EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2

Friday, August 05, 2011







Eurozone crisis: Can contagion to Italy be arrested?






by Philip Whyte

Ever since the EU and the IMF ‘bailed out’ Greece in May last year, the
eurozone has fought a desperate rear-guard battle to stem contagion to
other countries – with little success. Ireland and Portugal have since
been bailed out, and Cyprus could be next. The most disquieting
development, however, has been incipient contagion to larger economies
like Spain and Italy. Unless this contagion is arrested, the eurozone
could face a potentially terminal crisis. For the past year, the Spanish
government has been battling valiantly to persuade financial markets
that it will not be the next domino in the chain. But the change in
sentiment towards Italy has been more recent – and is perhaps more
alarming. What explains it?

Until early July, Italy had just about convinced the financial markets
that it was not the ‘next Greece’. A cynic might justifiably wonder why.
The country’s structural problems, after all, are as profound as they
are well-known. It has a rapidly ageing population. Its ratio of public
debt to GDP is the second highest in the eurozone (after Greece).
Productivity has barely risen over the past decade. Rising wages have
consequently pushed up unit labour costs, eroding the country’s trade
competitiveness. Governance, moreover, is notoriously weak: because of
the dysfunctional nature of the political system, few eurozone countries
have done less in recent years to improve the supply-side performance
of their economy.

Given these longstanding weaknesses, why did sentiment towards Italy not
sour earlier? Until recently, Italy was thought to have several
advantages over other countries in the eurozone’s troubled geographical
periphery. Unlike Ireland and Spain, it did not experience a domestic
credit boom in the run-up to the global financial crisis. Private sector
balance sheets are therefore stronger: households are not
over-indebted, and Italian banks fared well in recent stress tests.
Italy, moreover, has been running smaller budget deficits than Greece or
Portugal; in 2011, it is expected to run a primary budget surplus.
Unlike in Greece and Portugal, budget deficits did not seem to pose a
threat to Italy’s public debt sustainability.

Since July, however, market sentiment has changed alarmingly. At the
time of writing, the yield on 10-year Italian government bonds stands at
6.12% – up from 4.73% at the end of June (and from 3.73% in October
2010). The spread over German bunds, which had fallen to almost zero in
2008, has now widened to 370 basis points. As in Greece, heightened
perceptions of sovereign risk are hitting sentiment towards Italian
banks (which have large exposures to their home country’s sovereign
debt). Even banks that fared well in the EU’s recent stress tests have
not been spared: the share prices of all Italian banks have taken a
pummelling. Why has sentiment towards Italy soured so dramatically over
the past month?

It is tempting to pin all the blame on political infighting and
paralysis. It certainly does not help that the government is hamstrung
by a small majority in parliament, or that relations between the prime
minister and the finance minister are poor. Nor does it help that Silvio
Berlusconi seems more inclined to use the office of prime minister to
advance his private interests than the public one. But it is not as if
these factors became apparent only in early July. Besides, Spain, whose
government has shown greater focus and determination than Italy’s over
the past year, has also experienced rising borrowing costs. So a strong
political commitment to reform is necessary to restore confidence in
Italy. But it may not be sufficient.

To see why, consider Japan – a country that displays many of the same
ills as Italy. Like Italy, Japan has a rapidly ageing population. It
also suffers from political paralysis and low economic growth. Japan’s
public finances, moreover, are in much worse shape than Italy’s: its
ratio of public debt to GDP is almost twice as large as Italy’s, and it
is set to run a bigger budget deficit in 2011. If the recent spike in
Italian government bond yields was solely driven by market fears about
political stasis, low growth, weak public finances and a dearth of
economic reforms, one might have expected Japanese bond yields to have
risen in tandem with Italy’s. Yet they have fallen: 10-year Japanese
bonds now yield just 1.2%.

Why have two countries with similar problems experienced such
contrasting fortunes? Beleaguered European politicians may be tempted to
blame market irrationality. A more plausible explanation is that less
creditworthy sovereign issuers are more fragile inside a monetary union
than outside, as they issue debt in a currency over which they have
little control. The emerging framework for dealing with stressed
sovereigns in the eurozone has heightened perceptions of fragility. A
sovereign can only remain solvent if markets are confident that a
‘credit event’ is not in prospect. That confidence has weakened in the
eurozone because ‘bail outs’ are increasingly seen as a prelude to,
rather than a means of avoiding, a default.

The result is that bond yields inside the eurozone have become
increasingly polarised between the weak and the strong. Italy could
certainly do much to restore market confidence in the long-term
sustainability of its public debt by enacting reforms that raise the
economy’s long-term rate of growth. But it is illusory to believe that
the country’s borrowing costs can be restored to more sustainable levels
by action in Italy alone. The fate of Italy – and, by extension, the
eurozone – is likely to be determined as much as by decisions in Berlin
and Brussels as by those in Rome. It is becoming harder to see how the
polarisation of yields within the eurozone can be reversed unless
European leaders adopt a common Eurobond.

Philip Whyte is a senior research fellow at the Centre for European Reform.



Posted by
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The president of the European Central Bank has claimed Europe's finances are
"encouraging" - proving it is possible to make statistics say anything.










Jean-Claude Trichet said the eurozone's deficits and economic standing amounted to a
"quite encouraging situation if you compare it with other major advanced
economies".

"The problem is at the level of individual countries," he said at the closing
of the Ecofin summit.

This is, of course, both entirely accurate and utterly misleading.

The further back you step, the better the world's economic problems will
seem.

When you look at things on a global level, for instance, there are no
deficits or surpluses.

Until we start trading with Mars, that is.

In other words, to ignore the imbalances between countries - as Mr Trichet
did in his comments - is to ignore the central and perennial problem in
international economics: that countries tend to borrow too much unless they are
checked.



US treasury secretary Tim Geithner



And that, if you wanted to boil it down to the very bare bones, is what went
wrong in the eurozone.

The Mediterranean countries borrowed too much and Germany saved too much.

That's fine (to an extent) when you have an independent currency which can
adjust, but not when you're yoked together with other differently-placed
economies.

If Tim Geithner, the US treasury secretary, was in any
doubt before this weekend about the difficulties Europe faces in bridging these
divides, he is unlikely to be now.

In what I am told was an extremely tense session on Friday, Mr Geithner put
forward his proposal for a new bailout package for the euro nations and implored
them to put their books in order - only to be met with an extremely stony
reception.

According to those inside the meeting, the Austrian delegation said it would
refuse to take orders from a country whose economic position is, in many ways,
worse than much of the eurozone.



Mr Trichet said the EU's situation as a whole was 'quite
encouraging'



The Austrian and German finance ministers said the only circumstances under
which they would be prepared to take such orders would be if the US started
supporting their plans for a global tax on financial transactions.

The treasury secretary unsurprisingly refused, and left the meeting with a
stony expression on his face.

Europe's problems are manifold.

Greece is on the brink of bankruptcy and economic collapse; the broader
eurozone has betrayed fatal flaws; ministers are divided on everything from the
shape of the bailouts to the question of whether further fiscal integration is
possible.

Sadly, this meeting failed to address these problems.

Disappointing Ecofin meetings are hardly unprecedented, but, as Chancellor George Osborne told me, time really is running out
before the problems lead to a crisis of disturbing proportions.

Unfortunately, economic history suggests that when it comes to large and
apparently intractable politico-economic problems such as these, it usually
takes a crisis for the politicians to take the nasty medicine (and make the
adjustments) they so desperately need.






sky report

Shares around the World are in the Red , not just because of th EU crisis, fears of a double dip recession and the problem with Greece because the
second tranche has to be finalised by 3rd October. Tim Geithner was not very well received at the meeting in Poland on Friday when he urged the EU
to be decisive, some of the EU Countries Austria in particular objected to his comments because the U.S. also has its problems. It is feared Italy, one of the largest Countries will be the next big hurdle . Many analysts believe Greece default in inevitable , there are only two options. One is to keep
lending money ad infinitem which the ECB cannot do, the other is to issue a Eurobond which makes every Country culpable for one Country"s debt
and the EU adopting a fiscal policy which every Country has to adopt. It was reported that there is a surge in property prices in London over the
last few days, many wealthy Greek Buyers, among them.!!!!!!!

I distinctly remember when Britain joined the "Common Market2, no Country should have a debt more than 3% of its GDP, Italy and either Spain and
France were the first to go above this but were never fined. This should have been the warning sign way back then that a Panel should be appointed
to monitor a Country"s Finance

S & P has reduced Italy"s Credit rating to A, Berlesconi reckons it is Political but opinion believes it is because the Italians will not accept stringent
cutbacks.

French AAA rated Bonds considered riskier than Malaysian Bonds.Siemens has moved U.S. $500 million from a French Bank to the ECB.

Greece in limbo while ECB considers second tranche. Has only enough cash to last a few weeks. The interest on it"s 2 year Bond is 68.7% !!!

Spain also a potential need for further help from the ECB. Teachers are staging a protest in Madrid , a 3 day March to protest against their longer
working hours.

The banks around the World are the worst performing in Europe.



That"s the problem with any Government reforms the protests by the Populalation will make them unworkable.

Yesterday Siemens took 5oo Million Euros from their French Bank Account and deposited the money in the ECB. Today, the ECB lends Italy E500 mill.

Does this mean the ECB is running out of money?

Shares around the World have fallen as much as 5% on some exchanges as Fed warns the situation is not improving.

It appears the rest of the World , including the IMF , is p***ed off with the Leaders of the EU Countries that they havn"t come to a resolution on the
way to treat the Greece problem. There is no way Greece can default , not only because of the Treaties it has signed, but mainly the Euro which so many other Countries have invested in.Italy is a major threat and Berlesconi knows he cannot impose harsh measures without the Italians having National strikes , like the Greeks .... both volatile Nations. Ireland is doing very well , not much news on Portugal or Cyprus.

Maybe the concept of a European Union which started life as a Common Market was doomed to fail.It should have been confined to Trade and a
Defense Policy,. t is not a Democracy either, France and Germany effectively ruling 27 Nations and MEP"s having no authority.

I think while the World is in Financial turmoil the EU should disband, what do you think?

IT IS BEING SAID THAT THERE ARE ONLY 6 WEEKS TO SAVE THE EURO.

[quote="Badboy"]IT IS BEING SAID THAT THERE ARE ONLY 6 WEEKS TO SAVE THE EURO.[/quot

The second tranche has to be paid to Greece in October subject to Greece taking appropriate measures to curb expenditure to repay the Loans
Badboy which of course they Can"t. Any measures by Greece or Italy will result in rioting because both Countries have volatile Citizens. G20 Leaders
are meeting as I write and the South Korean President says the rest of the EU MUST take action immediately to calm nerves around the World. This is
the first big problem the EU has faced and it has shown the World it is incapable of dealing with the very serious matter, it"s not just 2 Countries,
Portugal Spain, Cyprus and possibly Belgium and France could also be seeking Financial Hekp.

It is utterly ridiculous that Greece is paying 68% interest on a 2 yr bond and I wouldn"t be at all surprised if, despite France and Germany trying
desperately to save the Euro, it will fail.

The Meeting of the IMF is over and Europe has been given 1 week to take action because the rest of the World is affected and there is a real danger of
a World Wide recession. World leaders need to work together to try to resolve the problem. the trouble is, you can take a horse to water, but you can"t
make it drink . Only Yesterday there was a massive protest march in Greece against the latest measure to cut the deficit. Any fool can see that while
Greece is paying such draconian interest rates on the Bonds it is selling it is never going to lower it"s debt.

I think the ECB is running out of money and it appears the emerging markets might be asked to step in. Italy is the next Country causing concern.

Warns Osborne

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5:36am UK, Saturday September 24, 2011




Chancellor George Osborne has warned European leaders that they have
six weeks to tackle the economic crisis engulfing the eurozone.







Osborne says a November meeting of G20 nations is the deadline for action




He spoke as stock markets around the world stabilised following heavy falls earlier in the week.


Mr Osborne said a meeting of the G20 nations in France in November
remains the deadline for action to tackle the financial problems.


Speaking after meeting with fellow finance ministers from the group of developed and developing nations, he said there was a recognition of the need for urgency.


But Labour leader Ed Miliband renewed his calls for an earlier
emergency meeting to agree "a plan for growth" to steer the global
economy back towards recovery.


A late rally was not enough to prevent the FTSE 100 suffering its
second worst weekly fall this year, losing 5.65, or £78bn, from its
value.















FTSE-100's Rise and Fall



Click here to see an interactive graph showing how key events since 2008 have affected the FTSE-100.















Turmoil continued on markets across the globe as world leaders failed
to ease global recession fears sparked by a gloomy outlook from
America's central bank, weak Chinese and eurozone economic data and the
enduring sovereign debt crisis.


Prime Minister David Cameron used a speech in Canada last night to
urge the eurozone to deal with its debt and the US to put its public
finances back on a sustainable path.


And he put himself at the head of a six-nation bloc of G20 leaders
signing a letter calling for "decisive action to support growth,
confidence, and credibility".


But Mr Miliband accused Mr Cameron of "lecturing" foreign leaders,
when he had no more to offer them than the same austerity package being
imposed in the UK.







Ed Miliband (R) says the PM (L) doesn't have a plan to deal with the crisis





Instead, he called for co-ordinated action by the G20 - whose members represent 85% of the global economy - to restore growth.


"What we need is a plan for growth here at home and across the world," said the Labour leader.


"That's the way we tackle the debt issues that we face.


"The problem is that the Prime Minister may have woken up to the crisis but he doesn't have a plan to deal with it."


"All the Prime Minister seems to be offering is to say 'We have got
austerity here and I am going to export it abroad'. That's not a
solution to the problems the world faces."


:

I think the planned strikes and demonstrations by the U.K. are an indication of the lack of leadership Cameron shows. shame on those intending to protest, they still have jobs and Pensions, what about the rest of those who do not.??? One thing this Economic disaster has proved is the lack of
co=ordination and co-operation within the EU. Never again should France and Germany decide what"s best for the EU. France has serious problems
with it"s Banks which , had there been proper monitoring could have been foreseen a long time ago. Germany lent several EU Countries large amounts
of money 5 years ago at a low rate of interest. That should have been a warning sign that there were serious problems in these Countries even then.
Had austerity measures been taken then maybe this disater could have been avoided.

Panda wrote:I think the planned strikes and demonstrations by the U.K. are an indication of the lack of leadership Cameron shows. shame on those intending to protest, they still have jobs and Pensions, what about the rest of those who do not.??? One thing this Economic disaster has proved is the lack of
co=ordination and co-operation within the EU. Never again should France and Germany decide what"s best for the EU. France has serious problems
with it"s Banks which , had there been proper monitoring could have been foreseen a long time ago. Germany lent several EU Countries large amounts
of money 5 years ago at a low rate of interest. That should have been a warning sign that there were serious problems in these Countries even then.
Had austerity measures been taken then maybe this disater could have been avoided.

I agree about those protesting, Panda. Teachers are an example of those that I think have been very lucky so far. They have jobs for life, if they want them and it's very difficult to get rid of a useless teacher. They have final salary pensions, to which the taxpayer contributes. Why should I be contributing to their excellent pensions? I really don't wish to do that! As you say, they have jobs, while so many are losing theirs. At a time when the country is possibly approaching economic meltdown, all they can think about is themselves and that they are being asked to contribute more to their own pensions. Talk about blinkered!

I have to say I have become a tad cynical about this Eurozone fisaco.

It's the Bank Crash that really should have taken place which is now threatening to happen in within the EU. At some point someone, or some Country I should say, is going to take the "crash" and it will unfortunately, as Panda says, take everything else with it.

We should have let the Banks fail regardless of the consequences - there is only so much money you can print before your credit rating plummets and the paper becomes worthless. This is why people were buying gold and why its so expensive.

We should all change our money to the Yaun.

AnnaEsse wrote:

Panda wrote:I think the planned strikes and demonstrations by the U.K. are an indication of the lack of leadership Cameron shows. shame on those intending to protest, they still have jobs and Pensions, what about the rest of those who do not.??? One thing this Economic disaster has proved is the lack of
co=ordination and co-operation within the EU. Never again should France and Germany decide what"s best for the EU. France has serious problems
with it"s Banks which , had there been proper monitoring could have been foreseen a long time ago. Germany lent several EU Countries large amounts
of money 5 years ago at a low rate of interest. That should have been a warning sign that there were serious problems in these Countries even then.
Had austerity measures been taken then maybe this disater could have been avoided.

I agree about those protesting, Panda. Teachers are an example of those that I think have been very lucky so far. They have jobs for life, if they want them and it's very difficult to get rid of a useless teacher. They have final salary pensions, to which the taxpayer contributes. Why should I be contributing to their excellent pensions? I really don't wish to do that! As you say, they have jobs, while so many are losing theirs. At a time when the country is possibly approaching economic meltdown, all they can think about is themselves and that they are being asked to contribute more to their own pensions. Talk about blinkered!

I really don"t see what can be done to save Greece and the iirony is that many Greeks with money are flying to London to snap up bargains in
sought after areas where prices have dropped. !!!

Angelique wrote:I have to say I have become a tad cynical about this Eurozone fisaco.

It's the Bank Crash that really should have taken place which is now threatening to happen in within the EU. At some point someone, or some Country I should say, is going to take the "crash" and it will unfortunately, as Panda says, take everything else with it.

We should have let the Banks fail regardless of the consequences - there is only so much money you can print before your credit rating plummets and the paper becomes worthless. This is why people were buying gold and why its so expensive.

We should all change our money to the Yaun.

Britain should never have entered the EU, it morphed from a Common Market to a dictatorship and even though Britain didn"t sign up for the Euro,
we have signed so many treaties that it is virtually impossible to leave, the best hope is if the EU is dismantled. Angelique, what annoys me is Germany and France run the show and have proved incompetent Leaders. Sarkozy should have seen how fragile French Banks were a long time ago and Merkel
should have realised the vulnerability of the 5 Countries Germany lent money to 5 years ago. Do we ever get to know what the other Members think
should be done? The Euro is tied to so many other Countries that it can"t be allowed to fail at the moment, Greece will be allowed to default because
there is no alternative , it will take them at least 2 generations to repay the loans and that"s presuming the Greeks will accept the situation. Both
Greece and Italy have shown they are ready to strike and protest march.

Fears Over 'Shockwave' Of Greek Debt Crisis

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7:48pm UK, Saturday September 24, 2011

Ed Conway, economics editor, in Washington DC

No longer a question of if, but when - that is the tone of discussions over
Greece which has dominated the summit of finance ministers in Washington over
the weekend.




Greece is, in terms of its debt, increasingly seen as a
lost cause



According to senior G20 sources, the assumption now is that the country will
have to default on its debt by as much as 50% – on top of the 20% voluntary
restructuring already agreed in July.

And so whereas efforts some months ago were aimed at preventing Greece
defaulting, the Eurozone, and its G20 colleagues from the world's biggest
economies, are instead making secret plans to build a firewall protecting
European economies such as Spain and Italy from the prospect of a buyers'
strike.

::
Osborne: Global Debt Crisis Is In 'Dangerous Phase'

Here's what ministers are currently thinking: Greece is, in sovereign debt
terms at least, a lost cause.

Portugal and Ireland may be salvageable – unlike Greece their austerity plans
and bail-outs are yielding at least some results, albeit at the cost of some
severe pain.

A collapse in confidence in the debt of Italy or Spain would be disastrous
and unaffordable.



Greece's austerity cuts have sparked riots - and its
financial difficulties look set to send a shockwave across Europe



A Greek default would send an instant financial shockwave through the euro
area, since so many banks – particularly in France and Germany – hold its
debt.

Nonetheless, the first priority ministers have already openly agreed on is to
pump more capital into their banks to ensure their balance sheets are healthy
enough to withstand it when those Greek debts suddenly become worth half their
previous value.

The IMF said just this week that European banks are undercapitalised to the
extent of 200 billion to 300 billion euros. The assumption is that not all the
money can be raised from the beleaguered private sector.

So it is hoped that the euro members could use cash from the European
Financial Stability Facility (EFSF), a bailout facility worth around 440 billion
euros - to help shore up these bank balance sheets.



The focus is shifting to protecting the big European
economies, such as Italy's



But many ministers and economists – including UK Chancellor George Osborne,
have warned that this fund is not large enough. Earlier this month, the US
Treasury Secretary Tim Geithner urged Eurozone ministers to boost the fund using
private sector cash.

The alternative plan, which is being worked on in Europe and was discussed
privately this weekend, is instead to use EFSF cash to guarantee sovereign
debt.

In the event of a default, the first 20% of the losses would be absorbed by
the EFSF. This would theoretically make the EFSF five times more powerful.

At the same time, the European Central Bank would continue to step in and buy
up troubled Eurozone debt as necessary to prevent their bonds sliding
dangerously.

The hope is that these extra measures would be enough to prevent further
contagion throughout the euro area. Whether markets will be convinced remains to
be seen.

Papadopoulas says it is not possible to default and leave the EU, would be disastrous if it left and how would it"s £1.7 trillion debt be repaid. The
German Court has to vote this week to decide whether the second tranche should be paid to Greece, based on their Budget Commitee report.

It appears that Greece cannot be allowed to fail for fear that the EU would also fail, but how can Greece ever hope to repay such a huge debt? Where is
all this money coming from when most banks are hanging by a thread and Governments around the World are having problems? America and China
are very reluctant to pour yet more money into bailing out Greece just to save the Euro, not Greece.

GREECE MIGHT BE ALLOWED TO PARTIALLY DEFAULT,JUST ANNOUNCED ON 5.30 BBC NEWS

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7:29pm UK, Sunday September 25, 2011




Alistair Darling has warned that the global economy faces a worse
crisis than it did three years ago amid growing fears that Greece will
default on its loans.










The former Chancellor told Sky News there had been a "lack of
leadership" in recent weeks - and decisive action should have been taken
to resolve the problems affecting the eurozone a long time ago.


He was speaking after Sky sources revealed that members of the G20 group of nations have had behind-the-scenes meetings in Washington DC to prepare for Greece defaulting on its £350bn debt.


Eurozone countries have come under pressure at the weekend's
International Monetary Fund meeting in Washington to contain the crisis,
which it is feared will bring the global economy into a double-dip
recession.

The better off, richer countries have to help the poorer countries get through this.

Former chancellor, Alistair Darling







Speaking on Sky News' Murnaghan show, Mr Darlingsaid: "The Greek crisis has been allowed to run on and on and on.


"Only this weekend it appears the governments have realised it is only a matter of time before Greece defaults.


"It is imperative the eurozone countries take action now and not let
it drag on for the next few weeks because the risk is it will bring down
other countries with it."


He said: "The situation today is more serious than it was three years ago.


"There are lessons to be learnt and they are not being learnt by those responsible at the moment."








Concern over Greek debt

















Mr Darling said the global problems were a consequence of having a single currency.


"The better off, richer countries have to help the poorer countries get through this," he said.


He said the crisis "will affect all of us - in or out of the eurozone".


Christian Noyer, the governor of the Bank of France, has said French
banks - which would be most exposed if Athens failed to pay off its
loans - can take the hit.


He said there are no hidden "toxic" assets and the country's financial institutions are "very solid".


An injection of funds into a number of continental banks is the
cornerstone of a three-pronged plan reportedly being discussed to save
the euro.















FTSE-100's Rise and Fall



Click here to see an interactive graph showing how key events since 2008 have affected the FTSE-100.















It has been reported that shoring up banks under a recapitalisation
scheme would mean that banks would have reserves they could draw on if
necessary.


The Sunday Times has reported the plans could be unveiled within days
- amid warnings the FTSE 100 suffer further dramatic falls without
rapid and radical intervention.


The index suffered its second worst weekly fall this year last week, losing £78bn from its value.


On
Saturday, Chancellor George Osborne assured Sky News that although the
debt crisis had "entered a dangerous phase" - nations had "taken a step
towards resolving it".

Euro slides to lowest ROE since 2001. Shares around Europe opened in the Red again, Meeting at week-end seems to have had little effect on the
Market , Banks urgently need re-capitalisation but where is all this money coming from?????? Banks splinter on remedy for halting the slide, agree
the EU MUST make a decision on Greece. Banks seem to be the main focus of concern, even more than what happens to Greece.

A little light relief, this is a comment on the latest News on the EU. in the sky Article.

Posted by: godfry winter on September 26, 2011 1:39 PM

Nick
Glegg and Merkel went to sea in a beautiiful pea-green boat,they took
some honey and plenty of money,wrapped up in a euro note,Nick Glegg
looked upto the stars above and sang to a small guitar,Merkel my love
what a beautiful Merkel you are,you are,what a beautiful Merkel you
are,.Merkel said how charmingly you sing,lets be married,too long have
we tarried,but what shall we do for a ring,they sailed away for a year
and a day to where la-la land grows,and there in a wood Nicolas Sarkozy
stood with euros at the end of is nose,is nose,with euros at the end of
is nose,dear gleggy are you willing to sell for one euro your soul?SAID
GLEGGY [ I WILL] So they were married next day,to the eurozone who bled
everybody to the bone,and hand in hand on the edge of the sand they
danced at the collapse of the eurozone,the zone,the collapse of the
eurozone.

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Could Beijing Step In To Save The Euro?

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6:47pm UK, Monday September 26, 2011

Holly Williams, Asia correspondent

China is under pressure to help bail out European countries facing debt
crises. But Beijing is a reluctant economic saviour.










China has around £1.93trn worth of foreign currency reserves.

It has earned the money by exporting much more to the rest of the world than
it imports and already uses the cash to help prop up Western economies.

China is the biggest buyer of American debt, with over $1trn (£644bn) in US
Treasury securities. It also owns European debt, including a recent purchase of
€25bn (£21.7bn) in Spanish government bonds.

Some say China, an increasingly important global player with a booming
economy, now also has a responsibility to use its reserves to help bail out
Greece and other European countries that may be facing default.

But a Beijing-backed rescue plan is not popular with the Chinese public.

"Maybe things are getting worse in Europe, and better here, but it's still in
China that people need more help," said a Beijing office worker.



Economy Facts: China v Greece

China
:: Debt - 18.9% of GDP
:: GDP per capita - £4,895
:: Unemployment - 4.3%
Greece
:: Debt - 142% of GDP
:: GDP per capita - £19,060
:: Unemployment - 12.5%

"In Greece, government workers retire when they're in their forties with a
state pension."

It is true that China is facing economic problems of its own.

Battling with inflation, the Chinese have seen the price of many staple foods
skyrocket over the last year, fuelling public anger and raising the spectre of
unrest.

Housing prices have tripled since 2005, leaving many people unable to afford
a home and many economists worry that China has a housing bubble that could be
dangerously close to popping.

But when it comes to European debt, China may not have a choice.



Eurozone
Q&A

Sky's economics editor Ed Conway answers your
questions on the debt crisis.








The EU is the country's biggest market for manufactured goods. If it keeps
debt-ridden European countries liquid, they will keep buying.

"Even if they didn't ask, China would help them, because it's of mutual
benefit," said Professor Zhang Bin of the Chinese Academy of Social
Sciences.

"China wants a stable world economy. That's not only good for the world, but
also for China."

Yet the Chinese Government is sounding a cautious note when it comes to how
much money it is willing to commit, saying it will assist Europe only "at the
margins".

"China is not a saviour," said one senior Chinese finance official during the
recent meeting of finance ministers at the International Monetary Fund.

"We need to save ourselves."

I think this says it all:-

China
:: Debt - 18.9% of GDP
:: GDP per capita - £4,895
:: Unemployment - 4.3%
Greece
:: Debt - 142% of GDP
:: GDP per capita - £19,060
:: Unemployment - 12.5%

The latest move is for "covered bonds" to be issued, another term apparently for quantitive easing, another term for printing more currency thereby
devaluing the Euro. Shares have rallied on this News but the most sensible reasoning I have heard so far was from a Spokesman from Saxo Bank in Denmark. He says the only action which will stop the Cancer spreading around Europe is austerity . the problem with the Banks is of their own making , too eager to lend without retaining enough liquidity. Now , we have the ECB and others having to bail out not just Countries ,but Banks as
well.

One of the ways the Greek Government is proposing to ensure that it is able to repay the borrowings is to put a levy on Electricity.......are they serious!!!!!
Hitting manufacturing at a time when it needs to keep costs down, and Domestic users can switch off if it gets too cold in the Winter and wear extra
clothing, thereby reducing revenue to the Government.

The Greek Government votes today on the austerity Bill, the most contentious being a tax on property. If this is not passed, then Greece will default,
concensus is that it is only the demented Sarkozy and Merkel insistent on keeping Greece afloat to save the Euro. Italy is selling bonds today, Spain is also worse off than expected, Portugal and Ireland have to be considered...........what happens if these Countries have to back to the ECB for further
funding?

Patrick OFlynn Chief Political commentator at the Daily Express, explains it rather well. "On one hand the Brussels Elite is fully aware that Greece"s
debts are too enormous ever to be repaid in full . On the other hand they will not countenance decisive default, to devalue by leaving the eurozone
or put the giant reserves of Germany bedind it"s debts. Instead they provide Greece with just sufficient Funds to keep going for a few weeks to allow
it to stumble on in return for undertakings to embark on intense austerity.They call this "kicking the can down the street". It would be more accurate to
describe it as a particularly cruel form of life support.....keeping the Greek economy in a persistent vegetative state in order to comfort neighbours and relations."