided to end accession talks with the EU. Iceland is currently a member of the European Economic Area, the European Free Trade Association, and a part of the Schengen Area.

The European Central Bank is considering three possible options for buying government bonds ahead of its January 22 policy meeting, according to reports.   As fears grow that cheaper oil will tip the eurozone into deflation, speculation is rife that the ECB will unveil plans for mass purchases of eurozone government bonds with new money, a policy known as quantitative easing, as soon as this month.   According to the Dutch newspaper Het Financieele Dagblad, one option officials are considering is to pump liquidity into the financial system by having the ECB itself buy government bonds in a quantity proportionate to the given member state's shareholding in the central bank.

A second option is for the ECB to buy only triple-A rated government bonds, driving their yields down to zero or into negative territory. The hope is that this would push investors into buying riskier sovereign and corporate debt. The third option is similar to the first, but national central banks would do the buying, meaning that the risk would "in principle" remain with the country in question, the paper said. So let me get this right..  The ECB buys all the nice juicy lower risk AAA rated bonds leaving my pension and insurance company Greek, Spanish, Italian etc. bonds plus corporate bonds.

So my pension buys some corporate bonds in a few lower risk European blue chips, probably those who think it's a good wheeze to borrow at low rates and buy back shares (mmm. where have I seen that before??).   Hey presto the European equity market starts to lift off with an (un?)expected liquidity injection. We see asset price inflation.   How exactly does the real Euro economy benefit?

How does this extra liquidity translate into money velocity / inflation when there is no obvious connection between the printing press and job creation?   For the last six years the developed world has been suffering from a chronic shortage of demand: demand for goods, demand and services, demand for investment. The need to deleverage personal, corporate and government debt has meant that there has been massive excess capacity and a huge shortfall in aggregate demand. This lack of demand has been driving up unemployment and driving down prices and it is this problem that the ECB need to address.

The Guardian (Ted Elliot) writes :
For Mario Draghi, Thursday is the day the talking stops. It is two and a half years since the president of the European Central Bank said he would do “whatever it takes” to safeguard the future of the euro. Financial markets now want him to deliver on his pledge.  All the hurdles – economic, political and legal – have allegedly been cleared. The ECB will announce a programme of sovereign bond purchases, its equivalent of the quantitative easing programmes that were announced by the US Federal Reserve and the Bank of England six years ago.  But nothing is ever simple when it comes to the eurozone. So when François Hollande stated earlier this week that the ECB would create a “movement that is favourable to growth” by buying sovereign debt, it was only a matter of hours before the French president rowed back, saying that he was speaking “hypothetically”.  It was not hard to see why Hollande backtracked so quickly. The German government has been dragged kicking and screaming towards this latest attempt to boost activity in the 19 countries that use the single currency, fearful that it will be the citizens of Europe’s biggest economy that foot the bill for any losses from the bond-buying plan.  The signs this week were that Germany’s still massively influential Bundesbank was seeking to limit the scale of the programme and ensure that each eurozone country’s central bank bear the risk for buying its own national bonds. Reuters said on Monday that it had been talking to a source familiar with Bundesbank thinking, who said: “What exactly comes and in what dosage, that’s where the real action is at the moment. It could be that the decision is taken with details to follow.” Few were in doubt that “familiar with Bundesbank thinking” meant a Bundesbank official speaking on a non-attributable basis.  Having ramped up expectations, there is now a danger that the long-awaited plan proves a damp squib. Markets want Draghi to put a figure on the size of his programme (preferably at least €1tn) and they want to know exactly how it will be operated. Given the length of time that has elapsed since Draghi’s “whatever it takes” speech, they will be unhappy with anything less.  In reality, the nature of the challenge facing the ECB has changed since July 2012. Then, the eurozone was facing an existential crisis: the interest rates on the government bonds issued by Italy and Spain suggested that the financial markets foresaw the risk of the single currency breaking up. Today, the problem is more chronic than acute: the eurozone has been gripped by economic torpor ever since the deep recession of 2008-09 and prices are lower than they were a year ago. The risk of a euro break-up is more remote but is still seen as possible if stagnation leads to a persistent deflation that makes the debts of some euro members too expensive to bear. Draghi’s plan is designed to ease the deflation risk.   But it is by no means certain that the ECB will succeed. One fear is that the plan is too, little late. Jonathan Loynes, chief European economist at Capital Economics, said: “It is virtually certain that the ECB will announce some form of quantitative easing (QE) at its governing council meeting on January 22nd. But given the ECB’s natural caution and Germany’s objections, we’re not very confident that the programme will be big and effective enough to revive the eurozone economy or eliminate the risk of a prolonged bout of deflation.”   Others are sceptical about whether QE has worked in the US and the UK, even though the central banks in both countries believe that bond buying has led to both growth and inflation being higher than they otherwise would have been. Dhaval Joshi, of BCA research, said the recent growth and employment differences between the world’s major economies were largely due to fiscal policy – the severity of austerity – and whether governments had facilitated new lending by repairing their banking systems.   “Meanwhile, like-for-like inflation (which requires stripping out shelter costs in the US and the VAT tax hike in Japan) is converging towards the same near-zero level in all the major economies”, Joshi added. “Simply put, the different directions of central bank balance sheets have had zero impact on inflation outcomes.”   In the end, the buying of bonds by a central bank can only work through one of three channels. Banks can use the money they receive in exchange for their bonds to increase lending to consumers and businesses. Purchases of sovereign debt can drive down interest rates because the removal of bonds from the market makes them more attractive. This increases their price and reduces the yield (interest rate) payable on them. Finally, central banks can use bond buying to drive down a currency, since increasing the supply of dollars, pounds, yen or euros makes them less attractive to hold.   Eurozone banks are already awash with cash so analysts suspect they will fail to increase their lending no matter what the ECB does. Interest rates on eurozone sovereign debt are already low. That leaves only the exchange rate as a somewhat indirect means for generating the growth and inflation Draghi is looking for. Such are the deep-seated problems of the eurozone that even a €1tn bond buying programme unencumbered by German-imposed limitations is unlikely to do the trick on its own. 

Crude dropped to its lowest since April 2009 in the wake of a glut of supply, triggering more swings in share prices after heavy falls on Monday.  At one point Brent crude fell 2 per cent to $51.23 a barrel and US crude dropped nearly 3 per cent to $48.47, adding to market worries about a possible Greek exit from the euro.  The UK's FTSE 100 index of leading shares plunged as much as 78 points, after a 130 point drop on the previous day, before staging an afternoon rally to close down 50.7 points to 6366.5 points.  Shares in Germany and France were also under pressure, as Wall Street fell 141 points in early trading following Monday's 331 point slump.  Oil prices have been driven lower by a combination of higher US shale gas and oil production and a refusal by Saudi Arabia to cut output.  Alastair McCaig, analyst at broker IG, said: "Commodity prices continue to play havoc with the FTSE."   Despite market volatility, chief European economist Jonathan Loynes at Capital Economics predicted UK economic prospects would be improved by lower energy costs which would hold down inflation. 

Top 10 Imports to USA

1. Oil: $389.3 billion (16.7% of total US imports)

2. Machines, engines, pumps: $311.2 billion (13.4%)

3. Electronic equipment: $303.5 billion (13%)

4. Vehicles: $253.3 billion (10.9%)

5. Medical, technical equipment: $72.1 billion (3.1%)

6. Gems, precious metals, coins: $67 billion (2.9%)

7. Pharmaceuticals: $63.4 billion (2.7%)

8. Organic chemicals: $54.7 billion (2.3%)

9. Furniture, lighting, signs: $51.4 billion (2.2%)

10. Plastics: $46.5 billion (2%)

In 2013, total U.S. trade with foreign countries was $5.02 trillion. This consisted of $2.272 trillion in exports and $2.744 trillion in imports of both goods and services. This makes the U.S. the world's third largest exporter, after the European Union (EU) and China, and the world's second largest importer, after the EU.

America is in the Global Economy. If cutoff, it would most likely collapse pretty quickly.

The markets are correct to worry about a slowdown, because the main reason for the fall in oil prices is simply a lack of demand, possibly supplemented by some geopolitical shenanigans.

Whilst the fall in the price of petrol and diesel is to be welcomed, these low crude oil prices are unlikely to last, and will depend on how much financial pain oil producing nations and energy companies can stand. Beyond 12 months or thereabouts too many energy companies will have, or be in the process of going bust. To delay bankruptcy, many energy companies are already cutting back on investment in newer more expensive sources of oil, especially for US oil shale where rig counts are already falling as US Rig Count Continues To Plunge To 10-Month Lows reveals. If this reduction in supply capacity goes too far it will result in future shortage and higher prices.

These low prices are a mixed blessing so make the most of them while they last.

....and a lot of BS - since the "FED" pumped trillions of dollars in the Bundesbank in the last 3 years

Germany has balanced its budget for the first time in more than 40 years, and pressed eurozone partners to follow its austere example rather than try to stimulate their stagnant economies with borrowing or central bank money-printing.   Berlin had aimed to achieve the so-called "schwarze Null" (zero deficit) this year, but strong tax revenues and lower debt service costs due to rock-bottom interest rates helped it meet the goal a year early in 2014, the finance ministry said.   It is the first time Germany has balanced its budget since 1969 .  Chancellor Angela Merkel's government has rebuffed calls from EU partners, led by France and Italy, and international organizations such as the IMF and the OECD to spend some of the fiscal windfall on growth-promoting public investment.   Germany's announcement came nine days before the European Central Bank (ECB) may decide to launch large-scale purchases of eurozone government bonds in an effort to boost growth and avert deflation in the 19-nation currency area. The European Commission set out detailed rules on Tuesday for a planned €315bn investment programme over the next three years, involving no new public money in deference to German objections.  Public investment and structural reforms could win limited leeway for countries breaking EU budget rules, it said. That reduces the likelihood of tough penalties on France or Italy, the eurozone's second and third largest economies, when their fiscal plans are reviewed again in March.   Countries that put capital into a proposed European Fund for Strategic Investment would not be penalized if it tips them over the EU's deficit limit of 3pc of gross domestic product. However, those that already have an deficit in excess of the ceiling would win no indulgence.  The mood of self-congratulation in Berlin over the balanced budget made any easing of fiscal policy seem unlikely, even though the German economy is expected to slow this year. 

Far from using the leeway to invest more in creaking public infrastructure or cut taxes to stimulate weak domestic demand, politicians in Ms Merkel's conservative CDU party said the government should now focus on paying down the country's debt.

Commenting on the UK's future in the EU, Mrs Merkel said: "We would very much like to have the UK in a strong and successful Europe."   On migrants' abuse of benefits, she said: "Abuse needs to be fought against so freedom of movement can prevail."   The German chancellor declined to comment about whether she would support or oppose any of the changes being sought by Mr Cameron.  The prime minister earlier accompanied Mrs Merkel to an exhibition on the history of Germany at the British Museum.  The five-hour visit, one of a number Mrs Merkel is making to world leaders as part of Germany's year-long presidency of the G7 group of nations, is likely to be her last to the UK before May's general election.   Mr Cameron has called for a far-reaching shake-up of welfare and employment rules across the EU, including requiring migrants to have a job offer before coming to the UK, making them wait four years before they can receive certain benefits and ending the payment of child benefit to dependents of EU migrants overseas.  He has said the proposals will, in some cases, require changes to existing treaties and therefore require the support of all 28 members - most of whom have said they are fundamentally opposed to anything will infringing the principle of the freedom of movement across the EU.  In a joint statement earlier, the two leaders said their talks would focus on tackling instability in the global economy and securing long-term growth, including the prospect of a trade deal between the EU and US.

...what a mess...now we'll see the "benefits of the EU"...

Getting the American or British or European public deeper into debt via QE bond buying schemes by their respective governments, has already put them or will put them into further "hock" for generations! And all this just to pump up "bank balance sheets" is ludicrous! It's far better to get rid of the vampires at the central banks and have governments everywhere start printing their own currency on good faith - without all the ridiculous debt!

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!

The stockholders of the central banks' main concern is not the public interest or the general welfare - but to enslave Europe further into debt with the backing of the "hot air" dollar! This they have already achieved...and now they want everyone begging for QE as well! This just means more astronomical debt for all European governments and final control by the bankers!

Jackson was the only president to successfully get rid of the central bank of the United States and enjoy debt free currency for a generation. Lincoln also successfully funded the civil war with debt free currency! Kennedy also injected billions of debt-free silver certificates into the economy before the bankers had his brains blown out by a hit team! It's time to get rid of the buggers at the central banks for a more decent and fair world! The stockholders of the central banks need to be thrown into jail for crimes against humanity and then drawn and quartered for a start!...

So, it was 1,25 Francs for the euro. Now is 1 franc for the euro. The Real Euro Central Bank- The Swiss central Bank,the Rock of Money knowledge, having more euros than the ECB , got richer, very liquid....The more the ECB prints,the richer they go. ... Ok, they had to disclose for that many info,almost loose the banking secret, but they stash for the bad times. And there are ways for the safe haven to keep on.   The people who were betting on the Euro against the Franc were delusional years ago.  How it will backfire, this denial, in which the Eurozone is?... Well, they think they will sell more - to the Apache Indians.  And something will trickle down to the....... ( object missing).....?

The same goes with the other pals in the story- The QE Delirium Tremens syndrome is approaching, especially if you do not eat after you drink a lot.