EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2

Draghi, the new President of the ECB is speaking at this moment. He is saying that the ECB is fully independent and the national Economics is the repsonsibility for their growth. We were tole several weeks ago that the new EFSF fund of E700 Billion would be available , where is it?
When will the implementation of it be ready? It is not the responsibility of the ECB to get involved in the EFSF, nor will the ECB be lender of
last resort.

Portugal is heading for a shock year.

Spanish 10 year Bonds trading at 6.88%, very near the7% which would indicate a Bail out for Spain although the Elections next weeks promise a change in working practices promise more flrexibility, In comparison, the yield on a 10 year Greek bond is 28%.

Germany, Britain vow to face debt crisis together

By Laura Smith-Spark, CNN
November 18, 2011 -- Updated 1430 GMT (2230
HKT)


Angela Merkel and David Cameron shake hands after
a press conference in Berlin on November 18, 2011.

STORY HIGHLIGHTS

• David Cameron is in Berlin for talks with German Chancellor Angela Merkel
  
• Cameron: "A strong, successful and stable eurozone is in all our interests"
  
• The two countries are among the largest economies in Europe
  
• Europe is in the grip of a debt crisis that has shaken market confidence
  

(CNN) -- Britain's David Cameron and Germany's Angela Merkel
restated their commitment to a strong Europe Friday, as they sought to show a
united front in the face of Europe's debt crisis.

Their talks in Berlin come amid tensions between the two nations over how to
restore financial stability in Europe.

"The United Kingdom has a great interest, and very sensibly so, in seeing the
eurozone being strong," Merkel said.

While Britain has some differences of opinion with Germany over the EU treaty
and ways to boost competitiveness, she said, the two countries are tied by
"strong bonds of friendship."

Both will work closely together ahead of a meeting of European leaders next
month, she said.

Britain is the biggest economy in Europe outside the 17-nation eurozone,
which uses the euro as its currency, while Germany is the economic powerhouse
within it.

The pair have not always agreed on the best ways to tackle the current debt
crisis, which has seen attention focused on Italy and Greece in recent
weeks.

Senior members of Cameron's Conservative Party have been calling for more
powers to be brought back to Britain from Europe, as EU treaty changes are made
to ensure economic stability.

Cameron, who has previously expressed concern that Europe's difficulties are
affecting Britain's economic recovery, also downplayed divisions between the
countries as he stood alongside Merkel.

"We have had a very good discussion between very good friends," he said.
"There are many things on which we are in absolute agreement."

However they have not made progress on plans for a European financial
transactions tax, Merkel acknowledged. Britain opposes such a tax, fearing it
could disadvantage London as a global financial center.

Cameron called for the deal reached at a summit in Europe on October 27 to be
implemented as soon as possible.

The plan includes a series of measures to address the crisis, including debt
relief for Greece, new capital requirements for banks and plans to build a
financial "firewall" around vulnerable euro area economies.

"A strong, successful and stable eurozone is in all our interests," Cameron
said.

"We need this crisis to be resolved. Britain, like Germany, has a big
national interest in that happening."

And while the two do not agree on all matters, they can discuss and
accommodate each other's views, he said.

Cameron met earlier Friday with European Council President Herman Van Rompuy
and European Commission President Jose Manuel Barroso in Brussels.

Global markets have been volatile, as political turmoil linked to the
financial crisis has forced a change of government in both Greece and Italy in
the past week.

18 November 2011 Last updated at 15:15
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Italy: PM Mario Monti wins second confidence vote

Mr Monti came to the lower
house with his interior minister, Anna Maria Cancellieri
Continue
reading the main story
Global
Economy

• What's the matter with Spain?
  
• What's the matter with Italy?
  
• Is
  the euro about to capsize?
  
• How might Greece leave the euro?
  

The technocratic government of
Italian Prime Minister Mario Monti has won a crucial confidence vote in the
lower house of parliament.

MPs voted 556 to 61 to endorse the new government's programme after Mr Monti
asked to be allowed to continue in office until new elections in 2013.

Mr Monti's powerful predecessor, Silvio Berlusconi, said he would back the
new cabinet staying in office until then.

The Senate, or upper house, endorsed the new programme on Thursday.

Mr Monti said he would meet German Chancellor Angela Merkel and French
President Nicolas Sarkozy next week.

He has promised to fight tax evasion and reform pensions to bring down
Italy's debt.

He is under considerable pressure to act quickly after Italy's borrowing
costs again reached unsustainable levels, despite dropping to safer territory
early this week following his appointment.

Mr Monti was sworn in on Sunday to lead a government of experts - including
fellow professors, bankers and businessmen - after the country's worsening
financial crisis forced out Mr Berlusconi.
Monti
appeal
Addressing MPs, Mr Monti urged them not to "pull the plug" on his government
before the next scheduled elections, no matter how politically painful the
measures in his plan to spur growth and cut debt.
Continue reading the main story
Analysis


Alan Johnston BBC News,
Rome

---

So far, generally, Mr Monti has been well received.

His measured, thoughtful, tactful approach comes in stark contrast to the
style of his predecessor, Silvio Berlusconi. And to many Italians, the change of
tone comes as a huge relief.

Mr Monti has made some clever opening moves. In setting out his austerity
programme before parliament he's talked only in the broadest terms. There have
been no details of any step that might have provoked major opposition right from
the outset.

Far from frightening people, much of what he said would have been widely
welcomed. He said his reforms would aim to make Italy fairer. He said there
would be more jobs for women and the young, and that tax evaders would be hunted
down.

Certainly some people are uneasy that their country is now led by a
completely unelected administration.

One student at yesterday's demonstration in Rome spoke for many around him
when he demanded the right to be able to vote for his government.

But at the same time, there is very little faith in the country's
professional political class.

And for the moment at least the polls suggest that the great majority of
Italians are ready to give Mr Monti and his team of experts a chance.

• Q&A: Italy's technocrat
  government
  

Mr Berlusconi, who retains substantial support in
parliament, had reportedly said he would bring down the new government if he did
not like the path it took.

However on Friday, he told reporters: "I think this government will operate
in a way that serves the country for the whole remaining period."

On Thursday, the government won the vote in the upper house of parliament
easily, by 281 votes to 25.

Addressing the senators, Mr Monti promised to respect Italy's timetable to
balance its budget by 2013 and reduce its debt, but said austerity measures
would be balanced by economic growth and social fairness.

"The future of the euro also depends on what Italy will do in the next few
weeks," the former EU commissioner said before the vote.

Mr Monti said he intended to overhaul the pension system which he said "has
large disparities in treatment and unjustified privileges for certain
sectors".

He also said there would be a crackdown on tax evasion and changes to the
taxation system.

He said the absence of a locally gathered property tax on houses classed as
first homes was an Italian "anomaly". The tax - known in Italy as the ICI tax -
was abolished under Mr Berlusconi.

He added that his government would introduce incentives for companies to
employ more women and young people.

"If we fail, if we don't carry out the necessary reforms, we will also be
subjected to much harsher conditions," Mr Monti said.

He said economic growth would also involve a crackdown on the Mafia.

But the unelected leader has already faced widespread protests, by people
angry at growing unemployment and further austerity.
Who's who in the new government




Defence minster (not pictured):
Giampaolo Di Paola, head of Nato's military committee since June
2008.
Foreign minister (not pictured): Giulio Terzi Di Santagata, experienced
diplomat, no clear political leanings. Environment: Corrado Clini
Expert in environmental and health risk assessment, climate
change and renewable energy.





More on

Sky News


7:10pm UK, Friday November 18, 2011


Spain's borrowing costs hit a record high on Friday, breaking through a key
threshold at which Greece, Ireland and Portugal officially needed a
bailout.


Investors demanded a yield of 7.1% on Spain's 10-year bonds on Friday morning
as fears of contagion from the eurozone debt crisis continued to escalate.

Last week, returns on equivalent Italian bonds also breached the symbolic 7%
mark.

However, yields on both Spanish and Italian bonds fell back sharply after
quick intervention from the European Central Bank (ECB) to buy up some of the
debt on the secondary market, but safer economies saw their borrowing costs
begin to rise.

Although nowhere near the 7% danger zone, yields on French 10-year bonds have
hovered around the 3.6% mark while its prized triple-A credit rating remains
under pressure.

The
continent is facing two separate challenges - in the short term it must create
firewalls to prevent the debt crises in Spain and Italy from spreading, and in
the longer-term it is working towards closer economic integration within the
eurozone.

Riva Froymovich, Dow Jones Europe
economics correspondent


Even Germany, Europe's most robust economy, saw its 10-year bond yields rise
towards 2%.

By the close of trading on Friday, the FTSE 100 in London was down 60 points,
or 1.1%, marking a fifth day of straight losses.

Elsewhere in Europe, Germany's DAX closed down 0.8%, while France's CAC 40
fell 0.4%.

However, the MIB in Italy rose 0.2% and Spain's IBEX was up by almost
0.5%.

Meanwhile, Italy's new prime minister Mario Monti has passed his first big
test after the lower house of parliament approved his austerity bill.

The changes in leadership in Italy and Greece have done little to ease
concerns over the finances of both countries.

Spain is due to go to the polls on November 20.

Dow Jones Europe economics correspondent Riva Froymovich explained that the
continent is facing two separate challenges.

In the short term, it must create firewalls to prevent the debt crises in
Spain and Italy from spreading, and in the longer term it is working towards
closer economic integration within the eurozone.

She told Sky News the problem was that both Germany and the ECB are both
focusing on the longer-term challenge, and there is no indication to investors
of a feasible solution to building the firewalls.

However at the European Banking Congress in Frankfurt, ECB chief Mario Draghi
urged decisive action to implement the European bailout fund.

The eurozone's debt crisis featured in discussions between the British Prime
Minister and the German Chancellor.

David Cameron and Angela Merkel said although they didn't agree
on every aspect of European policy, they can "address and accommodate and deal
with those differences".

PressEurop
Editorial

State of emergency

18 November 2011

The wheel continues to turn. Following elections on 20 November, Spain will become the third EU country to change government this month, and the sixth, in the wake of Ireland, Portugal, Slovakia, Greece and Italy, to have an administration that has either been ousted or voluntarily given up its mandate amid the ongoing crisis.
Democracy, technocracy, people, financial markets... These terms are increasingly a feature of press comment on the state of play in Europe. The manner in which George Papandreou and Silvio Berlusconi have been shown the door to be replaced by experts with remarkably similar profiles – Lucas Papademos and Mario Monti, two economists who have occupied highly ranked positions in the EU and worked for the investment bank Goldman Sachs– has raised legitimate questions about governance and democratic responsibility.
Along with the all-powerful markets, the two main targets for criticism have been French President Nicolas Sarkozy and German Chancellor Angela Merkel, whose role in the much reported Frankfurt Group that includes the presidents of EU institutions and the managing director of the IMF, has fuelled conspiracy theories about plans to place Europe under the autocratic control of a German influenced board of directors.
But if we momentarily adopt the point of view of devil’s advocate, there is no denying the devastating impact that the announcement of a referendum in Greece had on the meager progress towards a solution in the wake of the 26 October agreement on the country’s debt, or the damage wrought by this announcement to George Papandreou’s standing, who in spite of his many qualities, completely discredited himself in the eyes of his political friends.
As for Silvio Berlusconi, given the overwhelming evidence of his personal and political unfitness for high office, we can hardly complain that he has handed over to a man who has the trust of Italy’s partners. And having spent years complaining about the lack of leadership in Europe, we can hardly take issue with Merkel and Sarkzoy’s initiative to prevent the exacerbation of a crisis, which everyone acknowledges is a genuine threat to the future of the European project.
For all that, doubts remain about the effectiveness of the emergency measures. On the one hand, the crisis, which is continuing to spread is now threatening France and Austria along with Spain and Belgium. On the other, the growing rift between the 17 Eurozone states and the ten other EU members has prompted fears of a political deadlock, which would constitute a major obstacle to future strategies to overcome the crisis and address the issue of the democratic deficit in Europe.
With this in mind, the possibility of a stand-off between Germany and the United Kingdom, which emerged in the news this week, is increasing cause for concern. On the same day, both Angela Merkel and David Cameron delivered speeches that were characterised by diametrically opposed visions Europe: the German Chancellor demanded more discipline, coordination and control that would imply the surrendering of certain aspects of national sovereignty, while the British Prime Minister who wants “the flexibility of a network, not the rigidity of bloc,” declared his intention to take back responsibilities from Brussels.
In a Union where governments do not know how long they will hold office and where mistrust of Germany continues to grow, the necessary debate on Europe’s political model is likely to be more heated than ever.
Translated from the French by Mark McGovern
Categories

• Angela Merkel
  
• European Union
  
• Frankfurt Group (GdF)
  
• George Papandreou
  
• Goldman Sachs
  
• Lucas Papademos
  
• Mario Monti
  
• Nicolas Sakozy
  
• Silvio Berlusconi
  

Type Editorial

• inShare0

Protesters in Madrid linked arms to try to stop the Bailiffs entering a neighbours House who owed E50,000 in Mortgage and Legal Fees but
it was all in vain , the family were evicted including an 87 yr old Grandmother.

A protest movement has sprung up in Madrid calling itself "Indignados", the Indignant, and have taken possession of a Madrid Hotel boarded
up for 20 years. It is being used as Headquarters for the Protesters who are complaining that while the average wage in Italy is E1300 per month , im Spain it is E640.
A Newsagent interviewed said he is not selling many Newspapers because they are full of doom and gloom and it remains to be seen whether
any new Goverment can do something to make the situation better.


Angela Merkel may be adamant on Countries learning to live within their means but her policy is obviously not working and as with Angola
offering Portugal financial assistance, if other Countries offer Spain help, what happenes to the EU????? How can there ever be fiscal union
when there is such disparity between the Members some of whom will take years to improve their situation.?????

sky news


7:10pm UK, Friday November 18, 2011


Spain's borrowing costs hit a record high on Friday, breaking through a key
threshold at which Greece, Ireland and Portugal officially needed a
bailout.


Investors demanded a yield of 7.1% on Spain's 10-year bonds on Friday morning
as fears of contagion from the eurozone debt crisis continued to escalate.

Last week, returns on equivalent Italian bonds also breached the symbolic 7%
mark.

However, yields on both Spanish and Italian bonds fell back sharply after
quick intervention from the European Central Bank (ECB) to buy up some of the
debt on the secondary market, but safer economies saw their borrowing costs
begin to rise.

Although nowhere near the 7% danger zone, yields on French 10-year bonds have
hovered around the 3.6% mark while its prized triple-A credit rating remains
under pressure.

The
continent is facing two separate challenges - in the short term it must create
firewalls to prevent the debt crises in Spain and Italy from spreading, and in
the longer-term it is working towards closer economic integration within the
eurozone.

Riva Froymovich, Dow Jones Europe
economics correspondent


Even Germany, Europe's most robust economy, saw its 10-year bond yields rise
towards 2%.

By the close of trading on Friday, the FTSE 100 in London was down 60 points,
or 1.1%, marking a fifth day of straight losses.

Elsewhere in Europe, Germany's DAX closed down 0.8%, while France's CAC 40
fell 0.4%.

However, the MIB in Italy rose 0.2% and Spain's IBEX was up by almost
0.5%.

Meanwhile, Italy's new prime minister Mario Monti has passed his first big
test after the lower house of parliament approved his austerity bill.

The changes in leadership in Italy and Greece have done little to ease
concerns over the finances of both countries.

Spain is due to go to the polls on November 20.

Dow Jones Europe economics correspondent Riva Froymovich explained that the
continent is facing two separate challenges.

In the short term, it must create firewalls to prevent the debt crises in
Spain and Italy from spreading, and in the longer term it is working towards
closer economic integration within the eurozone.

She told Sky News the problem was that both Germany and the ECB are both
focusing on the longer-term challenge, and there is no indication to investors
of a feasible solution to building the firewalls.

However at the European Banking Congress in Frankfurt, ECB chief Mario Draghi
urged decisive action to implement the European bailout fund.

The eurozone's debt crisis featured in discussions between the British Prime
Minister and the German Chancellor.

David Cameron and Angela Merkel said although they didn't agree
on every aspect of European policy, they can "address and accommodate and deal
with those differences".

Britain 'will join euro before long’, says German finance minister

Britain will have to abandon the pound and join the single currency “faster than people think”, Germany’s finance minister has said.


Wolfgang Schäuble believes that Britain will have to adopt the euro Photo: REUTERS







By Bruno Waterfield, in Brussels and Christopher Hope in Berlin

10:44PM GMT 18 Nov 2011
893 Comments


Wolfgang Schäuble said that, despite the current crisis in the eurozone, the euro will ultimately emerge as the common currency of the entire European Union. He said he “respects” Britain’s decision to keep the pound, but insisted that the survival and eventual stabilisation of the euro will convince non-members to join the currency club. “This may happen more quickly than some people in the British Isles currently believe,” he added.

Mr Schäuble also said Germany will stand firm on its call for a financial transaction tax that Britain believes would badly harm the City of London.

Fears over the eurozone crisis saw stock markets fall again yesterday. The FTSE 100 closed down 1.1 per cent. French and German shares also fell.

Meanwhile, a leaked document seen by The Daily Telegraph yesterday showed Berlin has drawn up radical plans for an intrusive new European body which will be able to intervene directly in beleaguered countries.

Sir John Major, the former prime minister, warned last night that the growing integration of the eurozone nations threatens democracy in those countries. He told Al Jazeera television that richer euro members led by Germany and France will “insist on moving towards what we call fiscal union. By that I mean common control over budgets and fiscal deficits”.

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  18 Nov 2011
  
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Sir John, who advises David Cameron on foreign policy issues, also described the banking transaction tax as “a heat-seeking missile proposed in continental Europe, aimed at the City of London”.











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• New Greek government submits 2012 budget 18/11/2011 20:34 CET
  
• Greece kept waiting for new PM 08/11/2011 00:03 CET
  
• Referendum dead as Greece PM faces crucial vote 04/11/2011 15:03 CET
  
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• Greece presents new budget plan 18/11/2011 13:43 CET
  

International lenders are piling pressure on Greece’s political parties to give written guarantees of support for the country’s bailout deal.
With a new technocrat prime minister in place, the politicians appear to be on board, but there is still a lot of anger on the streets, and many are considering emigration.
One young male student said: “(If) we don’t have something to eat, we will think about going to another country.”
His friend said: “We fight, we stay…and I think all problems can be solved if you fight very well and if you believe that.”
A female student said: “I think I am going to stay here because if I leave I feel I will (have) betrayed my country. So, I will do whatever is necessary in order to improve the situation.”
Our correspondent in Greece, Ali Sheikosalami said:
“Getting the vote of confidence from the parliament is one thing, winning the confidence of the Greek people is another. Optimism is in very short supply in this country. That means wrestling with the massive debt will not be the only challenge for the new government.”
Copyright © 2011 euronews
smaller_text larger_text

7:05am UK, Sunday November 20, 2011

Robert Nisbet, Europe correspondent


Spanish voters go to the polls today in the midst of the eurozone debt
crisis with polls suggesting they will oust the ruling Socialist party.


The current prime minister, Jose Luis Rodriguez Zapatero, has already
announced his intention to stand down after the election, following criticism
for his handling of the country's economy.

His handpicked successor Alfredo Rubalcaba looks almost certain to be
defeated by the veteran conservative Mariano Rajoy.

The election campaign was fought over the country's parlous finances.

Unemployment stands at over 21%, the highest in the European Union, growth
has stagnated and the collapse of the housing market has exposed worrying levels
of private debt.

To make matters worse, the sovereign debt crisis in the eurozone has made it
even more expensive for the Spanish government to raise money, with interest
rates nearing the 7% barrier on 10-year government bonds.

Mr Rajoy is expected to introduce a wide-ranging austerity package, although
he has been coy on specifics.

Professor Gayle Allard from the Madrid Business Institute says he will need
the help of the Socialist party if he is to succeed.

"Particularly with labour market, collective bargaining, and pensions reform
they are going to need a consensus of the two parties," the professor told Sky
News.

"I would hope that in a moment of crisis like this you could have a grand
coalition".

The eurozone debt bomb has seen political fortunes tumbling across
Europe.

In February, Ireland's prime minister Brian Cowen was the first to fall after
a humiliating bail-out, soon followed by Jose Socrates of Portugal and then
Iveta Radicova of Slovakia, who lost a confidence vote on the stability
facility.

More recently, Greece's prime minister, George Papandreou, went as did
Italy's Silvio Berlusconi: the biggest scalp of the crisis so far.

Today Mr Zapatero is likely to join that list, as Spanish voters show their
anger over the country's dire financial straits.

Why Europe needs enemies

17 November 2011
Hospodářské noviny
Prague


"Together since 1957", the logo for the 50th anniversary of the Treaty of Rome.
europa.eu

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Nothing better than an enemy to forge a common identity. But the adage of the nineteenth century doesn’t quite fit the current crisis. Only by changing their relationship to power can Europeans unite and overcome the crisis, says a Czech editorialist.
Martin Ehl
He who understands the past can shape the future. That paraphrase from George Orwell’s Animal Farm offers a way of looking at the current state of the European Union. At the recent annual conference in Passau of the Czech-German Discussion Forum on European Identity, a refreshing viewpoint from historian Milos Řezník offered up a key to Europe’s survival as a group of economically, politically and culturally thriving states.
In our collective identity it’s not just what we are that’s important; what we’re not has even more resonance. That was the basic thesis of Professor Řezník, which he illustrated by the development of modern nationalism in the first half of the nineteenth century, when the system of states disintegrated and new elites offered people a chance to identify with the ‘nation’ through the concept of civil equality. As it evolved, national identity turned into a source of potential conflict.
And now we’re asking the question: what role does European identity play? It arises as a notion, moulds itself, and the question is whether it will take root. What is it missing, for it to take root, to unite those who would – in theory – accept this identity because they live in the common area, share common values? For Europe to be more united, what’s missing is a strong sense of a threat. Europeans are missing a common enemy.
Shared prosperity

Greece in collapse, Italy crumbling, and France threatened with slashed credit ratings, all bound up in a looming collapse of the eurozone: that’s not enough to glue together the inhabitants of the Old Continent. Even in the deepest crisis of the historically unique process of European unification, Europeans are unable and perhaps unwilling to admit that what brings them together is greater than what divides them.
The argument that the European Union must either integrate more deeply or fall apart is being heard more often. But deeper union cannot be decreed by a change in the Lisbon Treaty. What we need is a crisis. Real and deep.
Greece, in fact, is crashing

But where is the enemy, which will unite Europeans, to be found? Who’s to blame for waning economic prosperity, state finances in terminal arrest, reduced competitiveness? Is it just a historical blip in the rise and fall of empires, so accurately described by historians Paul Kennedy and Niall Ferguson? Can we simply point a finger at someone and say Europe is in dire straits because the Greeks cook the books, the Italians borrow too much, or should we wag our fingers across the borders at Chinese state capitalism and cheap Indian labour?
In a global economy, one has to lay aside old national and ideological categories. A stronger European identity, which could be the basis for restoring the prosperity of the peoples of the old continent, could be created by tighter restrictions on a quite different class of people: politicians who are unable or unwilling to look beyond the horizon of a term in office, who speak a language remote from the everyday lives of ordinary Europeans, who are unwilling to resign even while dragging their countries towards the brink of bankruptcy...
National identity has all too often been shaped by a variety of traumas, as societies were brought together by a sense of shared fate. European identity, Professor Řezník believes, needs a deep, thorough-going crisis, in order to test its own viability.
So long as Europeans do not feel a sufficient sense of belonging, the French and Germans will be able to go on negotiating coordinated taxes or changes to the Lisbon Treaty. In the long run, though, this kind of united Europe is doomed to disappear all the same.
Translated

What's the matter with Spain?

By Laurence Knight Business reporter, BBC News The next Spanish government
will find itself on the horns of a nasty economic dilemma
Continue
reading the main story
Global
Economy

• What's the matter with Italy?
  
• Is
  the euro about to capsize?
  
• How might Greece leave the euro?
  
• Eurozone crisis explained
  

Whoever wins Spain's general election
on Sunday - and it looks likely to be the opposition conservatives - will face a
potentially unsolvable economic dilemma.

They may also face a major financial crisis.

Because, with Italy having now joined Greece, Portugal and the Irish Republic
on the eurozone critical list, it is looking like Spain will be next.

The government's cost of borrowing money on the financial markets for 10
years - a popular barometer of lender fear - has risen to
6.3%.

That's close to the level where other eurozone governments turned to their
neighbours for a bailout.

In comparison, Germany only has to
pay an interest rate of 1.8%.
Off-message
However, Spain's descent into the financial abyss is important for more than
the fact that it is - like Italy - an enormous economy that may be too big to
rescue.

It is because Spain does not fit the narrative.

Indeed, Spain's story lays bare the fact that the eurozone's problems run far
deeper than the issue of excessive borrowing by ill-disciplined governments,
which most politicians have focused on.

Until now it has been easy to blame southern Europeans for their economic
woes.

Greece couldn't control its spending, and lied about its borrowing
statistics.

Portugal also borrowed and spent too much.

Italy, while more frugal, simply has way too much debt - a legacy of
government profligacy from way back in the 1970s and 1980s.

But Spain has been a model European. Unlike, say, Germany.
Breaking the rules
When the euro was first conceived in the 1990s, Germany insisted on a
"stability pact" to ensure that governments inside the eurozone would keep their
finances in order.
Spain's Prime Minister Jose
Luis Zapatero may be about to become the latest victim of the crisis


Each government promised to keep their total borrowing each year to less than
3% of their GDP - the total output of their economy.

And to join the euro in the first place, they were also supposed to have
debts less than 60% of their GDP.

That latter requirement was dropped at the outset, because otherwise Germany
itself would have failed to qualify. Its debts, when the euro was created in
1999, were 60.9% of its GDP.

Then the entire stability pact had to be scrapped, as Germany broke the 3%
annual borrowing limit every year from 2002 to 2005.

What about Spain? When it joined the euro in 1999, it admittedly also broke
the debt rule, with a ratio of 62.3%.

But the Spanish government then proceeded to run a balanced budget on average
- that is to say, its borrowing was zero - every year until the eve of the 2008
financial crisis.

And as Spain's economy grew rapidly, its debt ratio fell to a mere 36% of GDP
by 2007. Germany's, by contrast, continued to rise.

So, given this record, why are markets telling us that they fear Spain may
not repay its debts, while they think Germany's debts are the safest bet within
the eurozone?
Continue reading the
main story



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Glossary in
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It doesn't seem entirely fair.
Boom and bust
The reason is that Spain is facing an impossible economic dilemma.

When Spain joined the euro, interest rates fell to the much lower levels
typical in Germany.

While the Spanish government resisted the lure of cheap loans, most ordinary
Spaniards did not.

The country experienced a long boom, underpinned by a housing bubble, as
Spanish households took on bigger and bigger mortgages.

House prices rose 44% from 2004 to 2008, at the tail end of a housing boom,
according to ministry of housing data. Since the bubble burst, they have fallen
17%.

During the boom years, Spaniards earned more and spent more.

That helped to flatter the government's finances. More economic activity
means more tax revenues.

But it also helped push Spanish wages up to uncompetitive levels.

Unit labour costs in Spain - a measure of the cost of employing an average
Spaniard - rose 36% from the euro's
creation in 1999 until the end of 2008.

Contrast that with Germany, where unit labour costs rose just 3% over the
same period.
Shrunken economy
Now Spain is bust.

Its workers are overpriced compared with German workers. Its construction
sector - bloated during the building boom - has collapsed.



What are bonds and what can they tell us about the borrowers
who issue them?


Households are cutting their spending as they struggle to repay their debts.
And unemployment - always high in Spain - has shot up to 21.5% of the
workforce.

The economy, which
grew 3.7% per year on average from the euro's foundation until the end of
2007, has since shrunk at an annual rate of 1%.

So, although the Spanish government still has relatively little existing
debts, it is now having to borrow like crazy to fill the gap left by the jump in
unemployment benefits and collapse in tax revenues during the downturn.

And the government may also have to throw a lot more money at its banks,
which are looking very exposed to the housing collapse thanks to all the
mortgages they have lent.

All of which makes financial markets nervous about lending to Spain.
Inflate or devalue
But here is the nasty dilemma facing the incoming Spanish government.

To get out of its economic hole, Spanish workers need to regain their
competitive edge. That will boost demand for Spanish output, and help the
economy grow.

And a growing economy is one that can support a heavy debt load.
Continue reading the main story
Eurozone debt crisis

• Is the euro about to capsize?
  
• Will the ECB save the eurozone?
  
• Could Greece be Europe's Lehman?
  
• Europe's four big dilemmas
  
• The possible resolutions
  
• Crisis timeline
  

But how will they do this?

If workers agree to large wage cuts - which is unlikely unless unemployment
rises even higher - they will find their mortgages even harder to repay.

So most Spaniards would spend less, and many might be unable to repay the
banks, all of which would make the economic downturn even more severe.

On the other hand, if Spanish workers increase their wages, they will become
even less competitive and lose even more business to their eurozone
competitors.

There are two possible solutions.

First, German wages could rise much more quickly. That means Spaniards could
regain a price advantage without having to take a wage cut.

To achieve this, the
European Central Bank would probably need to raise its inflation target to a
level higher than the current 2% rate. That is an absolute no-no at the ECB,
particularly among its German members.

The alternative is that Spain could leave the euro and devalue the newly
recreated peseta. Spanish wages would fall with the peseta's value, but so would
their debts.

Leaving the euro would also largely eliminate the risk of the
Spanish government running out of money, because the Spanish central bank
would be free to bail it out - something the ECB has refused to do.

However, it is precisely the possibility of a break-up of the euro that now
has financial markets most worried of all.

I WONDER WHAT THE LATEST IS?
PANDA,WHERE ARE THOU ART?

Pandas gone on Holiday for ten days.

Lioned wrote:Pandas gone on Holiday for ten days.

ITS GOING TO BE BORING WITHOUT PANDA.

http://www.dailymail.co.uk/news/article-2066196/Now-UK-faces-5bn-bail-Spain--ministers-plan-euro-collapse.html

Now UK faces a £5bn bill to bail out Spain... as ministers plan for euro collapse


Comments (174)
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Gloomy prediction: Jacques Attali says the euro has a 'one in two' chance of collapsing in the coming month

Britain was last night planning for the collapse of the eurozone as Spain weighed up a bailout that could cost UK taxpayers £5billion.

The Government is preparing for the biggest mass default in history and the break-up of the single currency bloc.

Analysts warned that euro meltdown would wreak havoc in the banking system and plunge the global economy back into recession.

Whitehall sources said contingency plans are being drawn up – and indicated that the longer the euro limps on, the more time Britain has to prepare.

Fears are mounting that Greece will be forced to default on its debts as the crisis threatens to sink Spain and Italy.

The storm hit Belgium last night as the country’s credit rating was cut from AA+ to AA by Standard & Poor’s amid tumbling confidence in the region.

And a leading French economist, Jacques Attali, the former president of the European Bank for Reconstruction and Development, said there was only a 50-50 chance of the euro surviving until Christmas.

 
More...
If the debt crisis means the euro is in danger of disintegrating, why has it not plummeted in value?
Shares in Blacks Leisure crash 27% as outdoors shop becomes latest High Street name to sound alarm bell
Sources in Madrid said the new Spanish government is considering applying for international aid to shore up its battered finances.

It is thought a bailout of around £340billion would be required to keep the country afloat – with as much as £5billion coming from Britain through the International Monetary Fund.

http://www.reuters.com/article/2011/11/25/spain-aid-idUSL5E7MP21420111125

EXCLUSIVE-Spain's incoming govt may seek outside aid -sources


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Fri Nov 25, 2011 12:07pm EST
* New govt studying possible IMF, EFSF, ECB aid -sources

* PP spokeswoman denies aid plan under consideration

* No public appearance by PP leader Rajoy since election win

* Rajoy talking to bankers on economy -source

* Spain Treasury modifies bond issuance plans (Adds bond cancellation, market move, details on PP's plans)

By Elisabeth O'Leary

MADRID, Nov 25 (Reuters) - Spain's People's Party (PP), due to form a new government by mid-December, is considering applying for international aid as one option for shoring up its finances, sources close to the party say.

The PP inherits an economy on the verge of recession, a tough 2012 public deficit target, financing costs driven to near unsustainable levels by nervous debt markets and a battered bank sector with billions of euros of troubled assets on its books.

But Tuesday's launch by the International Monetary Fund of a credit facility for fiscally responsible countries at risk from the euro zone debt crisis gives it a potential lifeline it may wish to exploit.

"I don't believe the decision (to seek aid) has been made .. but it is one of the options on the table, because I've been asked about it. But we need more time and more information on the current state of things," one source close to the PP told Reuters.

A senior economic consultant to the PP confirmed to Reuters an application for IMF credit was just one option. In itself it would be insufficient and considered a transitory move, the consultant said.

Help under similar conditions may soon be available from the euro zone's European Financial Stability Facility rescue fund, which the bloc's policymakers plan to make more potent.

If extra funding is needed, either from the EFSF or the IMF, it would be politically preferable to make the decision independently and quickly, rather than being compelled by market forces at a later date.

"If we have to do it, we have to do it now," the first source said.

Asked about seeking outside aid, a PP spokeswoman denied that the party is studying such a plan and said the future government has not been formed yet.

The premium investors demand to hold Spanish over German debt stood at around 458 basis points on Friday afternoon, slightly higher than settlement on Thursday and off euro-era highs hit of over 470 hit earlier this week.

"The market perception on Spain would be enormously improved if there was a sense of resolution on the banks. They've probably missed the opportunity to do it on their own strength, but there's no point in dithering here," economist at Deutsche Bank Gilles Moec said.

"The absence of resolution on the banks outweighs the cost of calling for international help."

EURO CORE OR 'DEATH'

Earlier, Spain's treasury scrapped plans to sell a new three-year benchmark bond on Dec. 1, replacing it instead with three off-the-run bonds maturing in 2015, 2016, and 2017.

Analysts welcomed the move in light of yields on short-term debt issued by countries on the euro zone's periphery surging, as well as the fact that Italy too was set to issue a new three-year bond next week. That could allow bonds with different maturities to be more easily absorbed in the market.

The stakes are high for PP leader and incoming prime minister Mariano Rajoy, who will address fellow conservative leaders at a December 7th European People's Party congress in the French city of Marseilles, the first source close to the PP said.

The source said Rajoy would tell the congress that Spain would need to outdo German Chancellor Angela Merkel in terms of fiscal discipline, France's President Nicolas Sarkozy on governance former EU President Jacques Delors in terms of growth instruments.

Rajoy would aim to recover Spain's place as a European leader, he added, arguing that a two-speed euro zone which excluded Spain at its core would signal "death", he said.

The IMF on Tuesday increased its lending instruments and launched a six-month liquidity line offering help to countries with solid policies that may be at risk from the euro zone debt crisis.

The fund did not say which countries would qualify, though it would act as "insurance against future shocks and as a short-term liquidity window to address the needs of crisis bystanders".

Rajoy has not made an official appearance since his victory speech after the party trounced the Socialists on Sunday, and gave few details of his economic plans during the campaign.

On Thursday he sent his first tweet thanking supporters for their good wishes, saying he was "working hard".

This week he has been meeting with the heads of Spain's biggest banks to make a fuller assessment of the nation's economic health and decide what his first moves must be, the first source said.

Rajoy has pledged to stick to a deficit target of 4.4 percent of gross domestic product in 2012, which would require huge spending cuts as well as a deeper overhaul of the financial sector hit by a collapse in property prices.

In 2012, Spain's Treasury must pay back around 120 billion euros in debt redemptions while also financing its deficit. That amounts to at least 200 billion euros.

Spain's problems could be solved if the European Central Bank adopts a policy of quantitative easing -- effectively printing money to buy sovereign bonds. But there is strong opposition to that from Germany and within the ECB.

"Spain would opt for (the ECB solution) first but if that doesn't happen we will have to get external financing," the consultant said. (Additional reporting by Judy MacInnes and Fiona Ortiz, writing by Paul Day; editing by Mike Peacock, John Stonestreet)

http://www.google.com/hostednews/ap/article/ALeqM5gvmFvmzEOzwOKj9sIMj8ncyPNezA?docId=60b137225a044b25b03e4d7de9ea50be

Italy's borrowing rates skyrocket, Monti scrambles
By COLLEEN BARRY – 7 hours ago 
ROME (AP) — A week into his new job, Premier Mario Monti is running out of time to reassure nervous investors that his government has a strategy to deal with Italy's crippling debts.
The nation's borrowing rates skyrocketed Friday after a grim set of bond auctions, with a new auction looming Tuesday. Another borrowing debacle could ratchet up fears that Italy has entered a debt spiral driving it toward bankruptcy and the 17-nation eurozone into its most acute crisis yet.
Monti's government of so-called "technocrats" is battling to convince investors that it has a successful strategy to reduce the country's euro1.9 trillion ($2.6 trillion) debt. But Friday's dismal bond auction results for the eurozone's third largest economy temporarily battered Europe's stock markets.
The auction outcome also is likely to fuel calls for European Union officials to do more to jump-start economic growth and the European Central Bank to use more firepower to cool down a rapidly escalating debt crisis.
"We still haven't found a response that reassures investors," said Jose Manuel Barroso, head of the European Commission. "As long as we're unable to do that, we'll have very serious problems and discussions in Europe." He spoke during a visit to Portugal, which, like eurozone members Greece and Ireland, has taken an EU bailout to avoid bankruptcy.
Stephen Lewis, an analyst at Monument Securities, agreed with that outlook.
"The signs are that the euro will need a highly skilled financial engineer at the controls if it is to withstand the strains it is likely to face in the five remaining weeks of this year," he said.
Driving market fears is the knowledge that Italy is too big for Europe to bail out.
Given the size of its debts — Italy must refinance euro200 billion by the end of April alone — the government is depending on investors for money. But when borrowing rates get too high that can fuel a potentially devastating debt spiral which could bankrupt the country.
Friday's auctions showed that investors see Italian debt as increasingly risky.
The country had to pay an average yield of 7.814 percent to raise euro2 billion ($2.7 billion) in two-year bills — sharply higher than the 4.628 percent it paid in the previous auction in October. And even raising euro8 billion ($10.7 billion) for six months proved exorbitantly expensive, as the yield for that spiked to 6.504 percent, nearly double the 3.535 percent rate last month.
Following the grim auction news, Italy's borrowing rates in the markets shot higher, with the 10-year yield spiking 0.34 percentage point to 7.30 percent — above the 7 percent threshold that forced other euro nations into bailouts.
Solid returns on Wall Street helped European markets recover from earlier losses Friday fueled by fears over Italy.
The EU monetary chief, Olli Rehn, also tried to reassure markets. After meeting in Rome with Monti on Friday, he emerged to praise new economic reforms that are "going in the right direction," such as liberalizing professions, encouraging employers to hire, and making it easier for them to transfer workers.
But Rehn also said he expects more "bold measures" to follow.
Italy must adopt "a comprehensive and wide-ranging package of reforms to kick-start growth and offer young people not only more jobs but also better jobs," the monetary affairs commissioner said.
Rehn was in Rome to monitor Italy's compliance with promises to liberalize its labor market, reduce the bloated public sector and sell some state assets.
Analyst Raj Badiani, an economist at IHS Global Insight in London, said Monti must deliver more.
"I don't think the markets have turned against Monti" and his "first stab" at promised reforms, Badiani said. "However, I argue that he will need to consider more draconian labor market reforms to reverse Italy's woeful productivity performance since the adoption of the euro."
Other analysts were less accommodating toward Monti, a former European Union competition commission with a reputation for taking tough stands.
"Mario Monti has failed so far to impress bond markets he has the power and authority to do what is required," said Louise Cooper, a markets analyst at BGC Partners.
Monti was appointed to replace premier Silvio Berlusconi, whose conservative coalition squabbled for months over measures such as pension reform, which were urgently sought by EU and European Central Bank officials.
But Monti has no political party behind him, meaning he is at the mercy of lawmakers from Italy's infamously bickering parties to back him on painful doses of austerity, with the next election looming in early 2013.
Italy was not the only euro-using country to have a disappointing auction this week.
Even Germany — the region's strongest economy and the main funder of eurozone bailouts — suffered a shock Wednesday when it failed to raise all the money it sought, its worst auction result in decades.
Spain saw its borrowing rates ratchet sharply higher, even after a landslide election victory for the conservative Popular Party, which has made getting Spain's borrowing levels down its top priority.
"Within the eurozone, the more favorable political climate in Spain and Italy has not brought any improvement in market sentiment," said Herve Goulletquer, head of fixed-income research at Credit Agricole.
Monti has promised to balance Italy's budget by 2013. He has pledged to introduce "fair but incisive" structural reforms, his office said after a Cabinet meeting Friday. Monti has promised to reform the pension system, reinstate home property taxes eliminated by Berlusconi's government, and slash spending on government offices.
But even as Italy struggled to rescue itself, other signs of Europe's debt crisis emerged.
Standard & Poor's announced it is lowering its long-term sovereign credit rating for Belgium, citing a threat to exports and the euro country's lack of a permanent government. The agency cut Belgium's credit rating from AA+ to AA.
Belgium has been without a permanent government for 530 days, as a series of negotiators has struggled without success to bridge the country's divide between its French-speakers and its Dutch-speakers.
On Friday, Moody's also downgraded Hungary's sovereign debt to junk status — from Baa3 to Ba1 with a negative outlook — a decision Hungary hotly criticized. Hungary is not a member of the eurozone, but trades with many of its members.
This week's developments have ratcheted up the pressure on the European Central Bank to step up its bond purchases in the markets, though Germany adamantly opposes that. The current program is designed to support bond prices in the markets, thereby keeping a lid on the borrowing rates.
So far, the ECB has been buying limited amounts of bonds and has to sell an equivalent amount of assets.
The ECB said Monday it bought bonds worth only euro4.5 billion ($6 billion)last week, down from euro9.5 billion ($12.7 billion) a week earlier.
Potentially, the ECB has unlimited financial firepower through its ability to print money, and many countries in the eurozone, including France, want the bank to act more decisively to solve the debt crisis.
However, Germany finds the idea of monetizing debts unappealing, warning that it lets the more profligate countries off the hook for their bad practices.
Analyst Badiani said financial markets are "despairing over the very public disagreement between the French and German governments about how to use the ECB to regain control of the crisis, which has curbed the markets' appetite for sovereign debt across Europe."
But EU chief Barroso insisted that Germany isn't opposed "in principle" on eurobonds.
Germany's view is that "eurobonds can be considered once there's a higher level of integration and discipline in the eurozone," Barroso said.
Barry reported from Milan. AP writers Pan Pylas in London and Barry Hatton in Lisbon contributed to the story.
Copyright © 2011 The Associated Press. All rights reserved.

UK TREASURY PLANNING FOR EURO BREAKUP.
SOUNDS LIKE POTENTIALLY SERIOUS PROBLEMS AHEAD WITH EURO ZONE.

OSBORNE WILL BE GIVING HIS AUTUMN STATEMENT TODAY.

It's all going down the pan Badboy, we are heading for another recession!!!!!!

I will try and publish as much as I can till our "bestest" Panda comes back from her hols. Unfortunately I can't always access my computer.

Angelique wrote:It's all going down the pan Badboy, we are heading for another recession!!!!!!

I will try and publish as much as I can till our "bestest" Panda comes back from her hols. Unfortunately I can't always access my computer.

thank you,angelique.
IT DOES SOUND AS IF THE ECONOMIC SITUATION IS NOT VERY GOOD, LOOKS AS IT MIGHT GO WHAM BANG ECONOMIC BANG!

http://www.guardian.co.uk/uk/2011/nov/29/autumn-statement-george-osborne-uk-recession



Autumn statement 2011: George Osborne admits UK recession risks


• Eurozone crisis 'risks dragging UK into recession'
• UK economic growth predicted to be 0.7% in 2012
• OBR forecasts growth of 0.9% this year, down from 1.7%


Katie Allen
guardian.co.uk, Tuesday 29 November 2011 12.49 GMT
Article history
In his autumn statement to the House of Commons, the chancellor concedes the UK risks falling into recession in the coming months Link to this video
The UK risks falling into recession in the coming months and the economy will barely grow next year, the chancellor, George Osborne, has been forced to concede.

Presenting his autumn statement, Osborne also said the challenge of cutting Britain's deficit was bigger than previously thought and more savings would be made by restraint in public sector pay.

The admissions prompted accusations from Labour that the chancellor's strategy was "in tatters".

Osborne said the economy would grow just 0.7% next year, down from the 2.5% previously pencilled in, according to the independent Office for Budget Responsibility (OBR).

That was based on the assumption the eurozone found a way out of its debt crisis. If it did not, the single currency area risked recession and so did the UK, said Osborne.

"If the rest of Europe heads into recession it may prove hard to avoid one here in the UK," he told MPs.

In a plan that he billed as "leadership for tough times", Osborne vowed to do "whatever it takes" to protect Britain from the spiralling crisis.

"Much of Europe appears to be heading into recession caused by a chronic lack of confidence in the ability of countries to deal with their debts. We will do whatever it takes to protect Britain from this debt storm while doing all we can to build the foundations of future growth," he said, adding that the Treasury was working on contingency plans to deal with potential outcomes of the euro crisis.

The shadow chancellor Ed Balls lambasted what he saw as the "truly colossal failure of the chancellor's plan" following news of "flatlining growth", rising unemployment and more borrowing than previously thought.

"Plan A has failed and it has failed colossally," said Balls.

The OBR slashed its forecasts for growth this year as well. It put it at 0.9%, down from a previous forecast of 1.7% made in March.

In 2013 growth was forecast at 2.1%, down from 2.9%. Reflecting that, unemployment was expected to continue to rise to 8.7% by the end of next year, up from 8.3% now.

The forecasting body also predicted a bigger hole in the public finances in coming years than it had previously expected. It forecast public sector net borrowing (PSNB) at £127bn in this fiscal year, down from £122bn pencilled in at the March budget. For 2012-2013 the PSNB was forecast to be £120bn, up from £101bn.

Osborne conceded that cutting the deficit as the coalition had promised would take longer than thought, partly based on the OBR's assertion that expansion before the recession was driven by factors which were more unsustainable than previously thought.

"So our debt challenge is even greater than we thought because the boom was even bigger, the bust even deeper, and the effects will last even longer," said Osborne.

In a move likely to inflame public sector workers preparing for a mass walkout on Wednesday, the chancellor said savings for the public purse would be made by further restraint in public sector pay, which would go up by just 1% for the two years after the pay freeze was over. He accepted, he said, the rise was "tough", but said it was "fair to those who work to pay the taxes that will fund it".

In a direct attack on those planning industrial action over public sector pensions, he said: "I would once again ask the unions why they are damaging our economy at a time like this – and putting jobs at risk. Call off the strikes tomorrow, come back to the table."

The public sector pay plan drew immediate criticism from trade unions. Bob Crow, general secretary of the RMT union, accused the chancellor of wanting "the workers to keep taking the hit while the rich get richer".

"With inflation over 5%, and the increase in pension contributions, that means nurses and the others we rely on will be around 25% worse off after four years of this ConDem government, while top bosses' pay goes up by 12% a year. That's a scandal," he said.

Unison, which is coordinating what is expected to be the biggest strike in a generation on Wednesday, called on the government to "stop the attack on public sector workers and their families."

"The government's cuts and austerity agenda is hitting women, the young, and making those who are less able to pay plug the deficit. Meanwhile it is still billions in bonuses for bankers. This is only storing up trouble for the future," said Dave Prentis, Unison general secretary.

Financial markets showed little reaction to Osborne's statement, reflecting economists' comments that it did not make any significant changes to the government's deficit cutting plan.

The OBR's outlook for the UK was still more optimistic than that of other forecasters. On Monday, the west's leading thinktank, the Organisation for Economic Co-operation and Development, said the UK was headed for a double-dip recession. It said the UK economy would expand by just 0.5% in 2012. Output would fall in the final quarter of this year and in the first three months of next year.

Jonathan Loynes, chief European economist at Capital Economics, said: "Looking ahead, we expect further growth downgrades to push the borrowing forecasts even higher in future budgets and statements, deepening concerns about the UK's fiscal position and testing Mr Osborne's commitment to his own rules."

Angelique wrote:

• Eurozone crisis 'risks dragging UK into recession'

This is news to the UK who didn't know they were out of recession.

TBH l think it's good the eurozone will break up, far too much money has been pumped into it, now that countries have been dealing with each other l think it will stay that way. Break up Brussels and the fat cats who work for hours yet get thousands in pay and let each country recover.