Markets rally on German economy, US housing news

French EU lawmaker Sylvie Goulard has warned that the EU is becoming a "monster" with its latest treaty changes. The Liberal MEP said that "turning Europe into an angry father whipping his children is a fundamental error": I do not see myself going off to sell to my fellow citizens a Europe that behaves in this way. To say it's Europe or democracy, I do not agree. We are in the midst of creating a monster"....the IVth. Reich is being slowly bur surely impinged upon us, the Christian Nations (orthodox an catholic) by the barbarians who started every war in Europe in the last 1000 years and who murdered millions of innocent people for no reason at all, just for the joy of killing I suppose !...Hopefully the outcome will be as usual , they'll lose in spite of the unconditional support and help extended by Russia and The U.S. - But, what will it be the cost this time ?

Italy again had to pay investors yields averaging above 7% at its government bond auctions Tuesday, as the euro zone's third-largest economy continues to borrow at costs that forced Greece, Portugal and Ireland to seek external bailouts. The auction of up to €8 billion in bonds over a range of maturities saw Italy paying a yield of 7.89% on three-year bonds and 7.56% on 10-year paper. Both marked new euro-era highs. That Italy had to offer higher yields on shorter-dated bonds at Tuesday's sale underscores how investors want to be compensated for the risk attached to the country's near-term fiscal outlook. Demand at the auction totaled €10.9 billion, enough to safely cover the amount on offer. But the margin was still small; the bid-to-cover ratio on the 10-year sale, for example, totaled 1.34, up marginally from a slim 1.27 last month. Yields in the secondary market initially fell on the results, but the benchmark 10-year yield remained sharply higher on the day. "Italy does not have the ability to push down its funding costs to sustainable levels," said Jeffrey Sica, president and chief investment officer of SICA Wealth Management, which has more than $1 billion in client assets, real estate and private-equity holdings.

Could anyone give or sell us a "Survival kit?"

France is being particularly watched on its commitments to cut high deficits as losing its triple-A rating would undermine the euro zone's bailout facility, the European Financial Stability Facility. In the space of less than three months, President Nicolas Sarkozy has responded by crafting two austerity plans to save €19 billion ($25.7 billion) by the end of next year. The second austerity plan came as the government slashed its 2012 growth forecast to gross-domestic-product expansion of 1% from 1.75% previously. Economists are now concerned that austerity could bite significantly into growth. Deutsche Bank analyst Gilles Moec said in a research note Monday that the two austerity packages and the tightening already programmed could take 1.2% off French GDP next year. Moody's noted in its report Monday that the growth outlook and the European debt crisis are "important risk factors" for the French government's finances. Mr. Baroin defended the government's austerity plans, which are mainly centered on tax increases in the short term, including VAT hikes. "These measures will not have a negative impact on growth of the French economy," he said. On a funny note : How about a list of actions eurozone holders can take to lessen the horror when the euro crashes in a disorderly fashion.
1. Buy non-EU currency. Which ones?
2.Buy gold.
3. Buy property rather than have cash in the bank.
4. Stock up on long life essential food supplies, batteries, paper.
5. Ensure at least 6-9 months of regular medications.
Could anyone give (sell) us a "Survival kit?"... Civil unrest anybody?

How to win the war you "lost" - Germany is taking on an increasingly dominant role in Europe

Revelations that draft proposals for the Irish December budget had been circulated in a German parliamentary committee were met with horror in Ireland. It has since emerged that they were sent to every finance minister in the EU. Members of Irish opposition parties have been in uproar at the fact that parliamentarians in Berlin were privy to vital information, such as a proposed 2% hike in VAT. Although the government insisted that the plans seen in Berlin were not final, the Irish minister for finance, Michael Noonan, confirmed on Friday that he would indeed be proposing to the government that they increase the top rate of VAT by 2% to 23%. It is one of a number of measures the government says it will have to take to raise €1bn (£856m) in additional taxation as part of total spending cuts and tax increases of €3.8bn. The broad outline of the annual budget is usually known in advance, but the exact details are not revealed by the finance minister until budget day. The Irish people have, however, already been told that they face a string of harsh austerity budgets over the coming years. So, it will come as little surprise that more pain is to come. The fact that the budget plans were found in the Bundestag is most likely due to the fact that its finance committee has to be included in any decision-making on the bailouts, according to a recent ruling by the country's constitutional court. In other countries such a paper would never have left the finance ministry, but in Berlin all the 41 committee members were privy to the information. The reality is that Ireland ceded control over its own finances when it was forced to tap the bailout funds late last year. When the troika of the IMF, ECB and EU rode into town on those dark and dismal days last November there was much talk of the loss of sovereignty. For many something wrested from the British less than a century ago had been squandered due to the chronic mishandling of a banking crisis that was in turn caused by the reckless investment in property development. The worry for peripheral countries like Ireland should be not so much that Berlin is in charge, but the vision that Germany has for the rest of Europe.

Trying to keep the euro going is like trying to breathe life into a corpse.

The latest bit of euro fantasy has been that a few changes in the top personnel would transform matters. Yet even if you installed a coalition of Pericles and Alexander the Great in Athens and Cesare Borgia and the Emperor Hadrian in Rome it wouldn't make a blind bit of difference. What ails these countries is the irresistible arithmetic of the debt trap. The idea of a euro break-up frequently meets with the objection that this would crucify German industry. This is nonsense. The new German currency would certainly go up, I grant you. Indeed, it would need to; that is a key part of the adjustment mechanism. But it would not go up without limit. The Germans were reluctant to give up their Deutschmark which, they said, had been the secret of their post-war success. And now they are reluctant to give up the euro which, they say, is the secret of their post-Deutschmark success! In fact, German business proved immensely good at bearing the strains created by a strong D-mark and it would again be like this under the "son of D-mark". Anyway, what German business wants should not be the sole arbiter. A high German exchange rate would transfer income within Germany from businesses to consumers and this would help to boost consumer spending. Trying to keep the euro going is like trying to breathe life into a corpse. Europe's leaders should not be propping the single currency up, like El Cid strapped to his steed, but rather preparing to dismantle it at the lowest possible cost. Trying to keep the euro going is like trying to breathe life into a corpse. Europe's leaders should not be propping the single currency up, like El Cid strapped to his steed, but rather preparing to dismantle it at the lowest possible cost.

The break-up of the euro would mean a short, sharp economic shock and probably a recession, but would be followed by a quicker return to strong economic growth, according to the Centre for Economics and Business Research. As European governments struggle to keep the euro zone together, Greek political leaders last night sealed a pact to form a national unity government after George Papandreou, the prime minister, announced his imminent resignation under pressure from a European ultimatum. David Cameron will today tell MPs that the failure of eurozone leaders to resolve the debt crisis is harming the economy, and will warn that the break-up of the single currency would be even more damaging. However, CEBR economists suggest that the demise of the euro would “not be anything like the disaster that has been argued”. Freed from the constraints of the single currency, strong countries such as Germany would see their currencies gain in price in relation to the pound, boosting British exports. The economists predict that break-up would free many eurozone members from the deficit-cutting austerity policies that threaten to subdue their growth for years. “If it breaks up the immediate pain is much more intense, but then there is a more stable basis and we would expect that within about 30 months growth will actually be faster than if the euro zone survives in its current form,” CEBR said.

Traders sold Italian, German, French and Spanish equities as world leaders left Cannes without delivering concrete resolutions for the eurozone - just hours before Greek prime minister George Papandreou won a crucial a vote of confidence in parliament. The PM won by 153 votes to 145, clearing the way for a new coalition government and the next tranche of EU bail-out money to be paid. The leaders said they had agreed that the International Monetary Fund (IMF) would "monitor" Italy's economy. But even this, the only significant advancement on last week's Brussels accord, failed to reassure the markets on Italy's €1.9 trillion (£1.6 trillion) public debt pile. The yield on Italy's 10-year bonds soared to 6.4pc - the highest level since the euro was launched. Analysts have warned that Europe's third-biggest economy will need a bail-out if its borrowing costs are not brought down. In Milan the stockmarket fell 2.66pc, leading the German DAX down 2.72pc and the French CAC down 2.25pc. In London, the FTSE 100 held out, closing down 0.33pc. Silvio Berlusconi insisted that both the economy and government were "solid". He said he had even turned down an offer of funding from the IMF. However, Christine Lagarde, boss of the international fund, denied that any offer of funding had been extended. The final G20 communique was derided as "flimsy" and "uninspiring". In the document, leaders said they backed Europe's "determination to bring its full resources and entire institutional capacity to bear in restoring confidence and financial stability". They reaffirmed the Brussels agreement of October 26 to bail-out Greece, recapitalise European banks and "build firewalls" around indebted countries to stem contagion. The leaders called for the "swift implementation" of the resolutions.

The review, involving every major government department, emerged as the Prime Minister bluntly accused France and Germany of orchestrating “constant attacks” on the City of London through new EU red tape on the financial sector. Mr Cameron’s attack is the latest escalation in the tension over Europe since this week’s record rebellion by Conservative MPs demanding a referendum on the EU. Ministers at the Foreign Office are privately backing plans by back-bench MPs and peers to set out a “menu” of demands from the EU, including repatriating powers on employment regulations and human rights legislation. Some Tory MPs believe that the process should start next month when leaders begin formal talks on changing EU treaties to allow a rescue package for the eurozone. Conservative attempts to claw back power from the EU are likely to face opposition from their Liberal Democrat Coalition partners. Nick Clegg, the Deputy Prime Minister, said yesterday there was “no question” of Britain “unilaterally” repatriating powers from the EU. But he indicated that there was room for negotiation. He said Britain was “entirely within its rights” to defend its economic interests in Europe but argued the best way to do that was to “have a voice at the top table”.

Germany(the IVth. Reich) takes over Greece, according to the Ribbentrop - Molotov Pact !!!

The European Commission Task Force, headed by Horst Reichenbach, launches officially today initiatives to support Greece proceed with reforms. This Task Force is considered more powerful than Troika’s team. This is a group of technocrats with Commissioner Olli Rehn as a direct supervisor. The team would consist of European Commission and EU member states officials, and requests for participation have already exceeded 500, according to Rehn. Middle-level executives have already visited ministries and public organizations seeking issues for technical support. Although, officially the main agenda item is the National Strategic Reference Framework, it is considered clear that the substantial objective is to implement the terms of Memorandum of Understanding and promote necessary reforms. The meeting between Reichenback and Greek FinMin Evangelos Venizelos is scheduled for Tuesday, the first day of his arrival in Athens, is considered indicative. The former vice president of the European Bank for Reconstruction and Development is a man of Barroso’s absolute confidence, while his team would include also representatives of Greece’s lenders, who can propose measures. EU officials say that the Task Force’s role would expand as time passes, while there would be increased collaterals in case Greece receives the next aid instalment and the second bailout loan. The aim is to avoid the repeat of slowdowns and delays in implementation of the memorandum, which provides reforms in public utilities and sector, healthcare system, insurance system, closed professions, etc. Many government officials anticipated this team in order to overcome intraparty and union pressures in areas of great influence. But there are also government executives who clamour for loss of national sovereignty in exchange for a new loan....And so, Germany(the IVth. Reich) takes over Greece, according to the Ribbentrop - Molotov Pact !!!

Can somebody tell me what's great about this plan, and why the market and euro rallied?

RECAP-Bloomberg: "Merkel's office: “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” The search for an end to the crisis “surely extends well into next year.”" UK Telegraph: "Diplomats say Mr Geithner’s plan to use the ECB as a guarantor of eurozone sovereign bonds was dismissed out of hand, while the EU failed to offer clear assurances that bank recapitalisation would be carried out with sufficient speed and scale to halt an incipent run on the system." "German foreign minister Westerwelle politely told the US to mind its own business. “I cannot understand some of the comments of our American friends. You can’t solve a debt crisis with more debt,”" "RBS said any attempt to solve the eurozone crisis without the ECB playing a key role in shoring up the system is doomed to failure." "Trichet, ...said late last week that the bank has done “all it could” ... has now exhausted its role of “lender of last resort”." "Ackermann, head of Deutsche Bank, said plans to leverage the EFSF may be illegal. “We cannot allow a rescue fund of this magnitude. The (constitutional) court would’t permit, and nor would the people,” he said." Germany wants private investors to increase haircut to 50%. Financial Times: Investors say no. 21% was agreed, and they're sticking with that. (Search for: "Investor threat to second Greek bail-out") If banks take bigger haircut, they will incur bigger losses and will be downgraded again. If EU forces this, then it's involuntary and triggers CDS payouts on default. If EFSF is leveraged, then it will be downgraded from AAA, which means it can't borrow anymore.EU wants to re capitalize banks. DB said no. Germany and France have higher Debt to GDP ratios than Spain, and Spain is one of the PIIGS. Is this the poor helping the poor? When do their AAA ratings get downgraded? Spain was downgraded last Friday. If Germany or France get downgraded, how will the EFSF be able to sell bonds to raise the 440b euros?There are obstacles to almost every part of the plan. Can somebody tell me what's great about this plan, and why the market and euro rallied?

Euro fear as Spain and Italy's debt ratings are downgradedBritish banks and building societies lose rating while pressure mounts on EU to restore faith in single currencyThe eurozone crisis intensified on Friday when Spain and Italy were downgraded by the ratings agency Fitch, heightening fears over the health of Europe's banks. Fitch's move came at the end of a day which had already seen 12 UK banks and building societies downgraded by the rival agency Moody's and amid speculation about co-ordinated European action to bolster the finances of the continent's banks by next weekend. The euro fell against most major currencies, piling fresh pressure on European politicians to restore confidence in the single currency. Germany's Angela Merkel said Europe needed to find a solution for its banks by 17 October. Analysts from Capital Economics estimate the total financial package may top €200bn (£172bn). Merkel and Nicolas Sarkozy of France are due to meet in Berlin on Sunday to discuss the crisis, with bank recapitalisation expected to be at the heart of their negotiations.

Moody's downgrades Italy: analyst reaction - Italy’s credit rating was cut by Moody’s for the first time in almost two decades on concern the government will struggle to reduce the region’s second-largest debt amid chronically weak growth.

I suspect money is secretly being printed and moved around to prop up Greek banks and maybe other European banks too. The Fed's enforced audit published recently shows they already disbursed at least $16 trillion (some reports claim as much as $23 trillion) to various establishments around the globe. Merkel, Sarkozy et all look much too smug to me and they know public anger is growing, particularly in America is growing by the hour.

Switzerland sparked fears of a new currency war on Tuesday after it pegged the Swiss franc against the euro in an attempt to protect its economy from the European debt crisis. The Swiss National Bank in effect devalued the franc, pledging to buy "unlimited quantities" of foreign currencies to force down its value. The SNB warned that it would no longer allow one Swiss franc to be worth more than €0.83 – equivalent to SFr1.20 to the euro – having watched the two currencies move closer to parity as Switzerland became a "safe haven" from the ravages of the eurozone crisis. The move stunned currency traders, and sent the Swiss franc tumbling against other currencies. Jeremy Cook, chief economist at currency brokers World First, said it was "intervention on a grand scale", and the start of a "new battle in the currency wars". "That was the single largest foreign exchange move I have ever seen … The Swiss franc has lost close on 9% in the past 15 minutes. This dwarfs moves seen post-Lehman brothers, 7/7, and other major geo-political events in the past decade," Cook said. The SNB pledged to enforce a "substantial and sustained weakening of the Swiss franc", adding that it might move to an even lower exchange rate against the euro if needed. The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development," said Switzerland's central bank. "Most interventions in the currency markets by the authorities of late have only helped prices in the short term at best. If the euro crisis intensifies there is every chance the market could test the SNB's resolve to hold the cross rate above the 1.20 level.

Misha Japaridze/AP . -0 Hopes that BP could take the focus away from its failure to tie-up a ground-breaking deal with Rosneft in Russia were crushed on Wednesday when black-clad special forces raided its main offices in Moscow. The law enforcement officers were acting with the consent of a court in Tyumen, where minority shareholders are pursuing a $3bn (£1.8bn) compensation claim against BP over the collapse of the share swap with Rosneft. The move comes less than 24 hours after the Russian state-owned oil company triumphantly unveiled an alternative strategic alliance to explore the Russian Arctic with BP's rival ExxonMobil. Lawyers acting for Andrei Prokhorov, a disgruntled shareholder from BP's Russian joint venture TNK-BP, said the raid was a reaction to BP's failure to provide documents on the proposed tie-up between the UK firm and state-owned Rosneft. "We therefore applied once again to the court of arbitration of Tyumen region to have the measures to secure evidence replaced, and on 30 August the court permitted the bailiff to examine documents held by BP Exploration Operating Company Limited," said Dmitri Chepurenko, a partner in the Liniya Prava legal practice which represents Prokhorov but also – allegedly – the Alfa Access Renova (AAR) consortium led by oligarchs such as Mikhail Fridman. BP dismissed the raid as unnecessary and said there were no grounds for anyone to seek compensation over the collapse of the Rosneft deal. "We do not believe there is any legitimate basis whatsoever for the claim launched against BP in the Tyumen court and we intend to defend our interests vigorously," said a spokesman at BP's London headquarters, adding: "We do not believe there are legitimate grounds for today's raid."

Google’s surprise $12.5 billion bid for Motorola Mobility this morning is a bold attempt to move the needle for Google on several fronts. Google is going all in, dipping into its $39 billion of cash to make its biggest acquisition ever. The deal signals that mobile will be one of Google’s main growth drivers and that growth will come from entering new markets, specifically mobile hardware. With the acquisition, Google gains a portfolio of 17,000 patents and another 7,000 patents pending globally, an area where it is a currently a laggard. But more than anything, it signals how crucial it is for Google to control the Android experience from soup to nuts. There may now be 150 million Android phones and phones running the Android operating system command the largestmarket share smartphone , but Android the most popular single smartphone by far is still the iPhone. Buying Motorola is an acknowledgement on Google’s part that it must control the experience from software to hardware if it hopes to unseat Apple.

Renewed worries about the Eurozone's finances and the state of its banks - particularly the French ones - have sent shares sharply lower again, all but wiping out Tuesday's Bernanke bounce on Wall Street. The US market, which invoked a rule to help prevent turbulence at the open, is down more than 242 points, having started down 75 points and fallen by more than 300 points at its worst so far. Last night the US market mounted a more than 400 rise after US Federal Reserve chairman Ben Bernanke vowed to keep interest rates low until 2013, but it seems investors are now nervous about what that means for the state of the US economy, and how bad it could get. But attention also moved back to Europe, with news that President Sarkozy was locked in emergency talks with his ministers seeking ways to cut the country's deficit. That prompted rumours that the country was likely to be next to lose its Triple A rating, and also talk that one of its banks could be in trouble in the current financial turmoil, leading to hefty double digit share price falls at the likes of Societe Generale and BNP Paribas. In a note on the rating this week Citigroup said: We expect that France, with its high public debt and deficit, and popular resistance to cutbacks in its even by euro area standards extremely large welfare state is now likely to be the G7 country at the highest risk of losing its AAA rating. The markets appear to share this sentiment with French 10-year spreads over German Bunds reaching 16-years highs on Friday.

IMF - John Lipsky, the acting managing director of the International Monetary Fund, has taken a tougher approach than his predecessor, Dominique Strauss-Kahn. Photograph: Aleofficials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding – in stark contrast to the more emollient line of Strauss-Kahn – had been defused because of a German climbdown. As political turmoil continued in Greece on Thursday, with the prime minister, George Papandreou, scrambling to form a new government, the stage was being set for a political struggle between Europe's powerbrokers over the fine print of the proposed new €100bn-plus rescue of Greece. Berlin is deeply at odds with France and with the key EU institutions – the European Central Bank (ECB), the European commission, the presidency of the EU and the head of the eurozone, Jean-Claude Juncker, prime minister of Luxembourg – over the terms of a new deal. Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned. Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance and it warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece's rescue.

AsiaNewsAgencies - China: Xintang: police and army occupy city to stop protests. Climate akin to martial law, with police patrolling every street, road blocks, orders for shops and restaurants to close early, people advised not to go out at night. Tens of thousands of migrants are ready to protest on the streets for justice and recognition, tired of constant harassment.Beijing (AsiaNews / Agencies) - The police are now patrolling the streets and putting roadblocks on main thoroughfares of Xintang in the city of Zhengcheng, to end to urban guerrilla warfare that first broke out June 10. But it is a deceptive calm, with tens of thousands of immigrants ready to explode with further protests and violence. Beijing (AsiaNews / Agencies) - The police are now patrolling the streets and putting roadblocks on main thoroughfares of Xintang in the city of Zhengcheng, to end to urban guerrilla warfare that first broke out June 10. But it is a deceptive calm, with tens of thousands of immigrants ready to explode with further protests and violence. summoned the managers of 1,200 companies in the area telling them to "pay close attention to their employees." In an atmosphere akin to martial law, shops and restaurants have been ordered to close early. Residents have been "advised" not to go out at night and not to post pictures of the clashes on line.
http://www.eucouncilfiles.eu/

George Papandreou should resign

George Papandreou pledges to form a new government - After a day which saw world stocks tumble, on which tens of thousands marched on parliament to oppose the swingeing austerity measures designed to stave off bankruptcy, George Papandreou effectively conceded that he had not been able to muster enough support in parliament for the cuts required by international creditors to enable Greece to balance its books. Papandreou has told his conservative opposite number, Antonis Samaras, that he would stand aside and make way for a new leader if the opposition joined his party in a national unity government committed to sweeping reform to pull Greece's economy out of its tailspin. It remained unclear whether the opposition New Democracy party would agree to the move. Party insiders indicated that it would only do so if the government renegotiated the terms of last year's €110bn (£96bn) international bailout package, designed to save Greece from default. "The most important member of a ship's crew is the captain, and the captain has to go," conservative deputy Theodoros Karaoglou said, according to Associated Press. "If we joined forces, we could go to our [creditors] together to negotiate and the results of course would be better." Greece's economy is drowning in more than €300bn of debt – around one and a half times more than the country's entire annual output. Unemployment has rocketed to 16.2%, and the economy is predicted to contract by as much as 3% this year, making it Europe's worst performing economy – and one of the worst in the world.

With Europe's debt crisis intensifying by the day, fear appears to be the single biggest factor motivating those in charge of policy on the common currency. But as finance ministers from the 17 euro countries debated how to bail out Greece for a second time in a year, before an EU summit on 25 June, the signs are not promising. In Athens, a day after Standard and Poor's gave Greece the lowest rating of any country it covers – lower even than Pakistan and Ecuador – the omens appeared to be particularly poor. Differences over involvement of private investors in the rescue package – which is seen as the key to getting Europe's paymaster, Germany, to agree to it at all – this week pushed the cost of insuring Greek government debt against default up to 1,600 basis points, a record high even by the standards set so far. More than ever, Papandreou appears stuck between a rock and a hard place. Faced with a €340bn (£300bn) debt projected to hit 160% of GDP by 2012, Greece is teetering on the brink of bankruptcy. In a country plagued by a shadow economy that accounts for almost 30% of GDP, the medicine prescribed by the EU, IMF and ECB in exchange for €110bn of emergency loans last May, has resulted in a deeper than expected recession with further cost-cutting measures now seen as crucial if Greece is not only to rein in its debt but make it sustainable.