A potential exit of Great Britain from the European Union (Brexit) could affect the exchange rate of the sterling, according to a poll made by Bloomberg, which shows that the currency of this country could drop to 1.35 dollars or even lower, within a week from the vote to leave the EU. Such a level has never been reached since 1985. The Bloomberg analysis was conducted on a sample of 34 economists, and 29 of them anticipate the aforementioned evolution. Also, 23 of the polled economists think that the pound will not recover from the 1.35 level earlier than three months after the Brits' vote on the EU exit, scheduled for June 23rd. Seven of the polled specialists think that the British currency will drop below 1.20 dollars immediately after a vote in favor of the Brexit.   The pound has already lost over 2% in 2016, compared to the currencies of the G10 countries (the Group of the ten most developed countries in the world), as the unequal economic recovery and the increasingly weaker outlook for the hike of the policy rate join the fears of a possible exit of Great Britain from the EU. The depreciation is increasingly pronounced after prime-minister David Cameron announced on Saturday the date of the referendum and some politicians decided to launch campaigns for leaving the EU. "A Brexit vote will affect the pound sterling heavily", said Nick Kounis, head of the macroeconomic research division of "ABN Amro Bank" NV of Amsterdam.   He predicts the pound sterling going below 1.20 dollars a week after a potential vote in favor of the Brexit.  Peter Dixon, an economist with "Commerzbank" AG, the London branch, predicts that the pound sterling will fall to 1.25-1.30 dollars a week after a potential vote in favor of the Brexit.

The Federal Reserve could raise interest rates for the first time since 2006 at this week's meeting Wednesday and Thursday. A debate is raging whether this would be the right time to do it. Economic growth has been slow and jobs growth has lagged. Leaders from The World Bank to the International Monetary Fund to former Treasury secretary Larry Summers have publicly asked the Fed to hold off on the first rate hike in the face of a sluggish global economy and plummeting commodities prices. Of course traditional thinking is that lower oil and gasoline prices will ultimately help consumers and encourage them to spend more money which will lead to economic growth. But we have yet to see that happen. So I turned to one of my favorite independent research analysts: Stephen Schork who writes The Schork Report, and got a dreadful picture of the global economy. He says the drop in commodities is critical because it is a sure sign of a recession on the way. Our interview follows, edited for length and clarity...The Fed has painted itself into a corner. Just from a credibility standpoint, it's probably a better than 50% chance that they do raise rates. But I think that obviously is going to add a further blast to economic growth going forward. The biggest takeaway here is that commodities don't lead economies. Economies lead commodities. And falling commodity prices are a big telltale for us all.

Watch out for Spain's elections end of the year...Britain will leave I am sure of it...Britain never had a chance against the false Frogs and the Krauts, but it all started when the Germans invaded France in 1940...The French gave up without much of a fight and lets face it Vichy government got into bed with Adolf's government for a  Franco - German orgy....well ...Britain and the US  fought for Europe's freedom only to be sidelined. It's time to put the story right and stick the knife into the European blow up doll.  The only beneficiary of the EU is Germany when will all those queer politicians show their true cards ????  The Eurozone is bust but the moronic joe public believe the media and lets face it as long as the grub is on the table, the car is in the garage and the bird strips and goes to bed with her man all is fine... If the West really do decide to pay big money to keep Greece firmly anchored (shackled) inside the Western camp - Germanic instinct would swiftly price and cost that decision...because this is what they do!  And when they arrive at sum total, a portion of that bill should be sent to Paul Thomsen the Dane who needs 24 hour protection, the moment he steps foot on Hellenic soil. Thomsen cost the Greeks their dignity - Thomsen also cost the "West" Billions. On his will, on his demands Greece lost 3 Million self-employed businesses, the backbone of Greek society. He destroyed Greece!

Analysis: Jamie Robertson, BBC News - The gas deal between Russia and China was signed at 04:00 China time, which gives some indication of the level of urgency over these talks. Mr Putin appears to have been determined not to leave Shanghai without a deal - and he got one.

But the financial details are a "commercial secret", so we don't know how much he had to give away to get it. Certainly China needs the gas to help it cut its coal-fired smog levels, and it wants to diversify supply. But it had the luxury of time in which to negotiate, something Mr Putin was short of.

The perceived motive for the deal is that Russia needs a second market for its gas, so it can face up to European sanctions. Given that the "Power of Siberia" pipeline won't start pumping gas into Chinese factories until 2018 at the earliest, its economic effect on the European crisis will be limited.

More important may be the investment that China will make into Russia's power and transport infrastructure. Putin may not have managed to sign the most advantageous of gas deals on Wednesday but the opening of economic doors with China could well be the greater achievement.

Rain Newton-Smith, head of emerging markets at Oxford Economics, said: "The whole tenet of the deal has a symbolic value - it says that the two countries are prepared to work with one another. For instance there were other elements such as Chinese participation in Russian transport infrastructure and power generation.

"It is similar in many ways to China's investments in Africa where they drive a hard bargain over the price of raw materials but then provide infrastructure for the economies they are doing business with.

Jonathan Marcus, the BBC's defence and diplomatic correspondent said tensions between Russia and the west were not just over Ukraine: "There are fundamental differences over Syria and about the whole direction in which President Vladimir Putin is taking his country.

"Thus this deal could symbolise an important moment of transition - when both in economic and geo-political terms, Russia's gaze begins to look more towards the East than towards the West."

Siberian power

Another sticking point on the deal has been the construction of pipelines into China.

Currently there is one complete pipeline that runs across Russia's Far East to the Chinese border, called The Power of Siberia. It was started in 2007, three years after Gazprom and CNPC signed their initial agreement in 2004.

But financing the $22-30bn cost of sending it into China has been central to the latest discussions.

China is Russia's largest single trading partner, with bilateral trade flows of $90bn (£53bn) in 2013.

The two neighbours aim to double the volume to $200bn in 10 years.

The EU's financial chief has promised some of the toughest curbs on controversial use of high-frequency trading highlighted by author Michael Lewis in Flash Boys.

The restrictions are part of EU market reforms that will be voted on by the European Parliament on Tuesday.

Michel Barnier, the EU financial services commissioner, said on Monday: “With these rules the EU is putting in place one of the strictest set of regulations for high-frequency trading (HFT) in the world.

"While HFT trading might bring some benefits, we need to make sure that it doesn’t cause instability, and isn’t a source of market abuse. That’s what these rules set out to achieve.”

With high-frequency trading, a computer algorithm automatically determines whether to buy or sell a stock or currency, the timing of the order, the price and quantity. In Flash Boys, Mr Lewis claimed the use of superfast computers and algorithms allowed traders in the $22 trillion US stock market to profit at the expense of small investors by exploiting differences in prices on various exchanges.

HFT was blamed for the “flash crash” on May 6, 2010, during which the Dow Jones briefly lost almost 1,000 points.

The draft HFT rules MEPs are to vote on include a requirement for traders to have their algorithms tested on trading platforms to minimize risk as well as have them authorized by regulators.

However, proposals to ensure orders stay on a trader's book for a minimum time, making it difficult for high-frequency traders to operate, were dropped last year.

Tuesday's vote will endorse a tentative deal agreed in January on rules to govern financial markets by negotiators for the EU Parliament and the Council of Ministers.

The rules, which will still have to be endorsed by individual nations, were designed to curb speculative commodity trading, regulate high-frequency trading and close the loopholes in the existing legislation to ensure financial markets were safer and more efficient.

The large and growing income gap between rich and poor is the biggest risk to the global community in the next decade, the World Economic Forum said on as politicians, business leaders and academics prepared to gather in Davos.

Reflecting mounting concern about the risk to societies from inequality, the WEF said the need to tackle disparities in income and wealth had to be addressed at WEF's annual gathering in the Swiss ski resort of Davos next week.

The WEF said its annual survey of 700 opinion formers had identified the income gap, extreme weather events and unemployment or underemployment as the three threats most likely to cause major cross-border damage in the next 10 years.

It added that a fresh fiscal crisis, climate change and water shortages were the three risks that would have the biggest impact on the global community but these were seen as less likely.

Jennifer Blanke, the WEF's chief economist, said that while incomes gap between countries had been closing, the gulf between rich and poor had been widening within countries. "The message from the Arab spring, and from countries such as Brazil and South Africa is that people are not going to stand for it any more."

The Davos meeting has often been targeted by anti-globalisation campaigners as an exclusive club for a small, powerful elite but Adrian Monck, the WEF's head of communications, said inequality and the wealth gap was on the agenda. "We need to mobilise people around these issues and make people aware of them", he said.

The report also highlighted the problems of "generation lost" and said that the world's increasing reliance on the internet had resulted in a threat of "cybergeddon".

The study, Global Risks 2014, said the generation coming of age in the 2010s faced high unemployment and job insecurity, hindering their efforts to build a future and raising the risk of social unrest.

Noting that many young people faced an uphill battle, David Cole, group chief risk officer of Swiss Re, one of the companies responsible for putting together the report, said: "The members of generation lost are not lost because they have tuned out. They are highly tuned in. They are lost because they are being left out or they are deciding to leave."

He added: "As a result of the financial crisis and globalisation, the younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an ageing population. While in the emerging markets there are more jobs to be had, the workforce does not yet possess the broad-based skill sets necessary to satisfy demand."

The WEF said the massive expansion of the internet made the risk of systemic failure greater than ever, but recent revelations about government surveillance had reduced the global community's willingness to work together to address potential weaknesses. It added that the effect could be a "Balkanisation" of the internet, or so-called cybergeddon, where hackers enjoy overwhelming superiority and massive disruption is commonplace.

Axel Lehman, chief risk officer at Zurich Insurance Group said: "Trust in the internet was decreasing as a result of data misuse, hacking and privacy intrusion. A fragmentation of the internet is the wrong way to solve this issue, as it would destroy the benefits the web provides to all of us. Rather than building walled gardens, it is time to act by setting up security standards and regaining trust."(source guardian.uk)

TODAY's EU - Italy's finance minister, and Luis de Guindos, his Spanish counterpart, will face a grilling from other eurozone finance heads over their draft budgets in Brussels this morning. Last week the European Commission voiced concerns about the pair's spending plans, warning that they did not go far enough to narrow deficits or reduce debt. While the EU does not have the power to veto individual members' budgets, the European Commission hopes the pressure to explain their decisions to their counterparts will force them to make changes.

The gathering comes as the prospect of a second bail-out looms for Portugal. Several senior officials are concerned that Portugal may need a second bail-out, reported the Financial Times yesterday. The officials site Portugal's difficulties in passing tough economic reforms and the string of bond repayments due in the years after Portugal exits its first, 78bn, bail-out. One troika official is quoted as saying "The jury is genuinely out. We are mentally prepared for either [a line of credit or a second full-scale bail-out". THEY ALL HAVE TO ANSWER TO THE BUNDESTAG -  when it comes to their budgets, since Europe is under the natzi Germany boot, but the news is being altered in such a way as the people think that it is Brussells that is runing the EU, when in fact is only Germany!

European leaders reached an agreement with Cyprus early on Monday morning that closes down the island's second-biggest bank and inflicts huge losses on wealthy savers.

Russians would lose billions of euros under draconian terms that are aimed at preventing the Mediterranean tax haven becoming the first country forced out of the single currency. "Herman Van Rompuy has brokered an agreement between the troika and Cyprus," said an EU source, referring to the president of the European council and Cyprus's trio of creditors: the European commission, the European Central Bank and the International Monetary Fund. A meeting of eurozone finance ministers that started six hours late reached an agreement in the early hours of Monday morning to finalise the fine print of the deal. Savers with deposits of less than €100,000 (£85,000) would be spared but it was thought there would be heavy losses inflicted on the deposits of the wealthy.

Laiki, or Cyprus Popular Bank, is to be closed, with its good assets transferred to Bank of Cyprus, the country's biggest bank, where savers would suffer big losses in return for equity shares. Those with more than €100,000 in Laiki would also be hit hard.

Negotiations got under way amid a hardening of the stance by the IMF and Germany, which insisted that depositors must take the hit for bailing out the eurozone's latest crisis economy.

There were signs of panic in Cyprus as a €100 limit was imposed on ATM withdrawals, with more stringent capital controls to follow if the deal is finalised....This does not require ratification by the Cypriot parliament. So the will of the EU is imposed by force and thousands of depositors in Cypriot banks will have their money stolen all in the cause of the mighty Euro.

Italian Prime Minister Mario Monti resigned on Friday after a year of battling the debt crisis with austerity and reforms and selling his nation to the germans as lawmakers gave final approval to a budget bill that will pave the way for early elections. Monti said earlier he would step down once the vote was approved, kicking off a campaign that will likely see Italy go to the polls on February 24, with former premier Silvio Berlusconi and centre-left leader Pier Luigi Bersani already in the running. After Christmas mass in the prime minister's residence, Monti joked about the end-of-world Mayan prophecy saying: "A year ago this government was only just beginning. Now we will have to wrap up and it's not the fault of the Mayas." He then addressed Italy's ambassadors abroad saying his speech would be his "last act" before handing in his resignation. "Thank you for these difficult but fascinating 13 months," he said. Monti could also join the campaign and is under strong domestic and international pressure to do so. He is expected to reveal his future political ambitions at an end of year press conference scheduled for Sunday. Sources close to the technocrat premier insist he has not yet decided whether to enter the fray, despite appearing to launch a bid for a weighty role in the campaign with a rousing speech at a Fiat factory on Thursday. Some political observers have said Monti could campaign as unofficial leader of a centrist coalition that has been likened to the Christian-Democrats who dominated Italy for decades. Monti's name cannot officially be on the ballot as he is already a senator for life, but he can still be appointed to a post in government including prime minister or finance minister after elections. The centrist agenda will include "historic reforms" and "far deeper liberalization than we have witnessed so far", sources quoted by the Corriere della Sera daily. Monti, 69, defended on Thursday the "bitter medicine" of budget discipline he has implemented as well as his selling his people to the "Fourth Reich" and warned against any attempt to turn back the clock. Another words, he wants a German governor and a nation of enslaved Italians!!!

There are several reasons for the euro crisis but bailing out banks is one of the major reasons, followed by large scale tax evasion by corporations.The EU is trying to regulate banks and is also taking measures against tax havens. Richard Murphy's (tax research UK)figures may be disputed but it must run into hundreds of billions.
The Right are already talking about 'loss of sovereignty' by nation states. How much sovereignty does a nation state have (esp. a small one) in a globalised world? The sovereignty went when we bought into the present system whereby the 'markets' dominate political decision making.  In 1966 when we had an economic crisis we had five levers to control the economy.

1 we could control the exchange rate-that ended with the end of the Bretton Woods agreement in the early 70s
2 we could impose tariff controls as a temporary measure. The WTO would not allow that now.
3 we had capital controls. Abolished by the Thatcher govt.
4 Interest rate was set by the chancellor-no longer -that was Labour
5 we could vary taxes upwards, Now we are told it would drive away foreign investment and rich people. 

 

The scarcely regulated banking system trashed the world's economy and austerity policies are making it worse. The motive of the banks is obvious-they don't want to lose out. They over extended themselves and could not survive without state help. Much of the bail out of Southern Europe is not to pay for essential services for the people, but to pay off the banks. There is an issue of overspending by the govts. but it is not the main cause. Revenues collapsed in the wake of credit crunch. More were diverted to tax havens-partly due to inefficient government control. We, the people, have little power over the likes of Goldman Sachs but we can vote for politicians who can construct a pan European policy to control the banks and go after revenues which are being diverted. I agree that govts. should try to live within their income but not in the worse recession for sixty years.We need investment and it seems only the state is able to do so while the corporations sit on their money.  I would go further and suggest that the power to create money should not remain with the private banking system but I doubt if there is enough support for this-at present.  The fact is that taxpayers' money is not being diverted to bailouts. The banks are issuing money and it is being guaranteed by national governments. If the Eu can implement some of these reforms, there is a chance we could get out of the mess. Is there another plan which would involve less suffering?

Heil...who rules Europe in fact ... the Four'th Reich

The Four'th Reich - Bundestag - approves Greek aid package - The results are in -- and the German parliament has APPROVED the Greek aid package.

A total of 584 MPs voted -- 473 voted in favour, and 100 voted against. Eleven MPs abstained. we mentioned in yesterday's live blog, the ECB won a case to conceal secret documents about Greek debt issues prior to its €240bn taxpayer-funded rescue. Internal papers, which detail Greece’s use of complex financial trades to hide its level of debt, were kept from media organization Bloomberg amid concerns their publication could heighten Europe’s financial crisis.

The three judges presiding over the case at the EU General Court in Luxembourg, in upholding the Bank’s refusal to release the reports, said: “The ECB must be recognized as enjoying a wide discretion for the purpose of determining whether the disclosure of the documents relating to the fields covered by that exception could undermine the public interest.”

Their decision, made on Thursday, has been decried as a sign the European Central Bank (ECB) is becoming less transparent just as it prepares to expand its powers.

Why is everyone so surprised .........

Christine Lagarde, the head of the International Monetary Fund, will cut short her trip to Asia to ensure that she is present at next Tuesday's Eurogroup meeting on Greece, according to a spokesman. Gerry Rice told reporters: The managing director will participate in the eurogroup meeting on November 20 as she usually does, and that will mean shortening her current trip to Asia. On Monday, Ms Lagarde openly disagreed with Jean-Claude Juncker, the head of the Eurogroup of finance ministers, over a critical target for reducing Greek debt levels. The EU wants to give Greece an extra two years to meet its debt reduction target of 120pc of GDP by 2022 instead of 2020. The IMF doesn't. The 2020 “debt sustainability” target was a condition for the IMF’s involvement in the second Greek bail-out. Speaking to an audience in Milan, Mr Draghi also said that Europe's debt crisis proved that there was still a need to complete economic and monetary union, though he added that countries faced a long road towards this, with much uncertainty. European governments should focus on spending cuts, not tax rises to get their deficits down, according to the head of the European Central Bank. Mario Draghi said that the ECB's action (via its €1 trillion LTRO bazooka and announcement of the OMT programme) had helped to calm markets, but that it was up to governments to regain credibility....Why is everyone so surprised by the fact the Eurozone is in recession (for that matter pretty much all or Western Europe!)???? The shock expressed on these threads staggers me!!! Lazy, stupid people have always been poor and always will!!
A continent populated by indolent masses addicted to cheap credit and state handouts and totally unwilling to do a hard day's work for a reasonable wage!! And you think that's a recipe for an economic miracle???  The only miracle is that the farce that is the Eurozone hasn't already imploded!!
I don't need a Belgian in a cheap suit to spout figures and forecasts at me.....I can pretty much tell you what's going to happen next unless you lot start rolling your sleeves up!!

France - unveiled €20bn worth of tax breaks over three years, which will allow companies to cut labour costs, in a bid to restore the competitiveness of the country's declining industry. The cuts come after a report, commissioned by the Socialist government reported and carried out by French industrialist Louis Gallois, yesterday called on Francois Hollande to undertake "shock therapy" to stop the national rot, with drastic cuts in business payroll taxes to claw back loss ground against Germany and other EMU states. French Prime Minister Jean-Marc Ayrault said the reduction would take the form of tax credits, instead of a cut to employer wage taxes as recommended in Gallois' report . The cuts will be split as follows:

• €10bn in spending cuts

• €10bn increase in value added tax (VAT) and green taxes.

The standard VAT rate will rise from 19.6pc to 20 pc. There will also be a three-percentage point increase in tax on restaurants. "France must recover its ranking - its ranking of a grand industrial power," Ayrault said. The measures announced by the state "should allow France to avoid the decline that stalks us," he said.

 Two-days of general strikes began in Greece , with state hospital doctors, taxi drivers, transport workers and journalists walking off the job, as they protest against the government's austerity budget. The budget was delivered to parliament late last night and is due to be voted on tomorrow. The budget includes a package of €13.5bn (£10.8bn) in cost cuts and tax hikes along with measures making it easier for firms to hire and fire workers. Approval of the reforms and the passage of the 2013 budget are crucial to unlocking €31.5 bn in aid from an International Monetary Fund and European Union bailout that has been on hold since the summer.

What has Weimar to do with the Greece ...????? nothing !!!!

I was in Greece a few weeks ago, people are living on nothing, some people have not been paid in months, others surive on low salaries while the social welfare system is nowhere near good enough.  Greek people are being crushed, their livelihoods are being crushed, their spirit is being crushed, their country is being crushed.  If this EU is assisting in that process rather than stepping in to try and assist and find proactive ways forward then the whole damn thing should be wrapped up as a monumental failure, it simply has not performed in the way the founding fathers envisaged as it is all stick and no carrot. Debt on debt, austerity and stupid statements out of  Berlin and Brussels from mult-millionaire natzies like The Governor designated of Greece - Horst Reichenbach... who know next to nothing about deep personal and financial struggle.

What has Weimar to do with the Greeks?  Fake Left and Neo-Fascist Right keep on talking about ...Weimar.  Greece never was an imperialist power. It is almost  a banana republic. It is currently occuppied by the Troika and has a german governor. Under the Euro Greece had massive de-industrialisaion, massive importation of illegal labour. a collapse of agricultural production and an arms budget that has skyrocket beyond all proportion.  Yesterday they used riot police vans to arrest half a dockworkers demo outside the Defence Ministry, which is a crime scene, for all the financial fraud and bribery from Franco-German defence contractors.

On the other hand ... Germany went nationalist under Hitler, rearmed, got involved in civil wars in other countries and then allied itself with France, took over Europe leading to a war where 50-70 million died.
That was Weimar..."WTF" has that to do with a small banana republic on the outskirts of Europe ????  Nothing.

 

Poland under the current administration is based on “a system of clientelism”....

WARSAW–Tens of thousands of people marched through the center of the Polish capital Saturday in an anti-government rally organized by the conservative opposition hoping to unseat the country’s popular prime minister who it says has turned Poland’s democracy into a facade through his firm grip on power.   Police estimated that 50,000 people participated, while the conservative Law and Justice party said 200,000 people took part in the march, held under the slogan “Wake up, Poland.” The party’s leader, Jaroslaw Kaczynski, said Poland doesn’t give equal opportunities to all its citizens and discriminates against Catholics. He put the blame on Prime Minister Donald Tusk.

“These huge crowds mean strength,” he said at the end of the march at Warsaw’s Castle Square. “This means that Poland has awakened. The cup of evil has overflowed and we Poles, we Polish patriots, say ‘no’.”    Mr. Tusk’s administration, which took power away from Mr. Kaczynski in 2007 and is now in its second term of office, has been going through several rough patches recently. The collapse of a gold fund, Amber Gold, which the authorities said was a Ponzi scheme, highlighted possible systemic problems with enforcement of financial regulation. On Mr. Tusk’s watch, bodies of victims of a Polish government airplane crash in Russia in 2010 were mixed up and buried in incorrect graves, with the administration taking the heat this month for relying on autopsies performed in Moscow and not ordering that all coffins be opened upon arrival.   The economy is slowing more than expected, while the latest statistical data showed that Poles continue to emigrate to other European Union countries in search of better life. Poland has been growing robustly since the early 1990s, at 4.3% in 2011, much above EU and regional averages. But the EU’s largest emerging economy is expected to grow 2.5% this year amid the crisis in the euro zone, the largest recipient of Polish exports.  With economic output per capita adjusted for purchasing power about $20,000 a year, Poland remains a poor relative of the more developed nations in the European Union, which it joined in 2004 after more than a decade of transition from communist central planning.

Mr. Kaczynski said Poland under the current administration is based on “a system of clientelism” and said the mostly leftist and liberal media flatter the ruling Civic Platform party by painting a rosy picture of Poland’s economic and international situation while ignoring challenges and keeping mum on the governing camp’s shortcomings.

The World Trade Organisation warning

The World Trade Organisation has warned the outlook for global trade is deteriorating, citing the eurozone crisis as the main drag on growth.  The WTO slashed its forecast for global trade growth this year from 3.7% to 2.5% onprevious 20-year average. The WTO director general, Pascal Lamy, said there was more risk of things getting worse than better.

The news came as Brazil's finance minister lambasted the US and Japan for their latest rounds of quantitative easing, which will devalue their currencies and, he said, trigger a global currency war.

Next year the WTO expects trade to grow by 4.5%, compared with previous forecasts of 5.6% growth. That forecast is, however, based on the assumption that current policy measures will be enough to avoid a breakup of the euro and that US politicians will reach an agreement to stabilise public finances and avoid the "fiscal cliff". The WTO is targeting 1.5% growth in exports from developed economies, down from its previous forecast of 2% growth. The situation has deteriorated even more for developing countries, where the WTO cut its forecast from 5.6% growth to 3.5%.

 

Greece has a German Governor - Horst Reichenbach - there is no "troika"

The Greek people can hardly complain when this greek government (right-wing) tries to accept the capitlistic approach of the IMF/EU. They had the chance only a few months ago to elect a party (Syriza) into Government that wanted to put Greek people first and they decided against it. They will now have to pay the price. Just as the Greeks led the way with Democracy over 2500 years ago, they should now be taking the first steps of overhauling systems put in place to ensure the continuation of Capitalism, by letting the "rule of the people" rather than the "rule of the creditors" such as Germany and other countries of the European Union decide. Although the measures, such as extending the working week, supposedly only apply to Greeks in a dysfunctional economy - the aim is clearly also to remind those at home, e.g. fellow Germans back home or in the UK for that matter, that work is the only way to save yourself. Instead, Greece should take advantage of this symptom of global financial mismanagement by those in 'power', and set it's own agenda for the "good of the people". Well, half of so called Europeans (the term is BS) (by "you" I mean non-Greeks) wanted for people to vote Syriza and the rest, especially the creditor countries, were "pushing" for the same old governments, by literally starting a campaign (or propaganda) of fear. So, damned if we did and damn if we didn't. You don't care now, others would not care if it was the other way around. Big whoop....I say : Greece will have to exit the Euro and return to the Drachma - with all the extreme pain this will lead to (making the current situation look like a picnic), but long-term, it will have to reform its labour laws and skills base, in order to compete with the likes of China, Germany and Eastern Europe (regardless of its currency). Borrowing to maintain a good standard of living is no longer an option.

I am with the faux Angela Merkel (Queen of Europe ) on this - using a fund that doesn't exist - and if not the ESM then who is picking up Spain's share of the ESFS?

Brussels, 29 June 2012 - EURO AREA SUMMIT STATEMENT - 29 June 2012  • We affirm that it is imperative to break the vicious circle between banks and sovereigns. The Commission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgency by the end of 2012. When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to re capitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution specific, sector-specific or economy-wide and would be formalized in a Memorandum of Understanding. The Eurogroup will examine the situation of the Irish financial sector wit the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.

• We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for overcapitalization of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.

• We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area, in particular by using the existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilize markets for Member States respecting their Country Specific Recommendations and their other commitments including their respective timelines, under the European Semester, the Stability and Growth Pact and the Macroeconomic Imbalances Procedure. These conditions should be reflected in a Memorandum of Understanding. We welcome that the ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner.

• We task the Eurogroup to implement these decisions by 9 July 2012.

I am with the faux Angela Merkel (Queen of Europe ) on this - using a fund that doesn't exist - and if not the ESM then who is picking up Spain's share of the ESFS?

Italy borrowing at 6% to lend to Spain via the ESFS at 3% sounds like a great plan. Or maybe it isn't.

The European Exchange Rate Mechanism (ERM) vs. The Euro

I'm getting a great deal of "de ja vue" with what's happening these days, The ERM....I remember everybody desperately trying to keep it going long after the game was up, then finally when the bang came, it came big time. I think the same will happen to the Euro.  One mighty loud bang about to come, and when it does come, it will happen very very quickly......After all, was the ERM not the farther of the Euro?.....The European Exchange Rate Mechanism (ERM) is based on the concept of fixed currency exchange rate margins, but with exchange rates variable within those margins. This is also known as a semi-pegged system. Before the introduction of the euro, exchange rates were based on the European Currency Unit (ECU), the European unit of account, whose value was determined as a weighted average of the participating currencies....A grid (known as the Parity Grid) of bilateral rates was calculated on the basis of these central rates expressed in ECUs, and currency fluctuations had to be contained within a margin of 2.25% on either side of the bilateral rates (with the exception of the Italian lira, which was allowed a margin of 6%). Determined intervention and loan arrangements protected the participating currencies from greater exchange rates fluctuations.

The European Exchange Rate Mechanism (ERM) was a system introduced by the European Community in March 1979, as part of the European Monetary System (EMS), to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of a single currency, the euro, which took place on 1 January 1999. After the adoption of the euro, policy changed to linking currencies of countries outside the Eurozone to the euro (having the common currency as a central point). The goal was to improve stability of those currencies, as well as to gain an evaluation mechanism for potential Eurozone members. This mechanism is known as ERM2.

THE "THIRD REICH" ????

German Chancellor Angela Merkel and her finance minister, Wolfgang Schäuble, were able to get their pet project of a European fiscal pact accepted by most of the European Union's member states. Now Schäuble has come up with a new idea for improving the monitoring and coordination of fiscal policy within the EU in order to promote long-term budgetary discipline.   According to an internal Finance Ministry document obtained by SPIEGEL, Schäuble plans to propose creating independent panels of experts at both the national and EU level, who would monitor fiscal policies in the member states, the euro zone and the EU as a whole. They would be responsible for sounding a warning if they see governments' budgetary policies straying off course.

The panels, which would be composed mainly of academics, would also be charged with checking "the compatibility of national fiscal policies with European and national requirements" as well as the "implementation of national and European regulations," according to the Finance Ministry document. Those regulations would include the tougher EU stability pact, which was adopted at a summit in March 2011, as well as the new fiscal pact, which 25 EU countries have agreed to introduce.  In addition, Schäuble's ministry is also proposing that the role of the EU's economic and finance affairs commissioner, a position currently held by Finland's Olli Rehn, be strengthened in the future. According to the ministry document, the commissioner should be able to implement EU regulations "without the other commissioners or the Commission president having the right to object."