"We have a clear aim with the Energy Union. It is to strengthen the security of energy supply and increase energy efficiency at an affordable cost", said András Gyürk MEP, the EPP Group Shadow Rapporteur, after the adoption of the European Parliament initiative Report on the Energy Union. "It is up to economic actors to decide which projects make economic sense and what could be the potential of extraction projects in the area of energy. The European Parliament must do its best to provide a sound regulatory environment that includes strict standards with regards to climate, health and environment", Gyürk said. An important brick in the construction of the Energy Union is the plan to achieve a goal of 10 percent cross-border interconnectivity in the internal EU electricity grid.  "Increased interconnectivity is a crucial step towards achieving a true internal electricity market in EU. It must be achieved by more infrastructure as well as better access to the existing infrastructure", said Bendt Bendtsen MEP, the EPP Group Shadow Rapporteur, after the adoption of the initiative Report 'Making Europe's electricity grid fit for 2020'. "It will enable the EU to make better use of the electricity produced in Europe and thus lower dependence on imports, resulting in better energy security and lower electricity prices, to the benefit of European businesses and citizens", Bendtsen concluded.

The forced collective suicide of European nations

Berlin - A new bargaining chip has emerged in the ongoing German coalition talks: the idea of holding referendums on major EU decisions - be it bailouts, enlargement or more transfers of sovereignty to Brussels.

The idea was formulated in a joint working paper drafted by Hans-Peter Friedrich, a member of Angela Merkel's Bavarian sister party (CSU) and currently the country's interior minister, and Thomas Oppermann, a member of the opposition Social Democrats (SPD).

A grand coalition would be a unique opportunity for "modernizing our democracy," they wrote.

More referendums - which currently can be held only on constitutional matters or if the country's borders are changed - would give voters the chance to "influence political decisions also in-between elections," they added.

In their leaked paper, the two politicians argue for a "careful transition to direct democracy," for instance when 1 million people gather signatures on a matter or if the parliament wants to consult the population on a specific law.

The paper also argues that referendums should be held on EU matters of "great significance" - such as EU enlargement, transfer of powers to Brussels or another eurozone bailout.

Merkel's Christian Democrat party (CDU) was quick to dismiss such wide-ranging plebiscites, saying there was a risk of them being hijacked by populist campaigns.

"There are still serious doubts about the introduction of referendums at national level," said Guenter Krings, the deputy leader of the CDU in the Bundestag.

The chairman of the EU affairs committee in the parliament, Guenther Krichbaum, said such a change would bring about the "advent of populism" in Germany.

The Social Democrats have also distanced themselves from referendums on EU matters.

They say plebiscites should be held on internal matters and formulated in a way that would not give a platform for anti-European campaigns.

"One can leave out certain questions that touch on the core principles of the EU," said SPD secretary general Andrea Nahles.

The issue will form part of coalition talks on Wednesday.

The negotiations are expected to last at least until the end of the month, with a final round expected on 27-28 November. The new government should be in place by mid-December.

A major Swiss gold refiner is being investigated on suspicion of money laundering linked to the processing of gold allegedly looted from DR Congo. Swiss federal prosecutors confirmed criminal proceedings against Argor-Heraeus SA, over claims it knew gold it handled in 2004 and 2005 had been taken from DR Congo during an armed conflict. The case has been brought by the Swiss non-governmental organisation TRIAL.  Argor-Heraeus has strongly refuted all allegations in a statement.  The Swiss gold refiner said the allegation had "arrived like a bolt out of the blue" and there had been "no request or contact whatsoever from TRIAL beforehand".

It said "Argor-Heraeus has been cleared of all above mentioned allegations", referring to an investigation at the time by the UN, SECO and FINMA.

The firm said it would "collaborate in complete transparency with the authorities" to prove its innocence.

'Growing pressure'

The Swiss federal prosecutor's office said on Monday that after reviewing the criminal complaint submitted by TRIAL, it had decided to initiate proceedings against Argor-Heraeus "for suspected money laundering in connection with a war crime and complicity in war crimes".

"Given the secrecy of the investigation and function, we are not able to provide more information for now," it said.

TRIAL alleges that gold looted from DR Congo in 2004 and 2005 was smuggled to Uganda and then refined in Switzerland by Argor-Heraeus.

According to TRIAL, the refinery knew or should have assumed that the gold resulted from pillage, a war crime.

DR Congo was in the midst of an armed conflict at the time, driven partly for control of natural resources.

An estimated six million people are believed to have been killed in DR Congo since 1997.

TRIAL says the sale of the gold "contributed to financing the operations of an unlawful armed group in a brutal conflict".

A report at the time by a UN Group of Experts recommended sanctions against Argor, saying the company must have known the gold was obtained illegally. Sanctions were imposed only on Ugandan businesses involved in the trade. TRIAL alleges that Argor escaped sanctions because of pressure applied at the UN by Swiss diplomats.

However, Argor says that "subsequent detailed in-depth verifications executed by SECO and UNO resulted in the removal of the name of Argor-Heraeus from the report and confirmed that the company was in no way directly or indirectly involved in the alleged claim".

Most of the world's gold is refined in Switzerland and the country is also a major trading hub for gold and other commodities.

The BBC's Imogen Foulkes in Geneva says there is growing pressure for traders and refiners to be more transparent.

Argor is owned partly by German company Heraeus, Commerzbank, and the Austrian Mint.

The following information focuses on earthquakes because seismic activity poses a significant risk for Romania. However, Romania is at risk for other natural and manmade hazards. While much of the information below specifically addresses earthquakes, it is applicable to multiple hazards, and we encourage you to think broadly about the possible risks you and your family may face and to be prepared for any kind of emergency that may arise.

Romania is situated in a seismically active region and has a history of devastating and deadly earthquakes. The Bucharest area has experienced a number of tremors of varying intensities, and the probability that a severe and damaging earthquake will occur is high. The consequences of such a disaster will vary greatly depending upon the circumstances surrounding the quake, and no one can predict with any certainty what conditions will exist immediately following an intensive shock.

It is prudent that everyone be prepared to care for themselves in the immediate aftermath of a major earthquake. Every family and company should develop its own emergency plan, stock its own emergency survival kit, and ensure that its personnel and their family members familiarize themselves with emergency procedures and take precautions to protect their personal safety.

The Role of the Embassy

The Romanian Government is responsible for assisting foreigners in the event of a disaster, but authorities may be stretched beyond their capacity to respond in the immediate aftermath of a major earthquake. Telephone services will be severely overloaded, if they are functioning at all, and the Romanian Government will likely restrict phone use to priority users. Nonetheless, the Embassy will quickly want to ascertain the welfare and whereabouts of American citizens.

To aid in this process, American citizens should cooperate with Romanian authorities at evacuation sites and clearly identify themselves as Americans. Those connected with larger organizations such as companies, schools, or church groups should try to let these organizations know of their welfare and whereabouts if this is practical. If possible, American citizens should try to contact their American Citizen Services wardens and/or the Embassy.

The Embassy will be in touch with the Romanian Government and with larger umbrella organizations to attempt to identify as many American citizens as possible and determine their welfare. In the likely event that it is impossible to communicate by telephone or use motor vehicles, Embassy consular assistance teams may be deployed to major evacuation sites, international schools, hotels etc. to collect information from and about American citizens.

The Embassy will help provide information about the situation and communicate with Romanian government officials, if necessary, in order to obtain proper food, shelter and medical attention. However, a significant earthquake will likely overwhelm the Romanian government’s resources and individuals should be prepared to provide for their own emergency needs.

We will pass as much information as possible about the welfare of individual U.S. citizens back to the Department of State in Washington, D.C. so that this information may be shared with families, friends and employers.

The Role of the Romanian Government

The Romanian Civil Protection Command is part of the Romanian Defense System and is responsible for protecting the population, assets, national heritage and geographical environment in case of a natural disaster. The command’s activities include disaster intervention, search & rescue, warning and notification, sheltering, evacuation, etc. A central committee for evacuations is set up under authority of the Government if evacuation is required. In the event of a disaster, the location of the centers is determined depending on the area affected and the type of disaster that occurred. The Civil Protection Command coordinates with the local authorities in order to notify the population regarding evacuation or taking shelter.

Evacuations

Evacuations will likely occur after an earthquake. City authorities will issue evacuation advice. Americans, as well as others affected by the disaster, may seek assistance from the Romanian authorities, but you should be prepared to take care of your own emergency needs for the first several days of any disaster.

Earthquake Preparedness/Survival Information

FEMA produces a comprehensive Disaster Preparedness Guide called Are You Ready?, which can be easily downloaded by section or in its entirety. This indepth guide provides a step-by-step approach to citizen preparedness by walking the reader through how to learn more about local emergency plans, how to identify hazards that affect their local area, and how to develop and maintain an emergency communications plan and disaster supplies kit. Other topics covered include evacuation, emergency public shelters, animals in disaster, and information specific to people with disabilities. However, it is designed primarily for residents of the United States, and not all of the information will be relevant to disaster preparedness in Romania. Regardless, it can be a useful resource and a good starting place when preparing for a disaster.

Additional resources are also available online. Please visit the following websites for additional information about preparing for a disaster:

• United States Geological Survey
• The Federal Emergency Management Agency
• Centers for Disease Control and Prevention
• American Red Cross

Emergency Supply Kit

Essential Supplies (Store enough for three-five days)

 

• Water (four liters or one gallon per person per day. Change water every three to five months)
• Food (canned or pre-cooked, requiring no heat or water. Consider special dietary needs for infants, the elderly, pets, etc.). Can opener.
• Flashlight with spare batteries and bulbs
• Radio (battery operated with spare batteries)
• Large plastic trash bags (for trash, waste, water protection, ground cloth, temporary blanket)
• Hand soap and/or disinfecting hand cleaner gel that does not require water
• Feminine hygiene supplies, infant supplies, toilet paper
• Essential medications as required; glasses if you normally wear contacts
• Paper plates, cups, plastic utensils, cooking foil and plastic wrap and paper towels
• First Aid kit with instructions
• Lei, euros, and/or dollars in small bills (ATMs may not work after a disaster), with coins and phone cards for public phones. Credit cards.
• Sturdy, closed-toed shoes and work gloves

Place emergency supplies in a sturdy tub where you can quickly and easily access your kit.

Essential Home Preparations Before a Disaster

 

• Secure water heaters, refrigerators and tall and heavy furniture to the walls to prevent falling.
• Move heavy items to lower shelves, and install latches or other locking devices on cabinets.
• Install flexible connections on gas appliances.
• Remove or isolate flammable materials.
• Move beds and children's play areas away from heavy objects which may fall in an earthquake.
• Register at Embassy or Consulate serving your area. You can do so online at https://travelregistration.state.gov/ibrs/ui/ or contact the U.S. Embassy to register.

Essential Planning Before a Disaster

 

• Draw a floor plan of your home showing the location of exit windows and doors, utility cut off points, emergency supplies, food, tools, etc. Share it with housekeeper, babysitters, neighbors, and guests.
• Establish family meeting points with alternate sites inside and outside of your home for all members to gather in the event of an evacuation.
• Establish reunion sites with alternate sites for when the family is not at home, e.g., local shelter, neighbor's house, park, school.
• Designate a person outside of your immediate area for separated family members to call to report their location and condition if separated.
• Learn or establish disaster policy/planning at your children's school.
• Know your neighbors and make them aware of the number of people and pets living in your home.
• Learn where the nearest designated shelter for your neighborhood is.
• Photocopy passports and other important documents. Store copies away from home (for example, at work). Scan important information and keep a thumb drive with critical documents in a safe, easy-to-access place or save it in email that you can access from anywhere.
• Learn how to contact the police, fire and rescue services in Romanian. Be able to provide your address in Romanian.

Essential Steps Immediately After a Disaster

 

• Check your immediate surroundings for fire, gas leaks, broken glass, and other hazards.
• Check your home for significant damage. Do not remain in your home if you believe there has been structural damage.
• Open doors and/or windows to avoid being locked in if there are after-shocks.
• Contact one friend or relative in the U.S., and ask them to inform other parties of your situation.
• Monitor local TV and radio for evacuation information. Contact your American Citizen Warden or the Embassy, if possible.

Angela Merkel's domestic policy in her third term will likely be confined to higher spending. But she has grand plans for Europe. SPIEGEL has learned she wants Brussels to have far more power over national budgets. It's a risky move that EU partners and the Social Democrats are likely to oppose.

In the end, the atmosphere became downright festive in the Berlin Hall of the Parliamentary Society, a building next to the Reichstag. Chancellor Angela Merkel's conservatives and the center-left Social Democratic Party (SPD) had met there three times in the last three weeks to sound out whether they could form a coalition government. The decision was still up in the air.

Merkel gave SDP Chairman Sigmar Gabriel a questioning look, and said: "Would you like to say something?" But Gabriel beckoned to her to speak. "I have my delegation's support for what we discussed," she said. "So do I," Gabriel replied.

The grand coalition took shape shortly before 3 p.m. last Thursday. For the third time in postwar German history, Merkel's Christian Democratic Union, together with its Bavarian sister party, the Christian Social Union (CSU), and the SPD are preparing to form a coalition government. The talks are expected to begin this Wednesday. The chancellor is in a hurry because she wants to have a new government by Christmas at the latest. "Christmas will be here sooner than you think," she told fellow members of the CDU executive board on Friday afternoon.  At the beginning of her third term, Merkel has more power in Germany and Europe than any chancellor before her. There hasn't been such a strong majority behind a government in Germany's parliament, the Bundestag, since the first grand coalition half a century ago. In the midst of the European crisis, Germany has become the undisputed dominant power in Europe.

The grand coalition will hand Merkel a majority she could use to shape Germany and Europe and address major issues, including constitutional reforms in Germany and the reform of European Union institutions.

Merkel, unlike SPD Chairman Gabriel, has been unchallenged in her own party since her election victory. Little is left of the accusations that critics had leveled at Merkel, except one: That she is a chancellor without an agenda, plan or vision; that her style of government is reactive rather than proactive; and that she doesn't know where she wants to take her government and Germany.

Big Plans for Europe - In the past, Merkel has treated governing primarily as repair work. The major issues of her first two terms in office, the financial crisis and the fight to save the euro, were suitable for that approach. Will that change, now that she has the necessary power and means? Hardly at all, when it comes to Germany. There are no major reforms in the works at government ministries, and the grand coalition will focus on increasing spending to fulfil some of the parties' campaign promises.

In contrast, officials at the Chancellery are forging plans for Europe that are practically visionary for someone like Merkel. If she prevails, they will fundamentally change the European Union. The goal is to achieve extensive, communal control of national budgets, of public borrowing in the 28 EU capitals and of national plans to boost competitiveness and implement social reforms. The hope is that these measures will ensure the long-term stability of the euro and steer member states onto a common economic and fiscal path. This would be the oft-invoked and ambitious political completion of Europe's monetary union -- a huge achievement.

It isn't a new goal, but what is new is the thumbscrews Brussels will be allowed to apply if Merkel has her way, including sooner and sharper controls and veto rights, as well as contractually binding agreements and requirements. In short, this would amount to a true reconstruction of the euro zone and a major step in the direction of an "economic government" of the sort the SPD too would like to see put in place.

Germany's current economic strength helps to explain these visions for Europe, since stricter budget controls wouldn't pose a threat to Berlin at the moment. Jobless levels are so low that the country has almost reached full employment, and the budget is in good shape, at least at the national government level. In fact, public coffers are so full that the government can afford to boost domestic spending.

More Money to Spend - And that's precisely what the members of that coalition intend to do. The first item on their agenda is to hand out benefits and spend money. Thanks to the strong economy, this won't even require raising taxes. In his financial planning for the medium term, Finance Minister Wolfgang Schäuble anticipates growing national budget surpluses from the year after next: €200 million ($274 million) in 2015, €5.2 billion in 2016 and €9.6 billion in 2017.

In other words, the government will have an additional €15 billion at its disposal in the coming years. This gives Merkel and Schäuble the necessary leeway to fulfill the desires of the CDU/CSU and the SPD for more investment in infrastructure and education without having to raise taxes. There is talk of an €11 billion fund for infrastructure alone.

Prior to the election, Merkel and Schäuble had announced their intention to use the surpluses to pay off old debts. That won't happen now, and yet the conservatives are not plagued by a guilty conscience, noting that despite the additional spending plans, the country will still remain within its debt limit requirements.

The reorganization of the financial relationships between the national and regional state governments, which is on the agenda in this term, will likely be costly for the national government. Many states would have to cut billions from their budgets so that they can make do without new borrowing starting in 2020. Many state governors complain that it's a burden their states can't handle without national government assistance. They are hell-bent on demanding financial support from Berlin in return for agreeing to a reform of the system of transfer payments from richer to poorer German states.

The states' ability to block legislation in the Bundesrat, the legislative body that represents the states, will likely become costly for the new administration long before that. Merkel is worried at the way in which preliminary coaltion talks in recent weeks turned into haggling over money between the national and state governments. "We just had a national parliamentary election, not 16 state parliamentary elections," an irritated Merkel recently told the CDU/CSU parliamentary group.

There may also be a major restructuring in the way transport projects are funded, due to the states' lack of money. The CSU's pet project, the automobile toll, stands a good chance of being approved, since it would generate new revenues.

More Powers For European Commission - During the negotiations, CSU Chairman Horst Seehofer presented a plan for how the toll could become a reality. It calls for drivers to pay an "infrastructure fee" in the future. Germans would be able claim the fee as a credit against the motor vehicle tax, so that the cost could ultimately be imposed on foreign drivers. According to the document, prepared by Transportation Minister Peter Ramsauer, this would be possible under European law. The new coalition won't face serious resistance to its spending policies, not even from the opposition. With the elimination of the pro-business Free Democratic Party (FDP) from the Bundestag, the voice of moderation in budget policy has disappeared. Only the economic wing of the CDU/CSU is likely to put up weak resistance. So Seehofer will get his toll, the states will be kept happy with financial gifts and the social security offices will hand out benefits. This doesn't exactly sound like an ambitious program for Merkel's second coalition government with the Social Democrats. Instead, it feels like more of the same, or a program of minor improvements, at least on the home front. But regarding Europe, Merkel is heading for strategic decisions and is likely to show more courage to take political risks than usual.

Schäuble, the last dyed-in-the-wool European among Germany's top policymakers, can be pleased. Merkel wants tangible amendments to the European Union treaties: more power for Brussels, and even more power for the much-criticized European Commission. "Unfortunately, there is no other option," say government officials.

Carrot-And-Stick Approach - Last Thursday, after the final round of exploratory talks with the SPD, Merkel brought European Council President Herman Van Rompuy into the loop in a private conversation at the Chancellery. It was a back-door initiative of the kind so typical in EU policymaking. Documents are already being put together at the German Finance Ministry over how "Protocol 14" of the EU Treaty could be beefed up. It currently contains a few general statements on cooperation in and control of the euro zone. But now, if Berlin is able to implement its carrot-and-stick approach, tangible powers for the European Commission will be added to the protocol.

For instance, the Commission could be given the right to conclude, with each euro country, an agreement of sorts to improve competitiveness, investments and budgetary discipline. Such "contractual arrangements" would be riddled with figures and deadlines, so that they could be monitored and possibly even contested at any time. In return, a new, long-discussed Brussels budget will become available to individual countries, an additional euro-zone budget with sums in the double-digit billions for obedient member states. Protocol 14 could also be used to install the full-time head of the Euro Group. The influential job is now held by one the member states' finance ministers, currently Dutch Finance Minister Jeroen Dijsselbloem. Devoted Europeans like Schäuble have long dreamed of installing a "euro finance minister."

Resistance Against Merkel's European Plans - If Chancellor Merkel is focusing on an amendment of this central part of the EU treaties, it is a remarkable about-face. Still, the new course is risky, and it has many detractors and an uncertain outcome. None of this is to the chancellor's taste, at least not the chancellor we know. But Merkel has already deployed her key European strategist. The relevant department head in the Chancellery, Nikolaus Meyer-Landrut, outlined the German plan at a Brussels meeting in early October. It didn't go down very well. Opponents of the common currency are rapidly gaining popularity in almost all euro countries. Every change in the balance of power in Europe and every upgrading of the European Commission make governments more vulnerable to domestic political attacks. More power for "Brussels?" No way. There are even growing doubts in the European Parliament, albeit for completely different reasons. Both leftists and conservatives fear that anyone who opens the door to amending the treaties "won't be able to close it again that quickly," says a top Christian Democrat. Especially the British government, driven by the radical, anti-European UK Independence Party (UKIP), could use the opportunity to retrieve powers from Brussels, essentially renationalizing the European Union.

The SPD could raise objections. "The SPD won't support any arrangements if Merkel conducts parallel negotiations with Britain's David Cameron to transfer EU powers back to member states," Axel Schäfer, deputy leader of the SPD's parliamentary group, told SPIEGEL ONLINE. He added that the SPD won't accept any treaty changes that relate to referendums in individual EU states.

The president of the European Parliament, German Social Democrat Martin Schulz, has already warned Merkel privately that he won't back any change in EU treaties. He wants national governments to make the euro zone resilient to future crises by using the instruments created step-by-step over the last three years -- without treaty changes. Schulz fears that a treaty change would take too long and that referendums necessary in some countries couldn't be won given current poor public sentiment regarding the EU. "We will check all the chancellor's proposals to see whether they can be implemented in all EU states," says Schulz, who will be part of the SPD's negotiating team in the coalition talks, responsible for all issues pertaining to Europe.

But Merkel seems undaunted by these obstacles. And she already has a timetable. First she wants to wait and see what happens in the May 2014 European parliamentary election. Then the new president of the European Commission will have to be chosen once the second term of the current incumbent, José Manuel Barroso, ends in 2014. Merkel got him the job and ensured he got a second term. But these days, she doesn't even bother disguising her contempt for Barroso.

Once the new European Commission is in office, the political window for Merkel's European vision is expected to open. It doesn't seem to bother her that she will be in a clear minority when she embarks on her reform plans. She is familiar with this position from the first days of the euro debt crisis, when she wanted to include the International Monetary Fund as a key authority in distributing aid packages, and almost all other euro countries were against the idea. At the time, she said privately: "I'm pretty much alone here. But I don't care. I'm right."

NIKOLAUS BLOME, CHRSTIANE HOFFMANN, PETER MÜLLER, CHRISTIAN REIERMANN, GORDON REPINSKI, CHRISTOPH SCHULT

It changes by the hour ....what a circus !!! lies and deceit and that's all !!

Good news for the European economy: retail sales were much stronger than expected in August.

Eurostat reported that retail sales volumes rose by 0.7% in the euro area, and 0.4% across the wider European Union in August. July's data was also revised higher, showing consumers weren't as cautious about spending as first thought.

Eurozone retail sales to August 2013 Photograph: /Eurostat

Eurostat's data shows that non-food shopping was strong, rising by 0.6% in the eurozone. That covers items such as computers, clothing and medical products.

The data also showed an increase in fuel purchases, suggesting a rise in motor journeys. Spending on "automotive fuel in specialized stores" (that's petrol stations to you and me) was up by 0.9% across euro members.

The eurozone recovery is gathering pace, with its private sector firms reporting the biggest leap in activity since June 2011 last month.

Data firm Markit's monthly surveys of companies across the single currency showed a solid rise in activity.

New business has picked up, and the rate of job cuts may finally be slowing to a halt.

Markit's monthly survey of activity came in at 52.2, up from August's 51.5. Both service sector firms and manufacturers said conditions were better.

Photograph: Markit

Here's some key factoids from the report (online here)

Ireland: 55.7 2-month low
Germany: 53.2 2-month low
Italy: 52.8 29-month high
France: 50.5 20-month high
Spain: 49.6 2-month low

The news comes hours after China's service sector output hit a 6-month high.

Chris Williamson, chief economist at Markit, said the eurozone data showed Europe's recovery on track, despite Spain's private firms faltering after a better August.

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.

Greece's international bailout faces a shortfall of around €11 billion ($14.59 billion) by the end of 2015, the International Monetary Fund said Wednesday in a review of the country's program, adding that this could be even bigger if the fund's outlook turns out to be optimistic.  Greece's international bailout faces a shortfall of around $14.59 billion by the end of 2015 and this shortfall could be even bigger if the fund's outlook turns out to be optimistic. Global economics expert Charles Forelle joins MoneyBeat. Photo: AP.  According to the report, Greece's bailout faces a €4.4 billion financing gap in 2014 and another €6.5 billion in 2015. The gap could be even bigger, according to the head of the IMF's mission in Greece Poul Thomsen, if the fund's growth outlook is overly optimistic or if the country doesn't reach its privatization revenue target.  "There are clearly downside risks [to the economic forecast] next year," Mr. Thomsen said during a conference call. "The assumption of a gradual recovery is based on the assumption that we have a rebound in consumption and investment and sustained implementation of policies and broad political support of the program."   A group of European Union finance ministers will have to meet and make commitments for the 2014 financing gap at the next bailout review—which likely wouldn't be considered by the board until October, according to Mr. Thomsen. "I have no doubt that we will see a bottoming out and gradual recovery in output next year. The exact timing is where the uncertainty comes," the head of the IMF's mission said.  The report says that Greece needs debt relief worth 4% of gross domestic product to meet a 124% debt-to-GDP ratio by 2020.  Last week, a European Union official said that the country's bailout faces a shortfall of around €3.8 billion between now and the end of 2014. That gap is because of the refusal of national euro-zone central banks to buy new Greek bonds when the ones they hold mature. When the euro zone and the IMF sealed Greece's latest aid program last year, such a rollover was part of their calculations. But since then, several central banks have refused to follow through, claiming it would amount to financing a national government, which central banks aren't allowed to do under EU rules. The official said the shortfall will have to be closed this fall in order to continue with the bailout program.  The EU and Greek flags flew in front of the Parthenon on the Acropolis on February 17, 2012 in Athens, Greece.  A group of European Union finance ministers will have to meet and make commitments for the 2014 financing gap at the next bailout review—which likely wouldn't be considered by the board until October, according to Mr. Thomsen.   "I have no doubt that we will see a bottoming out and gradual recovery in output next year. The exact timing is where the uncertainty comes," the head of the IMF's mission said.  The report says that Greece needs debt relief worth 4% of gross domestic product to meet a 124% debt-to-GDP ratio by 2020.(source WSJ) 

€-exposure...

Much more dangerous is the €-exposure that France, answering the exposure question in France that the ECB demanded, reduced it, and kept investor confidence, by transferring exposure to French banks outside France whilst strictly speaking answering the ECB honestly.
SocGen - St. Pierre et Miquelon and Débit Agricole Genève are 2 examples... In any case the big European lenders felt unease with the initial Bernake’s comments about restrictive monetary policy. The European financial system is currently oiled well with plenty of American dollars. If they are to be withdrawn there has to be a replacement. So Eurozone’s lenders asked and the ECB quickly responded with a completely new policy principle, the main characteristic of which will be plenty and zero cost euros for the ‘guys’.----- This decision was taken unanimously in ECB’s Governing Council last week with Germany not hesitating this time to support such a generous policy.----- The key to this Teutonic alignment with the rest of Eurozone member states is that the German banks are the first to need this ECB money bonanza. Many lenders in this country are dangerously undercapitalized and need badly this zero cost liquidity from the ECB.  All in all, either way western banks are now reassured that nothing will be done without their consent. The American Fed will continue to replenish their coffers with $85bn a month, and if the time comes for a change in the American generosity to banks, ---- the ECB is ready to take over.--"

DOWN SOUTH AS THEY SAY ...

There is a cultural problem in Portugal that makes this crisis worse. It has nothing to do with "laziness", "sunbathing culture" or other silly stereotypes often posted in these forum. The problem is a deep immersion in what I would call a "leftist cultural mindset" in a broad sense. Most people are not exactly communist, but they don't think good on entrepreneurs, they do not trust capitalists. In a conflict between a landlord and the home occupier they take position against the former, as if to be a landlord was a sinister capitalist exploitation. This makes any reforms towards a more market-driven economy much more difficult, specially so because even Constitutional Court justices fall into this leftist mindset.  Most people misunderstand this austerity measures. They blame the government, they blame the troika, they blame sometimes the Germans, and so on, as if this austerity was not necessary, as if it was a mischievous act. It's a silly thing, but unfortunately most Portuguese, not only low class, but even the middle class, feel a deep sense of entitlement and for them a wage cut or worse a job dismissal, is morally akin to a evil act. This explains the political manifestations against the troika and against austerity. Because of ignorance, people feels this austerity is an evil act designed to increase capitalist exploitation, and to line the pockets of the rich (how silly!). Then, their protest is self-righteous. Mind you, they are NOT exactly just defending selfishly their interests. They are more idealistic than that. They feel they occupy a moral highground and that the architects of austerity are wrong or even evil. Unfortunately, some writings by Ambrose suggest that he blames austerity almost as intensely, thus joining forces with the ignorant Greek and Portuguese masses, which criticize austerity without understanding the gravity of this situation.

The European Commission released the details of its proposals for a single bank resolution mechanism. Here's the run-down of their plans - stupidity has no limit ...it seems...:

 

1. The ECB, as the supervisor, would signal when a bank in the euro area or established in a Member State participating in the Banking Union was in severe financial difficulties and needed to be resolved.

2. A Single Resolution Board, consisting of representatives from the ECB, the European Commission and the relevant national authorities (those where the bank has its headquarters as well as branches and/or subsidiaries), would prepare the resolution of a bank. It would have broad powers to analyze and define the approach for resolving a bank: which tools to use, and how the European Resolution Fund should be involved. National resolution authorities would be closely involved in this work.

3. On the basis of the Single Resolution Board's recommendation, or on its own initiative, the Commission would decide whether and when to place a bank into resolution and would set out a framework for the use of resolution tools and the fund. For legal reasons, the final say could not be with the Board.

4. Under the supervision of the Single Resolution Board, national resolution authorities would be in charge of the execution of the resolution plan.

5. The Single Resolution Board would oversee the resolution. It would monitor the execution at national level by the national resolution authorities and, should a national resolution authority not comply with its decision, it could directly address executive orders to the troubled banks.

6. A Single Bank Resolution Fund would be set up under the control of the Single Resolution Board to ensure the availability of medium-term funding support while the bank was restructured. It would be funded by contributions from the banking sector, replacing the national resolution funds of the euro area Member States and of Member States participating in the Banking Union, as set up by the draft Bank Recovery and Resolution Directive.

Oh, NOOOO...trouble in "natziland"???

The FTSE fell 74 points, or 1.2%, while the German Dax and French CAC tumbled 1.5% as markets digested rumors that the resignation of Portugal's finance minister and foreign minister could be followed by more colleagues. Market unease over the health of the world economy was exacerbated by the political drama unfolding in Egypt and a weakening in China's growth.

The Portuguese ministers quit the coalition government this week in a row over the ruling party's handling of the country's economic plight, amid fears that they will be followed by two ministerial colleagues who are members of the junior coalition partner. If that happened, observers fear that they could take down the centre-right government. However, the junior coalition party, CDS-PP, said this evening that there would be no more ministerial resignations.

European commission president José Manuel Barroso, a former Portuguese premier, said the indebted nation risked damaging its hard-earned financial credibility after two years of closely following its €78bn (£66.4bn) bailout programme, coordinated by the International Monetary Fund, European Union and European Central Bank.

"This delicate situation requires a great sense of responsibility from all political forces and leaders," he said.

The government's future hung in the balance after president Aníbal Cavaco Silva's office said he would meet the leader of the main opposition Socialists and other parties to discuss the deepening schism in the coalition. Under the constitution, he has the power to dissolve parliament and can invite opposition parties to form a government.

Speaking in Berlin, where he was attending the EU summit on youth unemployment, prime minister Pedro Passos Coelho reiterated that he had no plans to resign. He said: "I am confident that we will be able to surpass this difficulty … I hope this internal crisis can be overcome very quickly."

With no solution imminent, the euro fell and the interest rate on Portuguese government debt soared past the 7% level – where debts are considered unsustainable – to hit 8.1% at on point, before settling back at 7.5%. The PSI 20 stock index in Lisbon fell by 5%, led by sharp losses of over 10% in bank shares

We're not living in a world where the one billion people inhabiting the 'developed world' control 80% of the world's wealth. We're living in a world in which 65% of the world's wealth is held by the 'developing world' (mostly in the BRIC countries).

This the underpinning global economic reality of where we are. The never-ending 'Euro crisis' blog and 'Japan crisis' articles that appears on this website on a daily basis is a consequence of this profound global shift in wealth and power... More info here...

http://www.youtube.com/watch?v=mOwZwkhFemQ

http://www.youtube.com/watch?v=6a0zhc1y_Ns

What has helped mask these extraordinary transformations are cheap energy, cheap debt, and cheap imported goods. However, right now, all the chickens are coming home to roost - the west (and particularly Japan) does not have sustainable access to cheap debt and cheap energy to fuel consumption and our mobile lifestyles.

We're still in the mindset that 'we' control 80% of the world's wealth. The reality is much of our supposed wealth is entirely abstract - living in the imagination of bankers and the financial industry. Whilst much of the real economy (primary resources; secondary manufactured goods, and; increasingly the service industry) is to be found more so in the BRIC countries.

We seem unable to face up to the reality - socially, economically, or politically - and educationally, we do not want to learn from the BRIC countries. In sum total: The world has got a lot more diffuse, and multi-facetated, with its power, wealth and social relations increasingly spread. But most people would prefer to accept the social and political attitude and agenda of a dinosaur imperialist like Farage, rather than a modern internationalist voice from the BRIC countries.

In essence, every city is becoming more like Janeiro or Johannesburg and every country more like Brazil or South Africa. This is the effect of globalisation - it's unsteadying the safe and cosy world of white Europeans and Americans - who can no longer rely on cheap energy, cheap oil, cheap debt, and cheap imports.

European leaders yesterday warned that youth unemployment – which stands at up to 59% in some countries – could lead to a continent-wide "catastrophe" and widespread social unrest aimed at member state governments.

The French, German and Italian governments yesterday joined together to launch initiatives to "rescue an entire generation" who fear they will never find jobs.

More than 7.5m young Europeans aged between 15-24 are not employed or in education or training, according to European Union data. The rate of youth unemployment is more than double that of adults, and more than half of young people in Greece (59%) and Spain (55%) are unemployed.  François Hollande, the French president, dubbed them the "post-crisis generation", who will "for ever after, be holding today's governments responsible for their plight".

"Remember the postwar generation, my generation. Europe showed us and gave us the support we needed, the hope we cherished. The hopes that we could get a job after finishing school, and succeed in life," he said at conference in Paris. "Can we be responsible for depriving today's young generation of this kind of hope?

"Imagine all of the hatred, the anger. We're talking about a complete breakdown of identifying with Europe.

"What's really at stake here is, not just 'Let's punish those in power'. No. Citizens are turning their backs on Europe and the construction of the European project.  Germany's finance minister Wolfgang Schäeuble warned that unless Europe tackles youth employment, which stands at 23.5% across all European Union countries, the continent "will lose the battle for Europe's unity".  Italy's labour minister Enrico Giovanni said European leaders needed to work together to "rescue an entire generation of people who are scared [they will never find work].  "We have the best ever educated generation in this continent, and we are putting them on hold," he said.  The UK department for work and pensions and the Treasury were unable to say why Britain, which has a 20.7% rate of youth unemployment, was not represented at the conference in Paris on Tuesday.  Stephen Timms, shadow employment minister, attacked the coalition for remaining "utterly silent on youth unemployment".

"This government has totally failed to tackle Britain's youth jobs crisis. This government must stop sitting on the sidelines and take the urgent action we need to get young people back to work."

Hollande outlined a series of measures to tackle the problem, including a "youth guarantee" to promise everyone under 25 a job or further education or training.

The plan, which has already been discussed by the European Commission, will be supported by €6bn of EU cash over the next five years. Another €16bn in European structural funds is also being made available for youth employment projects.

Herman Van Rompuy, European Council president, pledged to put the "fight against unemployment high on our agenda" at the next EU summit in June. "We must rise to the expectations of the millions of young people who expect political action," he said.

The commission estimates youth joblessness costs the EU €153bn in unemployment benefit, lost productivity and lost tax revenue.

"In addition, for young people themselves, being unemployed at a young age can have a long-lasting negative 'scarring effect'," the commission said. "These young people face not only higher risks of future unemployment, but also higher risks of exclusion, of poverty and of health problems."  The European ministers, who will meet with German chancellor Angela Merkel to discuss the youth unemployment crisis in July, said small and medium-sized businesses (SMEs) will form a central plank of the plans.  SMEs traditionally employ the vast majority of young people, but have complained they haven't been able to borrow enough money to grow since the financial crisis struck in 2008.  Ursula von der Leyen, Germany's labour minister, said: "Many SMEs, which are the backbone of our economies, are ready to produce but need capital, or they have to pay exorbitant borrowing rates."  The minsters are working on establishing a special credit line for small and medium-sized businesses from the European Investment Bank (EIB), which will have a €70bn lending capacity this year.  However, Werner Hoyer, head of the EIB, warned minister not have "expectations completely over the horizon".

"Let's be honest, there is no quick fix, there is no grand plan," he admitted.  Schäeuble warned that European welfare standards should not be jeopardised in order to cut the youth unemployment figures. "We would have revolution, not tomorrow, but on the very same day," he warned. Germany and Austria have the lowest rate of youth unemployment, with just 8% not in work, education or training.

The IMF suggests that as soon as central banks signal that they are readying themselves to halt QE, bond prices are likely to fall sharply, as investors "run for the door". Interest rates, which move in the opposite direction to bond prices, would jump and central banks might be forced to push up rates even further to prove they have not lost control of inflation.

"The potential sharp rise in long-term interest rates could prove difficult to control and might undermine the recovery (including through effects on financial stability and investment). It could also induce large fluctuations in capital flows and exchange rates," the IMF warned.

The research analyses the potential losses to central banks under three possible scenarios, from a relatively benign one percentage point rise in interest rates, to a much more dramatic six percentage point increase in short-term borrowing costs.

Under the most extreme scenario the losses to the exchequer would be £80bn, so even if the Bank is right about the £60bn gains for the Treasury from QE, that could still blow a £20bn hole in the public finances.

Economists stressed that any direct costs of QE should be weighed against the wider benefits to the economy. Erik Britton, of City consultancy Fathom, said, "the losses could be large - that much is true, and they would be borne by the taxpayer; but that would only be in a scenario where we were back in growth, and the benefits to the Treasury of that would outweigh those costs."

The IMF's researchers stressed that the prospect of losses on central banks' balance sheets should not prevent them from unwinding their unconventional policies, but warned that, "the path ahead will be challenging, with many unknowns."

A revised European Bathing Water Directive which is due to come into force in 2015 will require water to be twice as clean to achieve the highest standard – a rating of Excellent. Tourism bosses fear that the new rules could have a big impact on the communities around any beaches that fail to make the grade.
They are calling for a more flexible approach that would allow them to provide daily updates on the water quality meaning that they would only have to close the beaches to bathers on those days when the pollution reaches hazardous levels.  Malcolm Bell, the head of Visit Cornwall, said: “We are going to face a challenge to explain to people that things have not got worse – it is just that the hurdle has got higher.  “If a beach is on the new borderline, it doesn’t mean it will be borderline all the time.  “Sometimes it will be beautiful and other times there will be problems, so we want to be able to put up signs on those incidents but be able to take them down when it is more than safe.”  Jonathan Ponting, principal environment planning officer at the Environment Agency, said work was under way to improve the water quality in those areas at risk.  He said: “The vast majority of our beaches pass the current standards and they have seen a massive improvement over the past 20 years, but we are moving to a system that uses much tighter standards than the current ones that we report to.  “Tourism is a massive part of our economy in some of these areas and there is no doubt that if some of these beaches do have signs advising against bathing it could be damaging for the economies in those areas. “The Environment Agency has been working to get as many of those beaches as possible to meet those standards.”  Temperatures are expected to rise tomorrow to just shy of the hottest seen this year, with the South East expected to get up to 73.4F (23C), about the same as is forecast for the south of France.
 

Portugal's opposition party has called for a renegotiation of the country's EU/IMF bailout package and labeled the government an "incompetent" one which must be replaced. Socialist leader Antonio Jose Seguro, presenting a largely symbolic no confidence motion, said his party was against the spending cuts the government agreed to. He said (as reported by Reuters): Your government is destroying Portugal and there is only one solution - to replace the incompetent government. But the prime minister Pedro Passos Coelho, whose centre-right coalition has a comfortable majority, said the country had to comply with the programme to guarantee funding, and the no-confidence vote created a climate of political instability. He said a bailout renegotiation would lead to a second bailout.... The weaker than expected jobs data out from the US today could mean analysts are being too optimistic about Friday's non-farm payroll numbers, suggested James Knightley at ING. He said: The employment component [of the ISM non-manufacturing survey] dropped to 53.3 from 57.2. Given today’s ADP payrolls survey also showed a slowdown in private sector hiring to 158,000 from 237,000 in February this perhaps indicates some downside risk to the consensus forecast of non-farm payrolls rising 198,000 on Friday. With ongoing concerns about the potential economic impact from sequestration we suspect that we are going to see a softer period of activity data. As such we doubt that the Federal Reserve’s quantitative easing plans will be scaled back before the third quarter of 2013.

Greek business head calls for rethink on bailout terms - It may count as stating the obvious but the head of Greece's biggest business group reckons the Cypriot crisis could tip his country into an even deeper recession this year. He also called for the troika of international lenders, due in Greece this week, to rethink the bailout programme by promoting growth measures as well as austerity. From Reuters: "Greece is directly affected by the Cyprus crisis and based on some estimates this may chop up to one percentage point off GDP (gross domestic product)," Dimitris Daskalopoulos, head of the Hellenic Federation of Enterprises (SEB), told reporters. "With the success of the Greek bailout programme already hanging by a thread, many signs show the recession is deepening with the prospect of recovery in 2014 fading," Daskalopoulos said. He said the insistence on austerity by the eurozone's core to cure the ills of the debt crisis risked breeding euro scepticism and anti-German sentiment among the suffering countries of the single currency bloc. "The North must give and the South must change, otherwise the historic demons of Europe will find again room to act." He said the protracted economic downturn and fiscal austerity were testing society's tolerance limits and called on the government and its international lenders to retool the applied programme with growth measures. "The bell of reforms must finally ring loudly in Greece," Daskalopoulos said. "We cannot be fighting tooth and nail against firing a few thousand public sector workers when almost one million people have lost their jobs in the private sector."

The Statement by the Eurogroup President

Statement by the Eurogroup President on Cyprus - The Eurogroup held a teleconference this evening to take stock of the situation in Cyprus. I recall that the political agreement reached on 16 March on the cornerstones of the adjustment programme and the financing envelope for Cyprus reflects the consensus reached by the Cypriot government with the Eurogroup. The implementation of the reform measures included in the draft programme is the best guarantee for a more prosperous future for Cyprus and its citizens, through a viable financial sector, sound public finances and sustainable economic growth. I reiterate that the stability levy on deposits is a one-off measure. This measure will - together with the international financial support - be used to restore the viability of the Cypriot banking system and hence, safeguard financial stability in Cyprus. In the absence of this measure, Cyprus would have faced scenarios that would have left deposit holders significantly worse off.

The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below €100,000. The Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on 16 March, provided that it continues yielding the targeted reduction of the financing envelope and, hence, not impact the overall amount of financial assistance up to €10bn.

The Eurogroup takes note of the authorities' decision to declare a temporary bank holiday in Cyprus on 19-20 March 2013 to safeguard the stability of the financial sector, and urges a swift decision by the Cypriot authorities and parliament to rapidly implement the agreed measures.

The euro area Member States stand ready to assist Cyprus in its reform efforts on the basis of the agreed adjustment programme.

...thousands of trade unionists demonstrated...

As EU leaders gathered in Brussels for the talks, thousands of trade unionists demonstrated behind a police cordon against EU imposed austerity targets outside the summit venue. Figures showed that southern European Mediterranean nations continued to suffer the steepest drops in employment, with fourth quarter employment in Spain, Portugal and Greece dropping 4.5pc, 4.3pc and 6.5pc year-on-year respectively. Mr Barroso insisted that the EU needed to stick to the austerity measures and "reforms that are indispensable for European competitiveness" but conceded that more needed to be done "to promote growth in the short term and to have a reinforced commitment regarding social obligations." "Because in some cases we are reaching the limits of what is socially acceptable, and this is certainly a matter of concern for all of us," he said. During Thursday's summit France, Spain and Portugal will clash with Germany, Holland and Austria over their demand for more time to meet their debt-cutting targets against a growing popular backlash against EU austerity. A draft EU summit text echoes Mr Barroso by calling for an ﾓappropriate mix of expenditure and revenue measuresﾔ, language that France and others will interpret as a loosening of fiscal constraint against resistance from Germany. "We will discuss growth and employment and how to fight the present economic deterioration in Europe," said Mark Rutte, the Dutch Prime Minister and an EU austerity hawk. "At the same time creating a consensus on the fact that we need both to implement the necessary austerity programmes and structural reforms to improve our economies." Europe's leaders fear that an anti-austerity backlash is growing across Europe after Italian elections wiped out mainstream political parties delivering a stunning rejection to Mario Monti, the EUﾒs favoured candidate who only secured one in 10 votes. In a bid to overcome growing public dissent, the draft EU summit text expresses concern about low growth and proposes a "youth employment initiative" that allocates €6 billion for the highest unemployment regions of the EU over the coming seven years - a tiny amount of cash compared to austerity programmes cutting tens of billions. "Six billion will never be enough. I think 60 billion would not have been enough," a senior eurozone official told Reuters. "It is our political response, it is not a response in substance." "The burden has been placed on the people," said Bernadette Segol, the leader of the European Trade Union Confederation. "Unemployment is up and up and up every month, when is the growth going to come? We need investment. We are not dealing with figures, we are dealing with people, who have feelings and votes."