Geopolitical and economic warnings

A long-term global recession is certain to happen and China must focus on domestic problems, Chinese Vice Premier Wang Qishan has said.

"The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic," Wang was quoted by the official Xinhua news agency as saying at the weekend.

Wang's comments were the most bearish forecast ever by a top Chinese decision-maker about the world economy, and Beijing's worry about a worsening global environment could translate into an impetus for pro-growth policies at home.

China launched a massive fiscal stimulus package with a price tag of 4 trillion yuan ($650 billion) in late 2008 to avert a big impact from the global financial turmoil.

According to Xinhua, Wang did not speak this time about any major policy change but reiterated that banks should be more flexible lending to the agricultural sector and small firms.

"As for our country, which relies highly on external demands, we must see the situation clearly and get our own business done," Xinhua quoted Wang as saying, referring to exports.


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China Says It Will 'Strengthen' Yuan's Trading FlexibilityOdds Favor Those Who Buy Asian Stocks: ExpertChina Doesn't Have a Forex Bazooka to Bail Out Europe



The latest round of bank stress tests could actually do more harm than good to the fragile financial system—even pushing the US back into a recession, a prominent bank analyst believes. Mandated by the Dodd-Frank regulations, the Federal Reserve's annual tests require that the largest banks be able to survive 13 percent unemployment , another 21 percent drop in home prices and a 52 percent plunge in the stock market.

Those are conditions that mimic not only the financial crisis conditions in 2008 but also on some levels — particularly in the associated capital requirements the Fed thinks will be needed for the banks to survive — take the industry back to the 1930s.

For Dick Bove, the closely followed (and controversial) vice president of equity research at Rochdale Securities, the conditions are unfair and will force banks to boost their reserves against possible loan losses even more. That, in turn, will pinch bank profits and tighten credit conditions in an already struggling US economy.

"The banks are back, the banks are in good shape, the banks are ready and able to assist the economy. Then along comes this annual abortion of a stress test," Bove said in an interview. "You're going to see that they're going to have to stop lending money, they're going to have to dump loans, they're going to have to increase cash positions."

"They're going to have to increase capital ratios by shrinking their balance sheet," he added. "Everything they've achieved, everything that we've got to move us forward gets stopped and put in reverse by the stress test."

Bove has been one of the harshest critics of the increase in banking regulation that came about after the collapse of the subprime mortgage market sent the U.S. economy spiraling into recession and Washington scrambling for ways to prevent a reoccurrence.

His positions often sound contradictory — he has told investors to buy bank stocks "hand over fist" while also warning that overzealous regulators could destroy the industry. Several months ago he told investors to get out of stocks completely because of government debt turmoil, but has been adamant that U.S. banks face no serious risk from the European debt crisis.

Fears that the stress tests will seriously hamper banks are not universally shared.

read more at link.

November 26, 2011 – LONDON – As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible. Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis. The Treasury confirmed earlier this month that contingency planning for a collapse is now under way. A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time. “It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph. Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest. Greece has seen several outbreaks of civil disorder as its government struggles with its huge debts. British officials think similar scenes cannot be ruled out in other nations if the euro collapses. Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash. Fuelling the fears of financial markets for the euro, reports in Madrid yesterday suggested that the new Popular Party government could seek a bail-out from either the European Union rescue fund or the International Monetary Fund. There are also growing fears for Italy, whose new government was forced to pay record interest rates on new bonds issued yesterday. The yield on new six-month loans was 6.5 per cent, nearly double last month’s rate. And the yield on outstanding two-year loans was 7.8 per cent, well above the level considered unsustainable. Italy’s new government will have to sell more than EURO 30 billion of new bonds by the end of January to refinance its debts. Analysts say there is no guarantee that investors will buy all of those bonds, which could force Italy to default. -Telegraph

In an interview, former Dutch politician Frits Bolkestein predicted the “inevitable” breakdown of the Euro. He says Eurobonds would be a “disastrous” idea, saying…”That means that the Netherlands must pay more interest. I have calculated that thing up to seven billion euros per year. Each year, we already have problems to eighteen
billion cut in four years.” And he says he would not “shed a tear” if Italy left. Ultimately he sees the emergency of a “Neuro” comprise of Germany and other Northern European economies. –Business Insider


REPORT: The IMF Is Considering A 600 Billion Euro Bailout For Italy
The IMF is preparing a 600 billion euro bailout for Italy in case the debt crisis worsens, Italian daily La Stampa reported citing IMF officials (via AFP). The IMF would guarantee rates of 4 or 5 percent on the loan, far better than borrowing costs far better than the commercial debt market where yields have reached as high as 8 percent.
The loan is intended to give the new Mario Monti government 12 to 18 months to launch necessary reforms.


Read more: http://www.businessinsider.com/imf-600-billion-euro-bailout-italy-2011-11#ixzz1evL4AA9Y
Read more: http://www.businessinsider.com/moneygame#ixzz1evKHbyX3

WORLD BANKER MAKES STUNNING CONFESSION

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


Love Always
mudra

November 28, 2011 – ROME – Some stories in the European press (La Stampa - Zero Hedge link) suggest that Italy is working on a very big loan package from the IMF. I have no doubt that there are ongoing discussions. There have to be. Either someone puts a finger in the dike or Italy goes tapioca. That thought is difficult for me to fathom. How could we be so close to the brink? At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy. Either the ECB (aka Germany) steps in and underwrites the debt with some form of Euro bonds or the IMF (aka the USA) steps in with some very serious money. If Italy can’t make it, then there will be a very big crashing sound. It would end up taking out most of the global-lenders, a fair number of countries would follow into Italy’s vortex. In my opinion a default by Italy is certain to bring a global depression; one that would take many years to crawl out of. The policy makers are aware of this too. So I say something is brewing. And yes, if there is a plan in the works it must involve the IMF. And yes, it’s going to be big. Please do not read this and conclude that some headline is coming that will make us all feel happy again. I think headlines are coming. But those headlines are likely to scare the crap out of the markets once the implications are understood. –Business Insider
Read more: http://brucekrasting.blogspot.com/2011/11/italy-next-week.html#ixzz1f1Yt1hf3


10 days before day of reckoning: Financial Times’ Wolfgang Münchau says: I am hearing that there are exploratory talks about a compromise package comprising those three elements. If the European summit could reach a deal on December 9, its next scheduled meeting, the Eurozone will survive. If not, it risks a violent collapse. Even then, there is still a risk of a long recession, possibly a depression. So even if the European Council was able to agree on such an improbably ambitious agenda, its leaders would have to continue to outdo themselves for months and years to come. Ultimately, Münchau reckons that Italy’s disastrous bond auction on Friday tells us time is running out. The Eurozone has 10 days at most. –Business Insider


IMF drawing up £500bn package to save Italy, Spain and the euro - Last minute IMF rescue package? The International Monetary Fund is being lined up potentially to help Italy and Spain amid growing fears that a European rescue scheme will not be able to prop up the countries, it emerged last night. Reports in Italy suggested that the IMF is drawing up plans for a €600 billion (£517 billion) assistance package for the country. Spain may be offered access to IMF credit, rather than a rescue package, to avoid it being “picked off” by the markets in the coming weeks. Any IMF involvement in European rescue packages would be partly underwritten by British taxpayers, which could leave this country liable if Italy and Spain did not repay any international loan. -Telegraph http://www.telegraph.co.uk/finance/financialcrisis/8919470/IMF-drawing-up-500bn-package-to-save-Italy-Spain-and-the-euro.html


Britain draws up emergency plans for collapse of Euro after warnings Italy needs £500bn bailout
Britain is drawing up emergency plans for the collapse of the ‘creaking’ Eurozone amid warnings debt-stricken Italy will need a £500 billion bailout involving billions of pounds of UK taxpayers’ money. Chancellor George Osborne said the Treasury had ‘stepped up’ contingency planning and aimed to be ready for ‘whatever the Eurozone throws at us’. It emerged yesterday that the International Monetary Fund, in which Britain is a major shareholder, could be forced to offer Italy a €600 billion (£514bn) rescue package to give its unelected new prime minister Mario Monti 12 to 18 months’ breathing room to implement big tax rises and spending cuts.
http://www.dailymail.co.uk/news/article-2066862/Britain-draws-emergency-plans-collapse-Euro-warnings-Italy-needs-500bn-bailout.html

November 29, 2011 – NEW YORK – The aria is over- the last opera has begun. Bank of America Corp. (BAC), Goldman Sachs Group Inc. and Citigroup Inc. (C) had long-term credit grades downgraded to A- from A by Standard & Poor’s after the ratings firm revised its criteria for the banking industry. Standard & Poor’s also made the same cut to Bank of America’s Merrill Lynch unit. S&P listed its ratings for 37 of the largest financial institutions in a statement today. The new ratings were part of a sweeping change to its rating methodology for 37 financial institutions published on Nov. 9. The move may increase pressure on Bank of America, which has plunged 62 percent this year in New York trading. The second-biggest U.S. lender, by assets, said in a filing this month that a ratings cut could trigger billions of dollars in collateral payments and crimp access to credit markets. Downgrades may be costly for banks. Bank of America said in a regulatory filing this month that it may have to post $5.1 billion of additional collateral and termination payments on its trades were it to be downgraded one level by rating companies. Ratings downgrades “could likely have a material adverse effect on our liquidity, potential loss of access to credit markets, the related cost of funds, our businesses and on certain trading revenues, particularly in those businesses where counterparty creditworthiness is critical,” Bank of America said in the filing. The company, which noted the risk of downgrades from S&P and Fitch Ratings in its third-quarter filing, previously said it has prepared by lining up funding for a year. -Bloomberg

International companies are preparing contingency plans for a possible break-up of the eurozone, according to interviews with dozens of multinational executives.
Concerned that Europe’s political leaders are failing to control the spreading sovereign debt crisis, business executives say they feel compelled to protect their companies against a crash that can no longer be wished away. When German chancellor Angela Merkel and French president Nicolas Sarkozy raised the prospect of a Greek exit from the eurozone earlier this month, it marked the first time that senior European officials had dared to question the permanence of their 13-year-old experiment with monetary union.

“We’ve started thinking what [a break-up] might look like,” Andrew Morgan, president of Diageo Europe, said on Tuesday. “If you get some much bigger kind of ... change around the euro, then we are into a different situation altogether. With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive.”

Executives’ concerns are emerging as eurozone finance ministers weigh ever more radical options to tackle the sovereign debt crisis, including the possibility of funnelling European Central Bank loans to struggling countries via the International Monetary Fund. Read more at link above.

November 30, 2011 – TEHRAN – It’s starting to look like all those crazy 2012 prophecies might not be so wide of the mark after all. Even as the world is transfixed by the slow-motion implosion of the Eurozone, reports are emerging that Israel might strike Iran’s nuclear facilities early in the New Year. The unpredictable interaction of two such epochal events could cause a global catastrophe like something out of a bad science fiction novel. The most recent data shows that the Eurozone, and much of the world, may be slipping rapidly into recession. Property and commodity bubbles are bursting even in China. Not only that, but there is no more fiscal stimulus to be had. The global economy’s life raft is gone. The combination of the onset of a second global Great Depression, a devastating banking crisis in Europe, fragmentation of the Eurozone and rolling sovereign debt crises across the US and Europe is bad enough. This scenario is, in itself, a total catastrophe. Yet some serious economists say such outcomes are very possible within the next 12 months. However, few have thrown into the mix the ramifications of an Israeli attack on Iran’s nuclear facilities — also likely within the next 12 months. The Eurozone crisis and Iran’s nuclear weapons program are widely seen as discrete and unrelated events. However, they could interact in potentially horrific ways. Jeffery Goldberg of The Atlantic magazine says there is a “better than 50 percent chance that Israel will launch a strike by next July.” Israel simply cannot tolerate a nuclear armed Iran. Sanctions have failed miserably and the recent International Atomic Energy Agency (IAEA) report suggests that Iran could begin building a nuclear weapon within months. The Daily Mail has recently cited UK Foreign Office sources as saying that the British government expects Israel to attack Iran “sooner rather than later … We’re expecting something as early as Christmas, or very early in the New Year.” Israeli President Shimon Peres has said: “The possibility of a military attack against Iran is now closer to being applied than the application of a diplomatic option.”

Target Iran: Tehran has threatened to respond with “an iron fist,” and has warned about “aggressors and invaders being smashed from within.” A massive onslaught on Israel could be expected via Syria and Hamas. Simultaneously, terrorist attacks could happen in cities across the Western world. The political consequences of an attack across the Muslim world are incalculable, but one immediate effect of an Israeli attack would be on oil supply. The first thing Iran will do if attacked is blockade the critical oil-shipping lanes through the Strait of Hormuz. This would instantly send the price of oil skyrocketing to between $175 and $500 a barrel, depending on whose estimates you believe. America’s National Defense magazine says that “Under a worst-case scenario 30 day closure of the Strait of Hormuz … the U.S. would lose nearly $75 billion in GDP.” The effects on Europe would be similarly disastrous. Iran’s Navy is no match for the US Fifth fleet, but all Iran need do is slip a few mines into the water and the straits could be closed for months. Additionally, Iran might attack Saudi Arabia’s oil facilities in Dhahran, and the price of oil would instantly reach the stratosphere. Even in a best-case scenario, more stringent sanctions against Iran are now almost inevitable and these will seriously exacerbate the turmoil in financial markets, already reeling from the euro crisis. In our interconnected world, events in Brussels and Tehran can interact like never before. -Huffington Post - November 11, 2011 http://www.huffingtonpost.com/rory-fitzgerald/euro-collapse-plus-iran-s_b_1087930.html

November 30, 2011 – BEIJING – China’s debt is about $36 trillion yuan (or $5.68 trillion USD). This number is astronomical considering that it is just a little more than one-third of the U.S. total debt, but the difference between the U.S. and China is that the U.S. national income per capita is $47,140, whereas China’s national income per capita is $4,260 – not even one-tenth of the U.S. amount. To be on par with the U.S., China’s total debt should be around $1.5 trillion USD, but it is three times that! Considering that the U.S. has an unsustainable debt position, China’s is ridiculously out of control and puts that country in extreme danger of a financial collapse of epic proportions. In reality China’s inflation is 16 percent. This is eerily similar to the United States as well. The U.S. official inflation of around 3 percent is nowhere close to unofficial inflation estimates of 10-13 percent. What does this mean for China? This means that cost of living, wages and cost of goods sold in China will have to rise, and instead of exporting deflation, China will be exporting higher priced goods, thus affecting the rest of the world that purchases its goods. The world is on the verge of an inflationary cycle like we have never seen. Additionally, central banks around the globe are printing money on a massive scale to try to stimulate liquidity and spending (this is the definition of inflation!). Add to this a rising price structure in China, the major exporter to the world, and we could be preparing for a global hyperinflation. There is an economic tsunami about to engulf China, and because of the size of China’s economy and its manufacturing might, the impact of the tsunami will be felt far and wide. The United States will feel it in the form of inflationary pressures that we can’t afford right now. Periphery countries to China may feel its military might or cower to political pressure as governments that run out of money start to do irrational things (look at the United States, or Greece, or the European Union).” –World Net Daily
http://www.wnd.com/index.php?fa=PAGE.view&pageId=372457

November 30, 2011 – NEW YORK – The Federal Reserve, acting with five other central banks, took further steps Wednesday to make it cheaper for banks around the world to trade in U.S. dollars. The Fed — along with central banks of the Eurozone, England, Japan, Switzerland and Canada — announced a coordinated plan to lower prices on dollar liquidity swaps beginning on December 5, and extending these swap arrangements to February 1, 2013. The effort is meant to “ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the Federal Reserve said in a press release. Meanwhile, the People’s Bank of China also announced a plan to increase liquidity Wednesday by lowering its reserve requirement ratio for financial institutions by half a percentage point. -CNN http://money.cnn.com/2011/11/30/news/economy/fed_ecb_dollar_liquidity/index.htm

Global Reach: To prevent a lack of liquidity in the global financial system, The US Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said in a joint statement that they have agreed to lower the cost of existing dollar swap lines by 50 basis points from December 5. Such a move is unprecedented and shows the extent of the problem. Other measures included setting up bilateral swap arrangements between the central banks so that any bank could tap additional liquidity in their own currencies if necessary. The swap arrangements are good through Feb 1, 2013. –IBN
http://ibnlive.in.com/news/eurozone-crisis-joint-action-by-6-central-banks/207389-7.html

Slight of hand: This move by the Federal Reserve is almost unprecedented. Not only has the Federal Reserve coordinated a global efforts among Central Banks (both small and great, rich and poor) to print their way out of the Eurozone crisis- it also appears to be pushing an effort among banks and reassurance agencies to rewrite the maturity dates on Credit Default Swap contracts due for 2012 to February 2013- avoiding the entire doom-laden year of 2012 altogether. All of this was done virtually in secret and behind closed doors and is to go into effect on December 5, 2011- about 3 days before the EU summit convenes this year in Brussels on December 8-9th. The Bible tells us: “But while men slept, his enemy came and sowed tares among the wheat and went his way…the enemy that sowed them is the devil.” Matthew 13:25, 39. So too, while most of the world slept, the U.S. Senate passed the terrorist detention bill, the Federal Reserve instituted a move to preserve the global financial system, and a massive crackdown ensued by police in the U.S. across the country on Occupy protesters. Now we are beginning to see just how fast the events in the 13th chapter of the Book of Revelation regarding the enforcement of the Mark of the Beast, the international control of money, and the detention and death decree of Christ’s true followers can and will unfold. The Federal Reserve move to stabilize the world’s financial system through the year of 2012 is practically a red herring that something ominous is going to follow, most likely with Iran.


Personal Note: Do you think that there is another slight of hand where people in Europe can trade their Euros for dollars because the Euro is going belly up?

What we see is the Fed printing money with nothing behind it of any real value. One would think this would also undermine the value of the dollar and be a stall for the real failure of the euro expected, susposedly in the next few weeks. Isn't this possible that the Feds are bailing out their friends overseas who they lent billions too at the expense of the American taxpayer - AGAIN. The american tax payer will soon look like a slice with swiss cheese as there is less and less for real living expenses at the local level. Meanwhile, everyone is still waiting on Iraq to revalue the IQD and bail out the economy world-wide. Needless to say we are all still waiting.

December 2, 2011 – LONDON – Investor George Soros foretold doom in a recent speech in front of the International Senior Lawyers Project, according to the WSJ. The financial system is collapsing, and the developed world is fast falling into a “deflationary debt trap.” “The consequences could be quite disastrous,” he said. “You have to do what you can to stop it developing in that direction.” Soros has been an outspoken advocate of taking more radical action to stem the European debt crisis, endorsing intervention by the European Central Bank and even Eurobonds. He doesn’t think too highly about the rest of the world either, speculating that global economic imbalances are continuing to destabilize the global economy. But it’s not all bad. “A lot of positive things are happening,” Soros said. “I see Africa together with the Arab Spring as areas of progress. The Arab Spring was a revolutionary development.” –Business Insider http://www.businessinsider.com/soros-the-global-fiscal-system-is-in-a-self-reinforcing-process-of-disintegration-2011-12#ixzz1fKMvQjmR

SAN FRANCISCO (MarketWatch) - French President Nicolas Sarkozy said Thursday that using austerity alone to solve the economic crisis afflicting France and the rest of Europe would lead to recession and possibly even depression. He said such an approach would make the French people pay nearly the whole cost of trying to recover from the crisis. "It would end in recession or depression," Sarkozy said in a speech in the southern French city of Toulon. Sarkozy said that cuts and economic reform were necessary but were only part of what were needed to help Europe emerge from its sovereign debt crisis.

December 5, 2011 – BRUSSELS - Standard & Poor’s put 15 European Union nations on watch for a possible downgrade of their credit ratings as the continent’s debt crisis lingers. The threat to downgrade the euro zone countries — including the ones that enjoy the stellar triple-A-rating — comes ahead of a crucial summit of EU leaders later this week. The nations include Austria, Belgium, Estonia, Finland, France, Germany, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, the Solvak Republic, Slovenia and Spain. Greece and Cyprus were not included on the list. Cyprus was already on negative watch. Earlier, the Financial Times had reported that the ratings agency warned Germany, France, the Netherlands, Austria, Finland and Luxembourg that the countries’ top-notch ratings could be downgraded to double-A plus. -CNBC

S&P downgrade threat a clarion call for euro reform
http://www.reuters.com/article/2011/12/06/us-eurozone-idUSTRE7B30AO20111206
(Reuters) - A threat by Standard & Poors to slash credit ratings across the euro zone has sounded a clarion call, which could help Nicolas Sarkozy and Angela Merkel force through a change to the European Union treaty at a summit this week.

The French president and German chancellor are determined to change European rules to impose mandatory penalties on countries that exceed deficit targets, aiming to restore market confidence and prevent a sovereign debt crisis spiraling out of control.

Citing "continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis," S&P threatened to cut the credit ratings of 15 countries, including Germany and France, by 1-2 notches.

It also warned of slowing growth amid so much austerity, predicting a 40 percent chance of a fall in euro zone output.

A downgrade could automatically require some funds to sell bonds of affected states, making those countries' borrowing costs rise still further.

read more at link

ECB's Noyer says ratings agencies can worsen crisis
http://www.reuters.com/article/2011/12/06/us-france-noyer-idUSTRE7B50H820111206
S&P said late on Monday, after a Franco-German push for treaty change to tighten fiscal governance in the euro zone, that it could hit the 17-member bloc with a mass downgrade if there was no convincing deal at an EU summit on Friday.


Decision time for EU, with euro's future at stake
http://www.reuters.com/article/2011/12/04/us-eurozone-idUSTRE7B30AO20111204


Fed may give loans to IMF to help euro zone: paper
http://www.reuters.com/article/2011/12/04/us-eurozone-imf-fed-idUSTRE7B30X320111204


Ten days of secret planning to rescue markets
http://www.reuters.com/article/2011/12/02/us-eurozone-intervention-idUSTRE7B02P620111202


Stock futures gain on hopes of euro zone reforms
http://www.reuters.com/article/2011/12/06/us-markets-stocks-idUSTRE7AO0B420111206


Monti warns of Greek-style risk to Italy
http://www.reuters.com/article/2011/12/05/us-italy-idUSTRE7B42NH20111205

Since the inception of the euro, France and Germany have pursued divergent visions of European economic and monetary union. In two decades, the French have become a little more German, the Germans a little more French. But the gulf remains.

Paris, Berlin push for EU treaty change by March http://www.reuters.com/article/2011/12/05/us-eurozone-talks-idUSTRE7B411120111205


Euro held back by S&P; Aussie eyes RBA http://www.reuters.com/article/2011/12/05/us-markets-forex-idUSTRE7AC15W20111205


Mass. AG hits big banks with foreclosure lawsuit http://www.reuters.com/article/2011/12/01/us-banks-foreclosure-idUSTRE7B01UR20111201
(Reuters) - The Massachusetts attorney general has filed a lawsuit against five large U.S. banks accusing them of deceptive foreclosure practices, a signal of ebbing confidence that a multi-state agreement can be worked out.The Massachusetts lawsuit, filed in state court in Boston, accuses Bank of America Corp, JPMorgan Chase & Co Inc, Citigroup Inc, Wells Fargo & Co and GMAC of deceptive foreclosure practices, such as using robo-signers and false documents. "Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law," Coakley said in a statement.

Complete video at: http://fora.tv/2010/03/03/Richard_Wolff_Capitalism_Hits_the_Fan

Think Americans are in debt? Take a look at Great Britain. Economist Richard Wolff predicts that Britain will be the next victim of the global recession, citing that the average British family currently faces a debt amounting to 170% of its annual income.

-----

Join Economics Professor Richard Wolff, University of Massachusetts, for a screening of his film, "Capitalism Hits the Fan," and a Q and A.

Professor Wolff breaks down the root causes of today's economic crisis and traces its source to the 1970s, when wages began to stagnate and American workers were forced into a spiral of borrowing and debt. By placing the crisis in this framework, Wolff argues that proposals for government "bailouts," offers of stimulus packages, and calls for increased market regulation will not address the real causes of the crisis. He suggests that far more fundamental change is necessary to avoid future catastrophes. Richly illustrated with motion graphics, "Capitalism Hits the Fan" is a superb introduction to the unraveling economic crisis for ordinary citizens. - The New School

Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan.

Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne).



BRITAIN will soon be forced to scrap the pound and join the euro, one of Germany’s most senior figures said yesterday.

In a chilling threat to UK sovereignty, German finance minister Wolfgang Schauble predicted that all Europe would one day use the single currency. “It will happen perhaps faster than some in the British Isles currently believe,” he said.

His sinister warning followed the emergence of a secret German plan to build a powerful new economic government for the eurozone and block an EU referendum in Britain.

A leaked German foreign ministry memo detailed plans for a new European Monetary Fund. It also claimed the EU’s treaty could be altered to centralise more power without triggering a vote. http://www.express.co.uk/posts/view/284656

Many Greeks are draining their savings accounts because they are out of work, face rising taxes or are afraid the country will be forced to leave the euro zone. By withdrawing money, they are forcing banks to scale back their lending -- and are inadvertently making the recession even worse. read more at link http://www.spiegel.de/international/europe/0,1518,802051,00.html

December 6, 2011 – GREECE – Many Greeks are draining their savings accounts because they are out of work, face rising taxes or are afraid the country will be forced to leave the euro zone. By withdrawing money, they are forcing banks to scale back their lending -- and are inadvertently making the recession even worse. Georgios Provopoulos, the governor of the central bank of Greece, is a man of statistics, and they speak a clear language. “In September and October, savings and time deposits fell by a further 13 to 14 billion euros. In the first 10 days of November the decline continued on a large scale,” he recently told the economic affairs committee of the Greek parliament. With disarming honesty, the central banker explained to the lawmakers why the Greek economy isn’t managing to recover from a recession that has gone on for three years now: “Our banking system lacks the scope to finance growth.” He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totaled €237.7 billion — by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October — the biggest monthly outflow of funds since the start of the debt crisis in late 2009. The raid on bank accounts stems from deep uncertainty in Greek households which culminated in early November during the political turmoil that followed the announcement by then-Prime Minister Georgios Papandreou of a referendum on the second Greek bailout package. Nevertheless, the Greeks today only have €170 billion in savings — almost 30 percent less than at the start of 2010. The hemorrhaging of bank savings has had a disastrous impact on the economy. Many companies have had to tap into their reserves during the recession because banks have become more reluctant to lend. More Greek families are now living off their savings because they have lost their jobs or have had their salaries or pensions cut. In August, unemployment reached 18.4 percent. Many Greeks now hoard their savings in their homes because they are worried the banking system may collapse. Those who can are trying to shift their funds abroad. The Greek central bank estimates that around a fifth of the deposits withdrawn have been moved out of the country. “There is a lot of uncertainty,” says Panagiotis Nikoloudis, president of the National Agency for Combating Money Laundering. The banks are exploiting that insecurity. “They are asking their customers whether they wouldn’t rather invest their money in Liechtenstein, Switzerland or Germany. “Nikoloudis has detected a further trend. At first, it was just a few people trying to withdraw large sums of money. Now it’s large numbers of people moving small sums. Ypatia K., a 55-year-old bank worker from Athens, can confirm that. “The customers, especially small savers, have recently been withdrawing sums of €3,000, €4,000 or €5,000. That was panic,” she said. –Spiegel

In typical firebrand fashion, European MEP Nigel Farage unleashed a barrage of home truths during a speech in the European Parliament today, including the assertion that Greece is now under full control of a joint European Central Bank and International Monetary Fund dictatorship.

Farage was responding to a speech by Jose Manuel Barroso, the president of the European Commission, during which he called for further European integration to avert the worsening economic crisis.

Barroso asserted that the economic crisis has turned into a "fight for European integration," insisting that the solution to the growing threat to the european single currency is a more, and not less, integrated European Union.

During the speech in Strasbourg, Barroso claimed that he is getting "signals" from EU leaders that they wish to push for "a more integrated Europe" in response to the crisis.

"What we need now is a new, unifying impulse, a new federalist moment -- let's not be afraid to use the word." Barroso said, adding "The right way to stop the negative cycle and strengthen the euro is to deepen integration, mainly in the euro area. This is the way to go."

"This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration itself." Barroso stated.

Barroso suggested that more central European governance was needed in order to fully implement rules governing the running of the euro area.

"... if a eurosceptic fringe can determine the position of one member state and one member state can block decisions, the result is that we are not credible." Barroso said.

The EC president attempted to dismiss the idea that such a move would threaten the national sovereignty of member states by adding "This is not about institutional positioning or power. It is about efficiency and delivery."

"Economic and monetary union cannot function properly only on the basis of decisions taken by unanimity." Barroso said, suggesting that the Commission and the EU should have authority over the governments of member states to enforce rules via the EU "Community method".

"A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future. After all, this is why the Community method and the EU institutions were created by the member states in the first place." Barroso argued.

December 7, 2011 – WASHINGTON — Senator Mark Kirk (R-Ill.) continues to rebuff the Obama administration’s efforts to soften the amendment he authored with Senator Robert Menendez (D-N.J.) that would effectively cut off Iran’s central bank from the world financial system. The Obama administration sent a letter to the conference committee proposing “technical fixes” to the amendment the Senate unanimously voted to include within the defense authorization bill last week, Kirk said on Tuesday at an event hosted by conservative think tank American Enterprise Institute. The Kirk-Menendez amendment is meant to prohibit any financial institution that does business with the Central Bank of Iran from also doing business with the United States. A Kirk aide said the administration’s proposed changes included a six-month delay for the implementation of all sanctions, not just for oil and related products, and an easing of penalties imposed on foreign institutions for doing business with the CBI. Kirk, buoyed by the Senate’s 100-0 vote last week to include the sanctions amendment in the defense authorization bill, denounced this letter and the administration’s concerns, saying their proposed changes are simply meant to “undermine” the amendment and “provide a way out for the administration to say that a nuclear Iran is unacceptable, but to take no action.” Kirk and Menendez sent their own letter to the House and Senate Armed Services chairmen and ranking members on Monday night. “The Menendez/Kirk amendment is tough, responsible and, most importantly, bipartisan,” the letter said, a copy of which was provided to National Journal. “It provides the administration another key tool to curb Iran’s pursuit of nuclear weapons while keeping oil markets stable and encouraging other nations to reduce Iranian oil purchases. With the support of every single United States senator, it needs no alterations.” The Obama administration insists it supports what it calls well-targeted and properly designed sanctions against the CBI, but needs coordinated action with U.S. allies so that it does not fragment the international coalition working to isolate Iran, inadvertently spike oil prices and cause unstable markets, or otherwise negatively affect Washington’s allies and trading partners. –Global Security Newswire

Engineering the Eurozone Collapse - William Engdahl on GRTV

https://www.youtube.com/watch?v=htktdv28EF4


Love Always
mudra

December 7, 2011 – EUROPE - Standard & Poor’s ratings service just put the long-term rating of the European Union on “credit-watch negative.” With the eurozone accounting for 62% of the European Union’s budgeted revenues in 2011, it would seem that the greater, 27-state European Union is also vulnerable to the crisis. S&P is also putting BNP Paribas, Commerzbank, Societe Generale, Credit Agricole, Deutsche Bank, and many other European banks on “credit-watch negative.” Markets appear to be unfazed by the announcement. It is not wholly unexpected after S&P’s announcement earlier this week that it had changed the credit outlook of 15 eurozone sovereign nations to negative. Once again, S&P is late to the game and appears to be locking the barn door after the horse is gone. But the change certainly indicates just how precarious Europe’s financial position has become. –Business Insider

December 8, 2011 – FRANCE – French President Nicolas Sarkozy has warned that “never has the risk of disintegration been greater” for Europe in a speech in Marseille. He was addressing a gathering of European leaders of the centre right. German Chancellor Angela Merkel said it would take years to overcome the crisis but “we need to have more Europe.” EU leaders are preparing for a key summit in Brussels, where they will be trying to clinch a deal on how to tackle the eurozone debt crisis. The key proposal on the agenda of the gathering in the Belgian capital later on Thursday is how to enforce budgetary discipline with automatic penalties for those eurozone nations that overspend. Germany and France are pushing for new European Union treaties, saying stricter fiscal rules should be enshrined there. Mr. Sarkozy said Europe was in much danger. “Never has Europe been so necessary. Never has it been in so much danger,” he said. “Never have so many countries wanted to join Europe. Never has the risk of a disintegration of Europe been so great. Europe is facing an extraordinarily dangerous situation.” He said the eurozone economies still had a few weeks to decide, but that time was working against them. “The diagnosis is that we have a few weeks to decide because time is working against us. If we aren’t in agreement on this, I fear that we won’t be able to agree on anything. That’s the analysis.” Mrs. Merkel has said changes to the European constitution are necessary. She said all 27 member states in the EU had a duty to Europe, and had to work together to overcome the crisis in the eurozone. -BBC

http://www.bbc.co.uk/news/world-europe-16115373
UK alone as EU agrees fiscal deal
EU leaders say the UK is now the only country not backing a tax and budget pact on the eurozone debt crisis, after Hungary changes its stance. All the countries of the European Union except the UK have backed a tax and budget pact to tackle the eurozone debt crisis, say European leaders.

Hungary originally said it would also remain outside the deal but has now changed its stance.

Other countries outside the 17-member eurozone have agreed, some pending consultations with their parliaments.

UK Prime Minister David Cameron had insisted on an exemption for the UK from some financial regulations.

The UK effectively used its veto to block an attempt, led by the French and Germans, to get all 27 EU states to support changes to the union's treaties.

Instead, eurozone members and others will adopt an accord with penalties for breaking deficit rules. It will be backed by a treaty between governments, not an EU treaty.

'Stable euro'
"In fact, 26 leaders are in favour of joining this effort. They recognise the euro is a common good," said European Council President Herman Van Rompuy.

Read more at link above


EU summit
VIDEO: http://www.bbc.co.uk/news/world-europe-16093316
* Eurozone members have agreed to a new tax and budget pact to tackle the debt crisis

* Other EU members say they intend to sign up, although some need parliamentary approval

* Britain has ruled out joining the new agreement because of objections to new financial regulations
German Chancellor, Angela Merkel, says the deal is a "tremendous step towards a stable Europe"

* Croatia has signed an accession treaty to join the EU in 2013. Read more at link http://www.bbc.co.uk/news/world-europe-16093316


Euro crisis summit: The night Europe changed
http://www.bbc.co.uk/news/world-europe-16106979
In the long hours of a bitter Brussels night Europe changed. A major step was taken towards closer integration. It was not as a result of popular demand by Europe's people. It came about because Europe's leaders believed their project had "never been in such danger".

Last night most of Europe's governments gave up a chunk of their sovereignty. In the future, tax and spending plans will be shown to European officials before national governments.

There will be automatic sanctions against those countries that overspend. A monetary union has moved towards being also a fiscal union.

As a result of the late-night negotiations, there is now a two-speed Europe. French President Nicolas Sarkozy accepted that. He said it was "the responsibility of those who opted out of the single currency".

Several countries outside the eurozone had argued passionately against a Europe of the "ins" and "outs", of two categories of membership. That, however, is what happened.

Europe's leaders failed to agree a change to the EU treaties. Instead the new rules will be adopted and implemented through an inter-governmental treaty.

This will be an agreement involving the 17 members of the eurozone and some other states that are willing to embrace the new rules.

British isolation
The main obstacle to treaty change was Britain. Never has the UK been more isolated in Europe.


Read more at link http://www.bbc.co.uk/news/world-europe-16106979

December 9, 2011 – EUROPE – European leaders, meeting until the early hours of Friday, agreed to sign an intergovernmental treaty that would require them to enforce stricter fiscal and financial discipline in their future budgets. But efforts to get unanimity among the 27 members of the European Union, as desired by Germany, failed as Britain refused to go along. Prime Minister David Cameron of Britain gave a press conference after talks gathering European Union leaders in Brussels, Belgium, early on Friday. In a day of historic, seemingly tectonic shifts in the architecture of Europe, all 17 members of the European Union that use the euro agreed to the new treaty, along with six other countries that wish to join the currency union eventually. Twenty years after the Maastricht Treaty, which was designed not just to integrate Europe but to contain the might of a united Germany, Berlin effectively united Europe under its control, with Britain all but shut out. Though not a perfect solution, because it could be seen as institutionalizing a two-speed Europe, the intergovernmental pact could be ratified much more quickly by parliaments than a full treaty amendment. The support ECB bank to continue to buy the bonds of troubled large countries like Italy and Spain is crucial to buy time for their economic adjustment and restructuring, to reduce their debt and avoid a collapse of the euro. The outcome was a significant defeat for David Cameron, the British prime minister, who had sought assurances to protect Britain’s financial services sector in exchange for doing a deal.

Recalling thrills of our love: Mr. Sarkozy said that “David Cameron requested something we all considered unacceptable, a protocol in the treaty allowing the U.K. to be exempted for a certain number of financial regulations.” Mr. Cameron said, “What was on offer wasn’t in British interests, so I didn’t agree to it.” He conceded that there were risks with others going ahead to form a separate treaty, but added, “We will insist that the E.U. institutions, the court and the Commission work for all 27 nations of the E.U.” The prime minister seemed to be betting that his unhappy coalition partners, the Liberal Democrats, would not bolt over the issue, and that calculation seemed to be right. On Friday, the party’s leader, Nick Clegg, said that as much as he regretted the turn of events, Mr. Cameron’s demands had been “modest and reasonable.” The European Council president, Herman Van Rompuy, said that in addition, the leaders agreed to provide an additional 200 billion euros to the International Monetary Fund to help increase a “firewall” of money in European bailout funds to help cover Italy and Spain. He also said a permanent 500 billion euro European Stability Mechanism would be put into effect a year early, by July 2012, and for a year, would run alongside the existing and temporary 440 billion euro European Financial Stability Facility, thus also increasing funds for the firewall. –New York Times excerpt


French Banks ratings cut: Moody’s cut its ratings on the long-term debt of BNP and Credit Agricole by one notch to Aa3, concluding reviews that began in June and were continued in September. Societe Generale’s long-term debt was cut by one notch to A1. The downgrades were driven by the increasing difficulties the banks were having in raising funding and the worsening economic outlook, Moody’s said. The French banks’ ratings are still roughly level compared with their European peers, reflecting their strong retail operations and stable earnings. The downgrade nevertheless comes at a sensitive time for the banks, which have seen their shares pummeled and when they have been forced to cut their outstanding loans and potential risk as available short-term funding has evaporated. SocGen said in a statement it was surprised by the decision and challenged the ratings agency’s reasoning, adding that its third-quarter results had shown its “capacity to adjust rapidly its management of short and long-term funding needs in the current unfavorable market environment”. –Reuters http://www.reuters.com/article/2011/12/09/us-france-banks-moodys-idUSTRE7B80M420111209

European leaders say 26 out of 27 EU member states have backed a tax and budget pact to tackle the eurozone debt crisis. Only the UK has said it will not join. Prime Minister David Cameron said he had to protect key British interests, including its financial markets. The 17 countries that use the euro have all agreed to the deal. Nine other countries have said they will sign up, some pending consultations with their parliaments. Hungary originally said it would also remain outside the deal but has now changed its stance.

'Stable euro' - The UK effectively used its veto to block an attempt, led by the French and Germans, to get all 27 EU states to support changes to the union's treaties.


Chris Morris
BBC News, Brussels
This was a night of political drama, and the long-term implications of what happened will be debated for months to come.

But there is a more immediate issue, which will be of primary interest to the financial markets. Will the European Central Bank (ECB) judge that enough has been agreed in Brussels to allow the ECB to do any more to help protect countries which are struggling to pay their debts?

That will not mean becoming a lender of last resort - a commitment to the unlimited buying of bonds. But the ECB could still do more, if it chose, to help bring down the cost of borrowing for countries like Italy and Spain.

Sovereign debt woes in several member states are still at the heart of this crisis, and if further action is not taken to resolve them, there may not be much of a eurozone left to haggle over.

Euro deal means less sovereignty
Instead, eurozone members and others will adopt an accord with penalties for breaking deficit rules. It will be backed by a treaty between governments, not an EU treaty.

"In fact, 26 leaders are in favour of joining this effort. They recognise the euro is a common good," said European Council President Herman Van Rompuy.

Mr Cameron said he had done "the right thing" by not signing up to the deal, as it was not in Britain's interests.

"We were offered a treaty that didn't have proper safeguards for Britain, and I decided it was not right to sign that treaty," he told the BBC.

Read more at http://www.bbc.co.uk/news/world-europe-16115373


BRUSSELS—Europe's leaders crafted a new "fiscal compact" to repair flaws in their currency union, but the deal lacked bold strokes investors have been urging and it could be insufficient to halt the region's debt crisis.

Markets reacted with tepid optimism Friday. U.S. stocks rose. The Dow Jones Industrial Average climbed 186.56, or 1.6%, to 12184.26. European stocks were also generally higher, and the euro rose slightly. But the crucial government bond markets were mostly flat.

The positive reactions appeared to be driven by relief that leaders had reached an agreement at all, rather than enthusiasm for the deal itself. If ... http://online.wsj.com/article/SB10001424052970203413304577087562993283958.html?mod=WSJ_article_forsub