Paris shooting: Many people killed and injured after 'Kalashnikov and grenade attacks' across French capital...Many people killed after several shootings and explosions across central Paris

 

 

Greece and Germany are on the frontline in a fierce battle about the future of European economic policy, with Syriza determined to show that ditching austerity is a better recipe for economic recovery than relentless cuts, and Germany determined to make Athens stick to the deficit-cutting agenda – and pay back the €240bn (£180bn) in bailout loans it received from the international community.  As Varoufakis returned to Athens , thousands of people gathered on the streets to show solidarity in the party’s battle with Greece’s creditors.  The fresh outpouring of public concern, with protesters gathering in Syntagma Square, the centre of anti-government riots during repeated crises in recent years, came after the European Central Bank outraged policymakers by restricting access to emergency funds for Greece’s struggling banks.   In Berlin, Varoufakis promised to meet the alarmist warnings of some in the eurozone about the consequences of Syriza’s radical policies with “a frenzy of reasonableness”.   Just before the Berlin meeting the Russian president, Vladimir Putin, had ratcheted up the pressure on the eurozone to find a solution to the crisis by inviting the new Greek prime minister, Alexis Tsipras, to talks in Moscow in May.  Schäuble said Germany would “fully respect the mandate” handed to Varoufakis and his colleagues by the electorate in the general election last month, but Germany had its own democratic pressures.

The Economist 2015 cover - At first glance, we see political figures like Obama and Putin, references to the Rugby cup and the new Spider-Man movie. But a closer look reveals a plethora of disturbing elements. - The Economist is not a random newspaper that publishes quirky 2015 predictions to sell a few additional copies. It is directly connected to those who shape global policies and who make sure that they are applied. The publication is partly owned by the Rothschild banking family of England and its editor regularly attends Bilderberg meetings. In other words, The Economist is connected to those who have the means and the power to make “predictions” a reality.  The 2015-themed cover basically reflects the overall Agenda of the elite and is peppered with cryptic symbols that appear to be included for “those in the know”. And the masses, like Alice watching the Cheshire Cat disappear, will focus on illusions while the wolf in sheep’s clothing will strike … and strike hard....The presence of the Pied Piper on this 2015-themed cover is downright unsettling. The Pied Piper of Hamelin is a German legend about a man who used his magical flute to lure away the children of the city of Hamelin, never to be seen again....This folkloric figure dating from the Middle-Ages is said to represent either massive death by plague or catastrophe, or a movement of massive immigration. It also perfectly represents today’s youth being “lured” and mystified by the “music” of mass media. Conveniently enough, there’s a small boy right under the Piper’s flute.

VATICAN CITY (Reuters) - Pope Francis sacked the five-man board of the Vatican's financial watchdog on Thursday - all Italians - in the latest move to break with an old guard associated with a murky past under his predecessor. The Vatican said the pope named four experts from Switzerland, Singapore, the United States and Italy to replace them on the board of the Financial Information Authority (AIF), the Holy See's internal regulatory office. The new board includes a woman for the first time. All five outgoing members were Italians who had been expected to serve five-year terms ending in 2016 and were laymen associated with the Vatican's discredited financial old guard. Reformers inside the Vatican had been pushing for the pope, who already has taken a series of steps to clean up Vatican finances, to appoint professionals with an international background to work with Rene Bruelhart, a Swiss lawyer who heads the AIF and who has been pushing for change. Vatican sources said Bruelhart, Liechtenstein's former top anti-money laundering expert, was chafing under the old board and wanted Francis to appoint global professionals like him.

"Bruelhart wanted a board he could work with and it seems the pope has come down on his side and sent the old boy network packing," said a Vatican source familiar with the situation.

The new board of the AIF includes Marc Odendall, who administers and advises philanthropic organisations in Switzerland, and Juan C. Zarate, a Harvard law professor and senior advisor at the Center for Strategic and International Studies, a think tank based in Washington D.C. The other two board members are Joseph Yuvaraj Pillay, former managing director of the Monetary Authority of Singapore and senior advisor to that country's president, and Maria Bianca Farina, the head of two Italian insurance companies.

Francis, who was elected in March 2013 after the resignation of former Pope Benedict, in February set up a new Secretariat for the Economy reporting directly to him and appointed an outsider, Australian Cardinal George Pell, to head it.

In January he removed Cardinal Attilio Nicora, a prelate who played a senior role in Vatican finances for more than a decade, as president of the AIF and replaced him with an archbishop with a track record of reform within the Vatican bureaucracy.

He also replaced four of the five cardinals in the commission that supervises the Vatican's troubled bank, known as the Institute for Works of Religion (IOR).

Since the arrival of Bruelhart in 2012, the AIF has been spearheading reforms to bring the Vatican in line with international standards on financial transparency and money laundering. But Vatican sources say he has encountered resistance from an old, entrenched guard.

A report last December by Moneyval, a monitoring committee of the Council of Europe, said the Vatican had enacted significant reforms but must still exercise more oversight over its bank.

Francis, who has said Vatican finances must be transparent in order for the Church to have credibility, decided against closing the IOR on condition that reforms, including closing accounts by people not entitled to have them, continued.

Only Vatican employees, religious institutions, orders of priests and nuns and Catholic charities are allowed to have accounts at the bank. But investigators have found that a number were being used by outsiders or that legitimate account holders were handling money for third parties.

Monsignor Nunzio Scarano, a former senior Vatican accountant who had close ties to the IOR, is currently on trial accused of plotting to smuggle millions of dollars into Italy from Switzerland in a scheme to help rich friends avoid taxes.

Scarano has also been indicted on separate charges of laundering millions of euros through the IOR. Paolo Cipriani and Massimo Tulli, the IOR's director and deputy director, who resigned last July after Scarano's arrest, have been ordered to stand trial on charges of violating anti-money laundering norms.

Talks on forming a new German coalition between Chancellor Angela Merkel's conservatives and their main leftist rivals are under way in Berlin.  Her Christian Democrats (CDU) fell just short of an outright majority at last month's polls, when their liberal partner won no seats at all.   Seven leading figures from the CDU are meeting seven counterparts from the Social Democrats (SPD).   The SPD is seen as their likeliest new partner despite sharp differences.  Also present at the talks are seven members of Mrs Merkel's Bavarian allies, the Christian Social Union.   Key issues are taxation and a proposed national minimum wage.   If a grand coalition is forged by the two main parties, like the one Mrs Merkel led in 2005, it faces the twin tasks of rebalancing the eurozone's biggest economy and winning the support of the German public to tackle the eurozone's debt and banking problems.  The SPD, which has not won an election since 2002, has said that any deal must be approved by its membership.   Keeping its options open, Mrs Merkel's party is also holding preliminary talks next week with the Greens. At the election on 22 September, the CDU took about 41.5% of the vote, the SPD won 26%, the Greens 8.4%, and the former communist Left Party 8.6%.   The CDU's previous coalition partner, the Free Democrats, narrowly failed to cross the 5% threshold for entering parliament.

The only hope for Italy is to leave the EuroZone now - otherwise = bankruptcy!

Thousands of workers and unemployed people marched in Rome on Saturday to protest against record unemployment and call on Enrico Letta's two-month-old government to deliver more than empty rhetoric on the issue.

The rally, organized by the country's three largest unions was the first major protest since Letta's broad, left-right coalition took office following an inconclusive election in February.

Italian unemployment rose to 12% in April, the highest level on record, and joblessness among people under 24 is at an all-time high above 40%.

Union chiefs, speaking before a flag-waving crowd estimated at more than 100,000 by the organizers, criticized Letta for what they called a lack of action on an urgent problem.

"We can't accept these continuous promises that aren't translated into decisions that give a change of direction," said Susanna Camusso, leader of the country's largest union CGIL.

Luigi Angeletti, head of the UIL, said the country could not afford the piecemeal approach to policy adopted so far, especially when the ruling coalition is so fragile...The unionists called on the government to intervene to prevent plans by white-goods manufacturer Indesit to lay off 1,400 workers in one of the most recent labor disputes....
Big deficits in time of recession are nothing new. They are not desirable, but calling them "dangerous" is ridiculous. The only way to reduce them is through growth, which isn't going to happen with taking so much money out of the economy. Growth has got its own problems, I don't think a society can run for ever on people/states buying stuff they don't really need with money they have really got, but the present "solution" isn't going to work. It is indiscriminate cutting, with no thought for the cost this "cutting" is storing up for the future. The present crew hasn't got the skills, imagination, intelligence to think out of their narrow ideology. They still think putting state services to tender to private businesses is going to solve all. It isn't....

Mediobanca, Italy’s second biggest bank, said its “index of solvency risk” for Italy was already flashing warning signs as the worldwide bond rout continued into a second week, pushing up borrowing costs.

“Time is running out fast,” said Mediobanca’s top analyst, Antonio Guglielmi, in a confidential client note. “The Italian macro situation has not improved over the last quarter, rather the contrary. Some 160 large corporates in Italy are now in special crisis administration.” The report warned that Italy will “inevitably end up in an EU bail-out request” over the next six months, unless it can count on low borrowing costs and a broader recovery. Emphasizing the gravity of the situation, it compared the crisis with when the country was blown out of the Exchange Rate Mechanism in 1992 despite drastic austerity measures.
Italy’s €2.1 trillion (£1.8 trillion) debt is the world’s third largest after the US and Japan. Any serious stress in its debt markets threatens to reignite the eurozone crisis. This may already have begun after the US Federal Reserve signaled last week that it will begin to drain dollar liquidity from the global system.

A British exit from the EU would send fateful signals around the world, in the US and the far east, of an inward-looking Europe mired in fragmentation, provincialism and bickering. While Merkel and senior cabinet members such asWolfgang Schäuble, the finance minister, favour renegotiating the Lisbon treaty to push through big political and economic policy shifts in the eurozone, Berlin acknowledges that this is a tall order because of the resistance in many other countries, mainly but not only France. Cameron argues the single currency crisis has changed the EU, and is transforming the eurozone into a much more integrated core Europe, changing Britain's status, and wants the treaty renegotiated to reflect this fundamental shift. But senior officials in Brussels warn that any moves to substantially rewrite the Lisbon treaty would trigger a referendum domino effect, with not only Britain, but Ireland, parts of Scandinavia, perhaps the Netherlands and then France needing to stage referendums on a new deal. The leading government figures in Berlin acknowledged that Hollande was opposed. The damage to Hollande could be twofold. The treaty changes would inevitably entail transfers of fiscal and economic policymaking powers to Brussels, something Paris opposes, then possibly a national vote on the new deal in an increasingly Eurosceptic country, according to recent opinion polls. Hollande played a prominent role in the yes campaign for the French referendum on an EU constitution in 2005 and lost. A repeat of the failure could cost him his office. The differences between Berlin and Paris are reinforcing their estrangement, with no improvement expected until the dust settles after the German elections in September when Merkel is bidding for a third term. Berlin is also worried that France, Italy, and Spain are stuck in a vicious downward cycle of growing unemployment, austerity, and relative lack of meaningful reform. The Germans are relaxing the austerity that has been the principal response to the sovereign debt crisis of the past three years, but are demanding sweeping structural reforms in return in the form of labour law and labour market changes, longer working weeks, pension and social security reforms. Berlin is prepared to give France and Spain an extra two years to reach budget deficit targets under the euro rulebook, but is insisting that the two years not be wasted in policy paralysis.

Germany, the 4th Reich, also suffered a contraction in business activity during the month, which could send a worrying signal for the rest of the bloc. Tim Moore, a senior economist at Markit, said prospects for Germany's service sector were increasingly gloomy. "A renewed slide in services output during April, alongside falling manufacturing production, raises the risk that the German economy will fail to expand over the second quarter," he said. Data gauging the level of activity across thousands of companies and regarded as a good indicator of general economic conditions came in below the crucial level of 50, which separates contraction from expansion. At 46.9 in April, Markit's  eurozone composite purchasing manager's index (PMI) was an improvement on initial readings of 46.5 and March's output of 46.5 but it has been below 50 for more than a year.  Germany's PMI, which measures growth in manufacturing and services and accounts for more than two-third's of Germany's GDP, fell to 49.2.  Germany's economy performed well during the first two years of the eurozone crisis, but growth slowed last year as it was knocked by the slowdown in China. The services sector fell to 49.6 last month from 50.9 in March – the first contraction since November. Germany's wobble is likely to drag the whole of the eurozone deeper into recession, Markit warned. "The eurozone's economic downturn is likely to have gathered momentum again in the second quarter," Chris Williamson, its chief economist, said: "The PMI is broadly consistent with GDP falling at a quarterly rate of 0.4%-0.5% in April."

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The latest data and survey evidence fuel concern that the eurozone is headed for further GDP contraction in the second quarter after highly likely suffering a sixth successive quarter of contraction in the first quarter of 2013."

The European commission last week warned that it expects the eurozone's GDP to shrink by 0.4% in 2013, an increase on the 0.3% it had previously forecast. The recovery penciled in for 2014 will also be slower than expected and the unemployment crisis in the eurozone will persist, the commission said in its spring forecasts.

European Central Bank executive board member Benoît Cœuré said the ECB would ready to cut interest rates further if the economic outlook in the euro area worsens. The central bank cut its benchmark rate by a quarter point to a record low of 0.5% last week. "It's a historic low and we'll cut again if indicators confirm the situation is deteriorating," Cœuré said in an interview with France Inter radio station on Monday. Williamson said it was difficult to believe that a mere 25 basis point cut from an already low level will have "a material impact on an economy that is contracting so sharply". In further gloomy news, a separate EU report published on Monday showed retail sales across the eurozone dropped 0.1% in March following a 0.2% fall in February. There were also fears that the service sector is slashing prices to drum up business. Official figures released last week showed prices across the region rose 1.2% in April – well below the central bank's 2% target – while unemployment hit a new high of 12.1%. An index that measures sentiment in the eurozone improved, but illustrated concerns about Germany. "While investors' assessments of the economy for the eurozone are stabilizing, those for Germany are clouding a little, albeit at a significantly higher level," research group Sentix said.

German newspaper Die Welt am Sonntag, citing the results of its own research, said Spanish banks had borrowed funds from the ECB at a preferential interest rate of 0.5pc even though the creditworthiness of the T-bills they provide as collateral should have required them to pay 5.5pc. The rating of some paper should have made them completely ineligible as collateral for the ECB, the newspaper added. "The ECB is investigating the matter," the bank spokeswoman said. At issue is nearly €80bn (£64.1bn) worth of 18-month T-bills the newspaper said had been wrongly classified as carrying a top-notch A rating whereas many are rated only as B by leading rating agencies Moody's, Fitch and Standard & Poor's. "Dealings with certain Spanish government bonds casts doubt on the quality of the ECB's risk management... because the bonds pledged by the banks as security meet the central bank's requirements only in part," Die Welt am Sonntag said. If the bonds were downgraded further, the affected banks could have to produce other collateral amounting to as much as €16.6bn in value, Die Welt said....
I was wondering why Spain has not yet collapsed, why their ultra-risky sovereign debt was yielding only a measly 5.5%, how the Spanish government claims to have funded itself through till the end of 2013... here is the answer, cheap money from Mr Draghi at the ECB... the clown who has turned a central bank into a giant hedge fund... Banking 101, Mr Draghi, you are only supposed to lend money when there is a large likelihood you will be repaid with interest... or maybe you don't know that...Draghi will still have the last laugh, though... the EU taxpayers will be stuck with paying his more than generous pension... 

A pathetic gesture by a group of Nordic Europhiles intended to boost EU morale in dark times.

Has the committee which runs the Nobel Peace Prize been infiltrated by satirists or opponents keen on discrediting the organisation? Norwegian radio reports this morning, carried by Reuters, suggested that the European Union is to be awarded the prize for supposedly keeping the peace in Europe for the last sixty years. Was this a Nordic spoof? Apparently not.

It is only a few years since President Obama was ludicrously awarded the Nobel peace prize for winning the 2008 election and not being George Bush. Since then Mr Obama has continued the war in Afghanistan, stepped up drone attacks and got America involved in Libya's bloody revolution, suggesting that it is better to hand out baubles after someone has finished their job rather than when they are just getting started or are half way through. Incidentally, the same stricture should have applied to bankers honoured by New Labour when they were still running banks which later blew up.

Giving the EU a peace prize is at best premature, like knighting Sir Fred Goodwin in the middle of the mad boom. We have no idea how the experiment to create an anti-democratic federation will end. Hopefully the answer is very peacefully, but when Greek protesters are wearing Nazi uniforms, and Spanish youth unemployment is running at 50 per cent, a look at history suggests there is always the possibility of a bumpy landing.

Daftest of all is the notion that the EU itself has kept the peace. It was the Allies led by the Americans, the Russians and the British who defeated and disarmed the Germans in 1945. The German people then underwent the most extraordinary reckoning, transforming their country into an essentially pacifist society. The EU had very little to do with it. Throughout that period it was Nato, led by the Americans and British, which kept the peace in Western Europe. The American taxpayer picked up most of the resulting tab, and the British paid a significant part of the bill too.

Under this defence umbrella, the federalists who wanted to reconstruct the notion of Carolingian Empire which dominated 9th century Europe, created what we have come to know and love as the EU. Of course there are advantages in what they constructed – the single market and easier travel, making the South of France and Tuscany more accessible. But they also built an appallingly designed single currency, a horlicks of an agricultural policy and rapacious bureaucracy determined to stifle the nation state in the name of utopian, unachievable continent-wide homogeneity. And at every turn those driving it looked for ways to outwit the democratic will.

It is said that those in charge of the Nobel Peace Prize have made their latest award to distract attention from the eurozone crisis, which only adds a further surreal twist. The last year or so in Europe has been marked by demonstrations and extensive European rioting. There are words one can use to describe what is going on, but "peaceful" isn't one of them.(By Iain Martin)

Bad news...

BRUSSELS -- Unemployment across the 17 countries that use the euro remained at its record high rate of 11.4 percent in August renewing concerns that efforts to slash debts have sacrificed jobs.

While European leaders have calmed financial markets in recent months with promises to cut spending and build a tighter union, they haven't solved the eurozone's deep-rooted economic problems and the rising tide of joblessness. In August, 34,000 more people lost their jobs in the eurozone, according to data released Monday by the European statistics agency, Eurostat. The unemployment rate – the highest since the euro was created in 1999 – is the same as July's, which was revised up from 11.3. Europe's problems are dragging down the global economy. The region is the U.S.'s largest export customer and any fall-off in demand will hit American companies – as well as President Barack Obama's election prospects. The U.S.'s 8.1 percent unemployment rate is already making re-election an uphill battle for the president. The eurozone is in danger of slipping into recession this year after its economic output dropped 0.2 percent in the second quarter. Six countries in the eurozone – Greece, Spain, Italy, Cyprus, Malta and Portugal – are already in recession. Howard Archer, the chief economist for IHS Global Insight, said it will take some time before Europe's labor market rebounds. "There looks to be a very real danger that the eurozone unemployment rate could reach 12 percent in 2013," he said. He thinks that will be the high-water mark, hit somewhere around the end of next year. While austerity measures were introduced to ease the financial crisis by lowering public debt, they are also slowing down economies as government spending drops off. This is also pushing unemployment higher and threatening the continent with recession. Some experts urge leaders to instead loosen spending to encourage growth.

MEANWHILE - a dengerous development :
Turkey's military have struck targets inside Syria in response to a mortar bomb fired from Syrian territory which killed five Turkish civilians, Prime Minister Recep Tayyip Erdogan's office said in a statement.
The mortar fired from the Syrian side into the region of Akçakale sparked an urgent round of meetings with military chiefs and led the Turkish foreign minister, Ahmed Davagotlu, to formally complain to UN secretary general Ban Ki-moon.
"Our armed forces in the border region responded immediately to this abominable attack in line with their rules of engagement; targets were struck through artillery fire against places in Syria identified by radar," the statement from Erdogan said. "Turkey will never leave unanswered such kinds of provocation by the Syrian regime against our national security."
Nato said it was following developments and senior officials would meet urgently to discuss the issue. Turkey is a member state of the powerful body and earlier this year invoked a clause in the Nato treaty which called on it to respond to an earlier clash in which a Turkish jet was shot down from inside Syria.
The escalating border tensions came amid a day of grave violence inside Syria, with central Aleppo ravaged by three large explosions that killed at least 41 people and the capital Damascus again the scene of fierce clashes between loyalists and rebels and security sweeps by regime forces.
The Aleppo bombings were among the biggest seen in Syria in 18 months of uprising. Attackers, believed to have been dressed in military fatigues, are thought to have convinced regime soldiers stationed in Saadallah al-Jabiri Square to let them enter the secure zone. They are then thought to have detonated the bombs believed to have been packed into cars

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.

France and Britain had found great “convergence”... funnnnyyyy....

France and Britain had found great “convergence” on plans to create a powerful bank supervisor to regulate all eurozone banks. “The UK, like us, would like if possible quite a swift timeline,” he said. Although Britain has made it clear it will not be part of a banking union, the Chancellor has backed the plan as a way of stabilising the single currency. Creating the supervisor will require support by all European Union countries, not just the 17 eurozone members.  In Germany, Angela Merkel called for a steady approach to banking supervision; the Chancellor wants central supervision for the eurozone’s systemic institutions, not all 6,000 banks. In a lengthy press conference, Ms Merkel again ruled out eurobonds. She said her “heart bleeds” for suffering Greeks but insisted they stick to their austerity plan.  At a lecture last night at the London School of Economics, Mr Moscovici called for greater unity in Europe, even if it required eurobonds and the cost individual sovereignty. He said: “I’m not saying we must integrate at any price. I’m not in favour of a Europe dominated only by Germany. But if we are capable of having each step of integration accompanied by a step in solidarity Europe will grow closer to its people.” ... The yield on Spain’s benchmark 10-year bonds were pulled back just below 6pc at the close, but their steady rise all day reflected bets by traders that Madrid’s determination to resist a bail-out will cause more volatility. Some argued that optimism that followed the unveiling of the so-called “Draghi Plan” to buy bonds was already wearing off. ...  

Here we go again.....this time preacher from the LSE ..Mr Moscovici is confirming what everyone else in office has been saying....."I’m not in favour of a Europe dominated only by Germany".

....For heavens sake ...Wev'e known this fact ages ago.
Jaques Delors stated this decades ago and it still hasn't been settled. In the current situation, expect double extra time before a solution is found; if one can be found...I remain sceptical. I suggest Mr Moscovici extrapolate a mathematical model that can arrive to a solution of all current economic problems.

The ECB is understood to be considering setting internal yield band targets under a new bond-buying programme to allow it to keep its strategy shielded and avoid speculators trying to cash in, central bank sources told Reuters. Such a strategy would bring down yields, which translate into the interest rates countries can borrow at, without traders knowing where the ECB will stop buying.  Samaras, who arrived in Berlin with his foreign secretary and finance minister, has spent much of the week arguing that his country should have more time beyond the mid-2014 deadline to complete reforms that are a condition of it continuing to receive bailout loans. Without the help, Greece would be forced into a chaotic default on its debts and could be forced out of the eurozone.

Leading German politicians have voiced deep scepticism about granting Greece any concessions. Merkel and Hollande, meeting a day before Samaras came to Berlin, put the onus squarely on Greece to fulfill its pledges.

Greece has faltered in the speed and effectiveness of implementing the reforms irritating creditors, notably Germany, which is the single largest contributor to its two bailout packages, totalling €240bn.

Merkel said: "To win back confidence, we must fulfill expectations, and so I made clear in the talks that we of course expect from Greece that the commitments that were made be implemented, that deeds follow words.

"But fulfilling expectations also means that Greece can rightly expect from Germany that we do not pass premature judgments." Merkel added that Germany needed to wait for the debt inspectors' report.

The Athens coalition government has said it was considering passing a law blocking politicians from hiring relatives as staff after a series of corruption scandals. (source guardian.uk)

Reuters reports that The European Central Bank funding to Greek banks fell by €49.67bn in July from a month earlier to €23.99bn. Conversely, emergency liquidity assistance from the Greek central bank increased by €44.37bn to €106.31bn. Greek banks lost wholesale market access in the wake of the country's debt crisis, becoming dependant on the European Central Bank and the national central bank for liquidity. This is what Marc Ostwald of Monument Securities thought of those figures: The figures below mark a seismic shift away from the ECB to the Greek central bank, which could be interpreted as the ECB sensibly taking a hard line given the array of risks surrounding the new government's fiscal and structural reform policies, and indeed the Troika visit. ... But that sort of hard line is rather more suggestive of Herr Weidmann and the Bundesbank 'wearing the trousers' at the ECB than Signor Draghi, and for some Greece sceptics may even be constructed as a signal that Greece is one step closer to the exit, given the shift in risk (though we would be the first to admit that EUR 24 Bln is still a high level of risk, even if it has been reduced to what Signor Draghi might describe as an "adequate" level), and of course has no bearing on other ECB bond buying plans........

The biggest myth about current economic problems is that historical precedents have much value for understanding them. The next biggest myth is that the problems primarily have to do with difficulties in the financial system. The other big myth is that they are part of some short tem business cycle. The reality is that the post World War II era is winding down in a period of unprecedented change. Several different threads of that change that are difficult to factor are the primary agents creating global economic problems. Certainly the role of automation in ushering in post industrial society is one big factor. So is the global competition from the arrival of most of the world's population into the industrial age. Another factor is less certain, but perhaps more basic. That is the possibility that endless economic growth is not really a human priority. Japan may be the more realistic model of human behavior that is satisfied with some level of reasonable economic well being....After the goldrush: between the 1970s and now there has been almost no growth in real wages, whilst the growth in returns on capital have been almost exponential. People felt their standard of living was rising because of almost unlimited credit. That credit has gone. This has left industries, both manufacturing and service, that are in effect crack addicts. Nobody will borrow personally again until growth returns.. People need to be paid more. That way they'll spend all that money on the wonderful things the rich get richer by making and doing. Companies can either strip costs until their markets are dead, or invest in their wet skills through higher pay....

Of course we need to fix the causes of this crisis, but that is going to do bugger all in the short-medium term to fix symptoms. "The attempt to solve a crisis caused by credit with even more credit has, predictably enough, proved a failure. It has been a bit like the motorist desperately pumping air into a tyre with a slow puncture: it works for a while, but eventually the tyre goes flat again."

Nonsense. A fallacy in place of a reasoned argument.  'Debt caused the problem so debt can't solve it' is based on the fallacy that all debt is equally bad. The problem is not the amount of debt but who holds it - governments with their own currencies paying record low levels of interest vs private individuals and businesses who are depressing the economy by all de-leveraging at once. The former is absolutely sustainable at much higher levels than at present - and the use of this debt to produce stimulus the only obvious way out of this crisis that doesn't take years and condemn millions to the scrapheap. (Of course, if you're unlucky enough to be under the Euro, you are doubly screwed: not only is this path not an option - as the ECB won't back your debt sufficiently to make it sustainable - you can't even devalue.)

It will be an entertaining spectacle. ....

I don't give damn what Edgar Jones, Johnny Smith, Kevin Ross or whatever other American company with a fancy name say. Sooner rather than later the PIIGS will dump the euro, the EU and the west forever, strengthening ties with emerging south American emerging countries, with which they share language and culture, other Mediterranean nations, with which they share geographic interests and I bet Russia and China too.All the US will have accomplishment is to lose its geopolitical grip on yet another area in the planet and all Germany will have accomplished is being despised south and not only east of its borders. Your opinions, your comments, your ratings will become totally irrelevant to us. Moody's can downgrade us to ZZZZ if it wants, we'll keep on eating good food, enjoying good climate, making love with gorgeous women and have a higher life expectancy than Germany, the US and the UK. ... Bye bye loser....

I will be laughing my aSs off when Frau Merkel starts begging Italy and Spain not to leave the euro offering them billions in bail-outs with no conditions attached, having to explain her countrymen how the euro was the fundamental element behind german economic miracle and how export would collapse and unemployment jump to 10% or above without it...... It will be an entertaining spectacle. All Italy and Spain need to do is to threaten exit FOR real. France, having their same economic fundamentals, cannot afford them to have a weaker currency and will have to follow suit. One second after, the German bluff will be exposed. I propose Cascos for Spanish PM and Grillo for Italian PM. Rajoy and Monti simply don't have the balls to do that.

Eurozone leaders hoping for a quiet few weeks will be sorely disappointed. Short-selling bans on banking and insurance stocks by financial authorities in Rome and Madrid are a sure sign that all is not well, although I fear that these restrictions will only offer the most temporary of respites. After the summit in June that provided a brief burst of euphoria, there were mutterings that the crisis was not over, and the pessimists have now been proved right..... after a particularly grim day, European markets have closed and its time to rake over the pieces.....Growing fears that Spain could need a bailout, worries about whether Greece will get more money or will instead quit the eurozone, and a drop in EU confidence have conspired to sent shares and the euro sharply lower and bond yields higher. News of a ban on short selling in Italy and Spain - whether misguided or not - seemed to help haul markets slightly back from the brink. We may rapidly be approaching a decisive moment for the eurozone; previous bailouts were of smaller countries that were of manageable size. Spain is a different order of magnitude entirely, and it may not be possible to rescue this economy in the same way that Greece, Ireland and Portugal were bailed out. Eurozone leaders will likely hold yet another summit, but they will need more than fine words if they are to truly save the single currency.

Potential Defaults....

 Potential Defaults. The chairman of Deutsche Schiffsbank, a Commerzbank subsidiary based in Hamburg that is focused on the shipping industry, had been summoned to Frankfurt to present the bank's financial results. But the presentation was cancelled; Commerzbank had no need for the numbers, having previously decided it no longer wanted anything to do with German shipping.

The executive board of Deutsche Schiffsbank was not notified in advance of the parent company's reversal. The supervisory board was also taken by surprise. Only three months earlier, Commerzbank CEO Martin Blessing had declared the financing of ships and commercial real estate to be part of the bank's core business. And although it was expected to shrink, Germany's second-largest bank intended to create a separate segment for the business.  But the executives had underestimated the risks that the European sovereign debt crisis presents to Commerzbank, and how much capital the ship and commercial real estate business ties up. Now Blessing has slammed on the brakes. Deutsche Schiffsbank Chairman Otto characterized the parent company's about-face as the "decision of a cautious businessman and not of a skydiver."

Commerzbank has recently made a huge effort to satisfy and even exceed the capital requirements set by the European Banking Authority (EBA). But if the euro crisis worsens, new gaps could soon open up, say banking industry insiders.

In Spain alone, Commerzbank is exposed to the tune of €14.2 billion ($17.9 billion) via investments in banks, companies and the government. The lower the rating agencies assess the creditworthiness of these borrowers, the more capital the bank will have to place in reserve for these investments in the future -- to say nothing of potential defaults.
The Finnish finance minister, Jutta Urpilainen, said in a newspaper interview this morning that she'd consider crashing her AAA-rated country out of the eurozone rather than face paying the debts of another country: Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland. Finland will not hang itself to the euro at any cost and we are prepared for all scenarios. Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms.

Euro crisis -- Markus Huber at ETX Capital said that tight trading in European equities was likely to continue for at least the first half of today's trading session ahead of the anxiously awaited EU summit:

The problem with the EU meeting is that although expectations are very low for a positive outcome investors are increasingly running out of patience which is putting additional pressure on politicians. Unfortunately it is not all about Germany just agreeing to Eurobonds and everything will be fine but also about important and necessary reforms which need to be implemented by all countries in order to avoid a much more severe crisis in the future. The question is if politicians indeed have the necessary time available which will be needed in order to negotiate and implement these reforms, however any progress being made towards a more stable and financially viable Euro-zone would certainly be welcomed by investors and bring periphery yields down to more sustainable levels in the long run.... Spanish bond yields last week jumped to the dangerously-high level of 7pc and the country yesterday saw its borrowing costs rise sharply in an auction of short-term debt. But today, the yield on Spain's 10-year bond is down 4.7 basis points to 6.7pc.

It turns out that Mariano Rajoy has been speaking in the Spanish parliament this morning, saying that he will ask ask other European Union leaders at a summit this week to use existing EU instruments to stabilise financial markets. He said:

I will propose measures to stabilise financial markets, using the instruments at our disposal right now. The most urgent issue is the one of financing. We can't keep funding ourselves for a long time at the prices we're currently funding ourselves.