BRAVO Italy and Italians ... down with the fourth Reich

The leader of Italy's centre-left, Pier Luigi Bersani, set out to lure Beppe Grillo and his Five Star Movement (M5S) into a coalition government after their spectacular breakthrough in the general election.  At a press conference in Rome, a weary-looking Bersani said it was time for the upstart movement to do something more than just demand the removal of Italy's mainstream politicians. "Up to now, they have been saying: 'All go home.' But now they're here, too. So either they go home as well, or they say what they want to do for their country and their children."

Grillo had earlier said his followers in parliament would not join a coalition, but would consider proposals "law by law, reform by reform".  Bersani said that since his centre-left, four-party alliance had won an outright majority in the lower house of the Italian parliament, and more seats than any other grouping in the senate, it had a responsibility to suggest ways in which Italy could be governed, despite the deadlock in the upper house caused by the M5S's stunning gains.  Pouring cold water on the idea floated by Silvio Berlusconi of a grand coalition with the right, he proposed a government committed to a radical overhaul of Italy's politics and institutions, outlining a five-point plan for sweeping reform.

In a clear attempt to lure M5S into the mainstream, he hinted that Grillo's movement, as the party with most votes, should get the speakership of the lower house.

Talking to reporters outside his home in Genoa, Grillo, who has always denied being the leader of the M5S, announced he would be representing his movement in the negotiations with President Giorgio Napolitano aimed at forming a new government. But he made clear that the movement he co-founded just over three years ago remained as anti-establishment as ever.

The costs of insuring European Bank Debt against default fell Friday amid hopes that policymakers are nearing a solution to the debt crisis. In early trading Friday, the five-year CDS spreads on core European financial companies mostly fell, with senior and subordinated banking indexes both tightening, according to Markit. The CDS spreads on major lenders in Germany and France narrowed, with Deutsche Bank AG (DB) and Credit Agricole SA (ACA.FR) tightening the most. Deutsche Bank tightened 10 basis points to 229 basis points, while Credit Agricole tightened nine basis points to 265 basis points. Commerzbank AG (CBK.XE) saw its five-year CDS spread tighten four basis points to 306 basis points, with both BNP Paribas SA (BNP.FR) and Societe Generale SA (GLE.FR) also tightening four basis points. BNP Paribas was back on par with Credit Agricole at 265 basis points, while Societe Generale tightened to 331 basis points. Italian bank UniCredit SpA (UCG.MI) was the only major bank in the core euro-zone economies to see its CDS spread widen, advancing one basis point to 590 basis points. Spanish banks all pushed lower with Banco Popular Espanol SA (POP.MC) narrowing the most, tightening 21 basis points to 840 basis points. At around 0925 GMT, the iTraxx Europe Senior Financials index was six basis points tighter at 284/289 basis points, while the Subordinated Financials index tightened 12 basis points to 503/514 basis points, according to Markit. Credit default swaps are derivatives that function like a default insurance contract for debt. If a borrower defaults, sellers compensate buyers.

French president Nicolas Sarkozy is to hold urgent talks in Germany with chancellor Angela Merkel on speeding up the rescue plan for the euro. Sarkozy said on Friday the talks would take place within days as uncertainty about the eurozone's stability and worries about deepening recession returned to European markets. Declaring after talks with Greek premier George Papandreou that "a failure of Greece would be a failure for all of Europe", the French president praised Athens for its determination to meet its commitments and said: "There can be no question of dropping Greece." His comments came as European leaders turned up the heat on Slovakia to approve the enhanced eurozone rescue fund amid growing fears it could yet scupper the scheme. Only a day after huge relief at Germany's decision to endorse the expanded bailout fund, anxiety stalked markets and the corridors of power as eurozone inflation rose to a three-year high of 3%, shares in French banks plunged as much as 10% and Denmark's central bank offered 400bn krone (£46bn) in emergency liquidity for the country's banks. There was renewed talk of a Greek debt default and larger "haircuts" for private bondholders as Papandreou sought backing for a further €8bn (£6.8bn) lifeline to save his country's treasury from bankruptcy. Sarkozy said: "There is a moral and economic obligation of solidarity with Greece." Papandreou in turn told reporters that his nation was making all the required sacrifices and reforms. "I wish to make it perfectly clear that Greece, I myself, our government, the Greek people, are determined to make the necessary changes." Yet conflict sprang up anew over plans to set up an even bigger rescue fund for the eurozone, with leading European bankers demanding an outline agreement on a new scheme by the time G20 finance ministers meet in mid-October.

08/08/2011 - -7.44am: Japan's stock market has now closed after a pretty nervy session, but one where we didn't see a full-blown panic. The Nikkei ended 2.18% lower at 9,097.56, down 202.32 points, having been as low as 9,057.29 at one stage.

"The three main concerns are S&P's downgrade of the U.S. debt rating, the ongoing European debt problems and inflation worries in China," Masanaga Kono, chief strategist at Amundi Japan, told Reuters. Most Asian markets are still trading, and they are all suffering losses. China's Shanghai Composite is down by over 4%. We'll do a full round-up of the Asian markets once they've closed - they've already helped to set the mood in Europe....

The cost of insuring European sovereign and corporate debt against default using credit default swaps jumped higher in early trading Friday, as the intensifying euro-zone debt crisis and fears of a global slowdown hit financial markets around the world. The SovX Western Europe index, which investors can use to buy or sell default protection on a basket of 15 sovereign borrowers, was 12.5 basis points wider at 305/311 basis points, according to index owner Markit. CDS function like a default insurance contract for debt. A widening of one basis point in a five-year CDS spread equates to a $1,000 increase in the annual cost of protecting $10 million of debt for five years. The iTraxx Crossover index of 40 mostly sub-investment grade corporate borrowers was 39 basis points wider at 549/553. And the Europe index of 125 investment-grade borrowers was six basis points wider at 137/138. The rise in default-insurance costs comes as stock markets around the world tumble on euro-zone debt fears and worries about a slowing world economy, even after the European Central Bank Thursday bought sovereign bonds for the first time since March. “Today’s U.S. nonfarm payroll figures will be pivotal for market sentiment,” said Christian Weber, strategist at UniCredit Bank.

EURO-ZONE - Fears that the eurozone crisis is escalating and further evidence of the weakness in the US economy drove stock markets lower on Wednesday as policy makers failed to restore confidence in global markets. The FTSE 100 index closed at its lowest level since November, after its biggest one day fall for nine months of 133 points. After a nerve-racking day Wall Street narrowly avoided its ninth consecutive day of falls – a losing streak unseen since 1978. A much anticipated speech by Italy's prime minister, Silvio Berlusconi, was delayed until European markets closed but failed to calm the storm on international financial markets that threatens to engulf his country and imperil the entire eurozone. Italy and Spain – whose prime minister, José Luis Rodríguez Zapatero has cut short his summer holiday – are now at the centre of the eurozone debt crisis that began with Greece more than a year ago and has enveloped Ireland and Portugal. European commission president José Manuel Barroso tried to inject calm into the markets by insisting that record high yields – interest rates – on Spanish and Italian government bonds were "unwarranted". "Developments in the sovereign bond markets of Italy and Spain are a cause of deep concern," Barroso said.

European politicians had hoped their deal on 21 July to bailout Greece for a second time and impose losses on bond holders would restore confidence in the eurozone. Their efforts have failed, particularly as US debt crisis compounded the febrile atmosphere in the markets. In France, shares in the second largest bank Société Générale were temporarily suspended – they eventually closed 9% lower in heavy turnover – after it took a €395m (£345m) hit on its exposure to Greece because of its contribution to the bailout plan. Concerns were also mounting that banks across the eurozone were finding difficulties in funding themselves on the markets. Huw van Steenis, banks analyst at Morgan Stanley, said: "Investors, we and some banks are increasingly concerned that funding markets won't reopen with sufficient depth or at good enough terms for Italian and Spanish issuers, requiring banks to take offsetting measures". Berlusconi's statement to the lower house of parliament faced immediate criticism for failing to tackle the problems facing the Italian economy even though he promised to work with unions and employers on a reform of Italy's notoriously rigid employment laws. He drew attention to the fact that his government had earlier given the green light to €9bn of infrastructure projects which he said would promote growth, especially in the poorer south.

Personally, I don’t trust the banks to even get their hair cut to the extent they’re promising. They remain the spivs and dissemblers they’ve always been – and bank accounting is the most surreal (as in open to every trick in the book) of any business with which I’ve ever worked. To count obviously bad debts as assets is, let’s face it, a truly Swiftian idea. So probably, S&P is right to be saying Greece won’t make it. I mean that in the sense that it will be proved right with little or no risk to its reputation. For a commonsense "southerner" like me, it’s glaringly obvious Greece will default: it won’t make the asset sales targets it needs, and it won’t make the growth targets either.The ratings agencies agree with The Slog – not a position I’m that happy with, because on the whole they’re just as mad as the lenders and borrowers they monitor. However, there is no point in shooting the messenger, and one or two players in this mess are in touch with reality: German Finance Minister Wolfgang Schäuble admitted yesterday, in a circular to his Christian Democratic Party colleagues, that ‘the euro-zone debt crisis isn’t over, and that more discipline is needed’. Er ist eine gute Eier, Herr Schäuble. The Treasury had to pay sharply higher rates to sell off €8bn in bonds including 4.80pc on bonds due in 2014 that had last sold for 3.68pc, and 5.77 percent on bonds due in 2021 compared with 4.94pc before. Italy's benchmark FTSE MIB index fell as much as 2pc, while the difference between the rate of return on Italian and German 10-year sovereign bonds - a key measure of the financial risks as perceived by investors - rose to near-record highs of around 330 basis points. The euro also fell by a cent against the dollar to $1.4269 and by 0.7cents against sterling to £0.8745. Investors are concerned that the Italian economy, suffering from high public debt, low growth and growing infighting in the government could follow Greece, Ireland and Portugal into a debt spiral that has thrown the eurozone into crisis. Tensions on the Italian bond market went down after a second bailout for Greece was agreed at a summit in Brussels last week but have returned on concerns over the details of the Greek rescue plan and US debt fears...I say..through away the phony currency - euro!!

As he desperately tries to squash a popular rebellion, Libyan ruler Moammar Gaddafi is banking on the loyalty of a close circle of relatives and security officials whose personal fates depend on his survival, according to U.S. officials and analysts. Among them are four of his sons and two longtime spy chiefs accused of directing a series of assassination and terrorist plots during Gaddafi's four decades in power. While numerous Libyan diplomats and government officials have defected or abandoned Gaddafi in recent days, analysts said it is unlikely that his inner core will follow suit.
"The people who are in the bunker with him, they have pretty good reasons for sticking by Gaddafi," said John Hamilton, a Libya expert with Cross Border International, a British publishing and consulting firm that specializes in North Africa. "It's a bit late for the sons to revolt against their father . . . There's really nowhere for the others to turn, either." (W.P)

Mămăliga din Orientul Mijlociu" ("Middle East Polenta") that is the title chosen by Shachar Shaine, the former head of Tuborg Romania, for his speech delivered at the luxury Loft restaurant in Bucharest, held by a businessman closely connected to the beverage industry, Pepe Berciu, on Wednesday night. Shaine, 42, said goodbye to his co-workers, as well as to competitors in a relaxed atmosphere, pointing out that Romania was definitely "the country worth living and investing in". The manager who spent the last six years at the helm of United Romanian Breweries Bereprod (URBB), the bottler of Tuborg and Carlsberg, says he decided to stay in Romania, despite propositions from shareholders for whom he had worked to take over similar businesses in other countries. "I will stay and develop business here," Shaine said without providing further details. He is one of the managers with the longest-standing career in the beer industry, having worked for the same company for the last eleven years. Israeli-born Shaine has repeatedly said he loves Romania and even became a Romanian citizen six months ago.(Z.F.) BCE,ECB,IMF,Germany,France,Euro,currency,forex,investments,bucharest,Romania,cluj,