EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2

Eurozone Placed On Credit Downgrade Watch

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The agency's announcement could throw efforts to save the euro into disarray





10:16pm UK, Monday December 05, 2011





Credit ratings agency Standard and Poor's is to place 15 eurozone countries on downgrade watch, according to EU officials.


The agency will place most of the nations in the single currency on
credit watch negative, including six that currently hold the top AAA
rating, according to Bloomberg.


The financial news organisation quoted two anonymous officials, who
spoke out ahead of a summit of European leaders to be held on December
9.


The news could throw efforts to stabilise Europe's financial crisis into disarray.


It comes after the Financial Times reported that Standard and Poor's
(S&P) were planning to reduce the AAA ratings of Germany, France,
the Netherlands, Austria, Finland and Luxembourg.


The agency has warned all six governments that their ratings could be
lowered to AA+ if a credit watch review failed to convince their
experts, the newspaper said.


Although a downgrade of France had largely been expected, the inclusion of Germany has come as a surprise.


S&P were quoted in the Financial Times as saying it was worried
about "the potential impact...of what we view as deepening political,
financial, and monetary problems with the European economic and monetary
union."


Earlier, German chancellor Angela Merkel and French president Nikolas
Sarkozy, sought to restore confidence in the troubled European currency
with a joint call for changes to the European Union treaty so that
countries using the euro would face automatic penalities if budget
deficits ran too high.

Stock prices rose and borrowing costs for European governments dropped sharply in response to the changes proposed.





More to follow...

WHICH COUNTRIES ARE NOT TO BE DOWNGRADED?

France and Germany stand by eurozone plan






Comments (49)






Mrs Merkel and Mr Sarkozy said the eurozone needed a new treaty


Continue reading the main story













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France
and Germany have reaffirmed their commitment to reform the eurozone,
after ratings agency Standard and Poor's put most of the zone on "credit
watch" over debt crisis fears.

The two countries said proposals for a treaty change agreed on Monday would reinforce governance of the eurozone.

They said their priority was to press ahead with the proposals.

S&P's move means six countries with top AAA ratings would have a 50% chance of seeing their ratings downgraded.

It was announced hours after French President Nicolas Sarkozy
and German Chancellor Angela Merkel announced proposals they hoped
would begin to restore confidence in the battered eurozone.

The ratings move came as a surprise to investors and saw stocks fall back on early gains as the euro also fell.

The BBC's Chris Morris, in Brussels, says there will be
widespread anger at the timing of the agency's decision, which raises
the stakes another notch ahead of an EU summit on Friday that is being
seen as crucial for the future of the single currency.


Continue reading the main story Franco-Germany proposals

• Automatic sanctions for any country which runs up a deficit of more than 3% of GDP
  
• "Golden rule" built into eurozone member's budgets against running a deficit
  
• Private investors never again to be asked to take losses, as in Greece
  
• European Stability Mechanism (ESF) brought forward from 2013 to
  2012, with decisions based on a qualified majority not unanimity
  
• Eurozone leaders to meet every month as long as crisis continues to discuss growth
  

• Eurozone 'needs tougher treaty'
  
• Peston: Has Merkozy taken Italy out of the danger zone?
  

Ahead of the summit, US Treasury
Secretary Timothy Geithner is arriving in Europe to hold talks with top
financial officials in several countries. On Tuesday, he will hold a
meeting at the European Central Bank in Frankfurt before meeting German
Finance Minister Wolfgang Schauble.

Our correspondent says that many details of the French and
German proposals have not been revealed and other countries will reserve
judgement until they have seen them.

Ratings decision
On Monday, S&P's announced that it had placed its
"long-term sovereign ratings" on 15 eurozone nations on credit watch
"with negative implications".

The ratings agency said the decision was prompted "by our
belief that systemic stresses in the eurozone have risen in recent weeks
to the extent that they now put downward pressure on the credit
standing of the eurozone as a whole".

As well as Germany and France, Austria, the Netherlands, Finland and Luxembourg also currently have top AAA rating.

S&P's announcement means that there is a one in two
chance that those countries would see their credit rating fall within 90
days.


Continue reading the main story Five crucial days for the euro

• Monday: Nicolas Sarkozy and Angela Merkel propose tighter eurozone controls
  
• Italian PM Mario Monti seeks parliamentary approval for his austerity package
  
• Ireland's government unveils details of its proposed austerity budget
  
• Tuesday: US Treasury Secretary Timothy Geithner arrives in Germany before travelling to France and Italy for talks with euro leaders
  
• Wednesday: The talking continues as many EU leaders gather in Marseille for a European People's Party congress
  
• Thursday: ECB's monthly policy meeting could produce new measures
  
• Thursday and Friday: Crucial EU summit in Brussels to consider Sarkozy-Merkel plan
  

Analysts also say S&P's move
reflects uncertainty about what would happen were a larger eurozone
country - such as Italy - to default in future.

The agency's decision is uncontroversial, says the BBC's
Robert Peston, because eurozone banks have been struggling to borrow, a
number of eurozone economies are buckling under the burden of big
government and household debts and there is a significant risk of
recession.

Mr Sarkozy and Mrs Merkel said they would "take note" of S&P's warning.

French Finance Minister Francois Beroin later said that - for
its part - Paris did not plan to expand the austerity measures it had
already has announced.

Speaking on French radio on Tuesday morning, Foreign Minister
Alain Juppe said that Monday's plan was "precisely the response to one
of the major questions of this ratings agency that mentions the
insufficiency of European economic governance".

Eurogroup Chairman Jean-Claude Juncker, meanwhile, described S&P's move as "a wild exaggeration and also unfair".

"I am not unsettled by this, but I am astonished, after the
significant efforts in recent days to overcome the crisis, such as
savings programmes in Italy and Ireland," Reuters news agency quoted him
as telling German radio.

The only two countries not put on credit watch on Monday were
Cyprus, which is already under review, and Greece, whose rating has
already been severely downgraded.

'Structural changes'
At their joint press conference on Monday afternoon, Mr
Sarkozy said things in Europe "cannot continue as they are" and that the
Franco-German wish was for "a forced march toward re-establishing
confidence in the eurozone".

Continue reading the main story



Crisis jargon buster


Use the dropdown for easy-to-understand explanations of key financial terms:


AAA-rating









AAA-rating

The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule.





Glossary in full




"We are conscious of the gravity of the situation and of the responsibility that rests on our shoulders," he said.

Mrs Merkel said France and Germany were "absolutely
determined" to maintain a stable euro and wanted to see "structural
changes which go beyond agreements".

The two leaders said the treaty changes would ideally be
implemented by all 27 EU member states, but that if that was not
possible, just the 17 states which have adopted the euro.

Discussions on the changes should be concluded by March "because we must move quickly", said Mr Sarkozy.

You should click on the "Comments" on the previous post, a mix of nationalities and some interesting views.


S & P have said their reasons for issuing the warning were as follows:-

1. The time taken to make decisions.
2. The debt and risk
3. Disagreements over how to manage the crisis

If no firm action is taken at the Friday Meeting S & P have said they will downgrade all 15 Euro Nations, excluding Greece and Cyprus
which have already been downgraded.

Merkel and Sarkozy have said there will be a permanent rescue by 2012
There will be monthly Meetings by all Members of the EU
Eurozone Countries will not be allowed to have debts more than 3% of GDP and this will be enshrined in the Treaty.

A Danish Bank Spokesman says growth is the major factor and is the reason that any stringency measures imposed on the Euro Countries
is not the answer just now. He advises Investors not to take risks and thinks Europe will be in recession most of next year.

A study of the most leveraged Countries shows the following:-

1. Greece, 2. Portugal 3, Britain 4, U.S.A...........Italy is 8th so is better off .!!

In Ireland, Austerity Is Praised but Painful

Eoin O Conaill for The International Herald Tribune
Deirdre Cronin, right, and her family are leaving Ireland.

By LIZ ALDERMAN

Published: December 5, 2011

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DUBLIN — As European leaders scramble to overcome the Continent’s debt crisis, many are pointing to Ireland as a model for how to get out of the troubles.


Multimedia



Saving the Euro


Saving the Euro





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Ireland’s Efforts to Turn Itself Around



Interactive Feature
Tracking Europe's Debt Crisis



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Eoin O Conaill for the International Herald Tribune

John and Deirdre Cronin want more opportunities for daughters Caitlin, 11, and Anna-Louise, 4.


Having embraced severe belt-tightening to mend its tattered finances, Ireland is showing glimmers of a turnaround. A year after it received a 67.5 billion euro bailout, or about $90 billion at current exchange rates, modest growth has returned and the budget deficit is shrinking.
But the effects of austerity have pummeled Ireland’s fragile economy, leaving scars that are likely to take years to heal. Nearly 40,000 Irish have fled the country this year alone in search of a brighter future elsewhere; the trend is expected to continue.
“This is still an insolvent economy,” said Constantin Gurdgiev, an economist and lecturer at Trinity College in Dublin. “Just because we’re playing a good-boy role and not making noises like the Greeks doesn’t mean Ireland is healthy.”
The German chancellor, Angela Merkel, recently praised the Irish prime minister, Enda Kenny, for setting an “outstanding example,” while the French president, Nicolas Sarkozy, declared that Ireland was already “almost out of the crisis.”
Underneath the surface, however, the grinding reality of Irish life belies those glowing commendations.
Salaries of nurses, professors and other public sector workers have been cut around 20 percent. A range of taxes, including on housing and water, have increased. Investment in public works is virtually moribund.
On Monday and Tuesday, Mr. Kenny’s government is announcing an additional 3.8 billion euros in tax increases and spending cuts for 2012 that will affect health care, social protections and child benefits.
Retail sales fell 3.8 percent in October from a year earlier as spending was down even on things like school textbooks, shoes and other basic goods.
At a Spar convenience store in the center of Dublin, Samantha O’Donnell, a mother of two, filled her shopping basket with some necessities, then put a few back on the shelf.
“A lot of people are just trying to get by week to week,” said Mrs. O’Donnell, who said her salary as a nursing assistant had been cut.
To Sean Kay, a professor of politics at Ohio Wesleyan University in Delaware, Ohio, and the author of a recent book examining Ireland’s crisis, Mrs. O’Donnell’s experience is typical. “The Irish are being praised for doing what they were asked to do, which is important for bringing investors back to the country,” he said. “But for the Irish people, it’s not paying off.”
There are signs of improvement. Compared with the previous year, exports are up 5.4 percent for the first nine months of 2011, driven by gains from Pfizer, Intel, SAP and other multinational companies that were drawn to Ireland in the 1990s and 2000s by its low taxes, well-educated English-speaking work force and access to the European market. New information technology companies like LinkedIn and Facebook have recently arrived.
Prospects for local technology companies are improving, too. Brian Farrell founded Tethras with a partner three years ago to develop mobile applications for smartphones. He now has 16 employees and hopes to double his work force in the next 18 months.
“Every time you turn the radio on, companies in I.T. are hiring,” Mr. Farrell said, referring to information technology.
Gross domestic product grew 1.2 percent in the second quarter from a year earlier, compared with a decline of 0.4 percent for all of 2010 and 7 percent in 2009.
The interest rates that Ireland would pay its international creditors if it were not on a financial lifeline have also fallen, to 8.7 percent today from 14 percent in August, in part because investors hope that European policy makers will resolve the broader debt crisis.
But that is still above the level that led Ireland to seek a bailout and too high to allow for sustainable finances.



There was an interview with the irish fiknance Minister this morning and he said Ireland was out of recession when the crisis in Italy
and then Spain drew their Country in too, although he is hopeful for the future he says the Leaders MUST take action .

Sr. Blejer, former Governor of Central Bank of Argentina says Europe already has lender of last resort in the ECB and no way should
the IMF be involved in bailing out half of Europe, that is not their remit and they should just offer advice.

Danny Blanchflower, Economics Professor at a University says after 8 meetings between Merkel and Sarkozy all they have really come up with is changes to the Treaty which at the moment is not the most important issue. It is how to finance the bail-outs of all these
Countries needing help. He says it is apparent that Merkel for whom Debt is abhorent and Sarkozy who is more phlegmatic are not in tune
about what to do which is why they keep fudging the issues.

Sir Howard Davies, former Deputy Chairman of Britains Financial Services says had Greece been allowed to default 2 years ago the
eurozone would have been in a much better position than it is now. He also said any change to the Treaty should include all 27 Countries,
not just those in the eurozone but Sarkozy"s treatment of Cameron at one of the Meetings suggests the 10 will not be consulted.

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Ed Conway

December 06, 2011 12:49 PM

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There are now only two of the world’s top ten economies with a
top-tier, unblemished credit rating, and both of them feature the
Queen’s face on their banknotes.
The Standard & Poor's
decision last night to put all of the euro members on creditwatch
negative (aside from Cyprus, which is already on negative watch and
Greece, whose bonds are rated as junk) changes the complexion of the
international capital markets overnight - at least in one sense. It
means the UK and Canada are the only G7 members (or for that matter
major top-ten economies) with a "clean" top-tier rating.
Germany
has never faced a downgrade but, according to S&P, will suffer one
if the EU summit this Friday does not produce a convincing plan to solve
the single currency’s woes. Finland, which has a spotless record of
repaying its debt (earning it the nickname “Plucky little Finland” when
it, alone in Europe, repaid its war debts to the US), and now has a
worse rating than Britain, which has one of the worst balance sheets in
the world.
It’s a testament to the euro’s problems that these
comparatively virtuous countries are being lumped in the same boat as
France, Spain and Italy. But that is precisely the problem: yoked
together in the single currency, all members are vulnerable to the
crisis enveloping the continent.
Ttake Germany. If the continent
does indeed transmogrify into a fiscal union, whether through an
expansion of the European Financial Stability Facility and its successor
the ESM, or through future issues of Eurobonds, it will have to bear
some of the credit risk created by its Mediterranean neighbours. Its
banking system holds so much periphery debt that any default would
threaten its banking system with collapse. Moreover, while it has a very
healthy current account surplus, it also has a relatively large debt
load and an expensive welfare state.
It is in no-one’s interest
that the euro faces a messy and uncontrollable collapse, but the longer
its leaders struggle to come up with a comprehensive plan to resolve the
currency’s inherent problems, the more likely that looks.
But if
it falls, it won't be because of a credit rating downgrade. For if
there's one thing we have learnt from the market reaction to the
decision this morning, it is that investors are no longer taking that
much notice of what ratings agencies have to say.
Stock market
indices across the euro area were down a touch this morning, but none
more than 1% - and that after a pretty healthy rally in the past week.
German and French government borrowing rates are still well below the
levels they touched in November.
But then as we saw earlier this year when S&P downgraded the US and its borrowing rates subsequently fell,
a credit rating downgrade doesn’t always crystallise panic. In fact,
more often than not the rating agency’s verdict merely restates worries
that have been concerning private investors for some time. It is no
secret that everyone is worried about the lack of progress from European
leaders in resolving the crisis. So what difference does the word of
one of the credit ratings agencies make?

Actually,
not an awful lot. You might have expected that the downgrade would at
the very least caused a divergence in the borrowing costs of those
inside and out of the euro. But check out the chart above which tracks
the difference between German government borrowing rates and those of
the UK. As you can see, Germany has once again regained the upper hand.
In other words, it is more expensive for the UK government to raise cash
than Germany’s (remember for a week or so recently Britain had a
cheaper credit), and this disparity hasn’t disappeared overnight.
This
might mean a) no-one is paying much attention to the S&P decision,
b) they had already priced in the problems facing the euro area, c) they
are worried about Germany, but are just as worried about the UK,
notwithstanding its AAA credit rating. The likelihood is that it’s a
combination of all of the above.
For whereas in days gone by
changes in credit ratings really did cause flurries of concern in
markets, triggered stock market falls and caused government borrowing
costs to increase, that's no longer the case. In part, this is because
the agencies lost so much of their own credibility given their failure
to spot the causes of the financial crisis in the sub-prime market. It's
also because whereas in the past the rating of a particular instrument
had a direct bearing on whether it could be accepted as collateral with
central banks, this is no longer the case in practice for most central
banks.
In other words, slowly but surely credit ratings are
becoming more irrelevant - or to be more precise they are only one
element of what investors look at when buying a particular security. The
euro rating warning last night is worrying because it reminds us of the
interlinked problems facing the continent. It reminds us of the
problems facing the EFSF, the rescue fund whose success would rest on
its ability to borrow cheaply, based on the good creditworthiness of
countries like Germany, in order to disperse money to struggling euro
nations. But we didn't need the credit ratings agencies to rubberstamp
this: it had been a worry in the markets for some time.
While
George Osborne might be tempted to revel in the fact that Britain is one
of the only remaining major economies with a triple-A credit rating, it
might be more sensible to wonder whether this will be the case for much
longer, and to make plans for that eventuality.
The only problem
is he has made retaining the credit rating a key yardstick for his
success; to the extent that many think he should resign if Britain is
indeed downgraded. I wonder how much he'll be regretting that next year.

By Nina Dos Santos, CNN
December 6, 2011 -- Updated 2303 GMT (0703 HKT)






Herman
Van Rompuy's memo singled out "member states that ... have consistently
failed to meet the conditionality" of their relief.


STORY HIGHLIGHTS

• NEW: British PM warns he may not sign a new EU treaty if British interests are at risk
  
• Leaked memo sets out tough measures for countries that fail to manage budgets
  
• It comes a day after the leaders of France and Germany agreed to a new fiscal pact
  
• European leaders are in Brussels later this week for their last summit of the year
  

(CNN) -- European nations could be penalized by
being stripped of some powers if they fail to manage their budgets,
according to a memo from European Commission President Herman Van Rompuy
leaked Tuesday.

The confidential memo, sent out to leaders ahead of the final
European Council meeting of the year at the end of the week, comes only a
day after the leaders of Germany and France agreed in Paris on a new
fiscal pact they say will help prevent another debt crisis.

But Van Rompuy's proposals, details of which were obtained by CNN,
are perhaps even stricter than those of German Chancellor Angela Merkel
and French President Nicolas Sarkozy.

The five-page memo proposes that the European Commission could
perhaps be given the right to strip voting rights within the European
Union from some countries who have been bailed out but are still not
meeting their deficit targets

For "member states that are under an assistance program and have
consistently failed to meet the conditionality, the (European)
Commission could receive exceptional power such as ex-ante approval of
all major economic reforms," the document says.




Euro countries could lose AAA rating





Italians react to new austerity measures





Countdown to save the euro





Treaty 'the will of France and Germany'


As such, the executive arm of the EU could force bailed-out
countries, such as Greece, Ireland and Portugal, to comply with deficit
regulations, which for the entire EU currently stand at 3% of GDP.

Those rules have been in place for many years but EU leaders are
looking for a way to have them more tightly enforced in order to restore
confidence in eurozone debt.

Van Rompuy's proposals indicate continuing differences of opinion
with other key decision-makers in Europe over how to handle the region's
debt crisis.

The proposed change of protocol Van Rompuy has put forward would not
need to be fully ratified by all the member states, a person familiar
with the plans told CNN.

Merkel and Sarkozy, heads of the two largest economies in the
17-nation eurozone, said Monday that their pact, to be presented in
detail Friday, would involve amending or rewriting the treaties that
govern the EU to force members to manage their budgets in a more
structured and coherent way.

They are expected to write to Van Rompuy on Wednesday to find out
whether their initiative would be embraced by all 27 EU countries or
just the 17 that share the single currency.

Ahead of that move, Prime Minister David Cameron warned Tuesday he
would not sign any reworked EU treaty that does not protect British
interests.

"What I'm saying is that if -- and eurozone countries do need to come
together, do need to do more things together -- if they choose to use
the European treaty to do that, Britain will be insisting on some
safeguards, too, and as long as we get those, then that treaty can go
ahead. If we can't get those, it won't," he told the BBC.

Resolving the eurozone crisis is a priority, Cameron said, but he
would be going to Brussels to "defend and promote" British interests,
including the U.K. financial services sector.

As the head of the European Commission, Van Rompuy is expected to
steer discussions between the member states as they meet for the final
EU summit of the year.

Both Merkel and Sarkozy ruled out Monday the concept of pooling
eurozone debt under so-called "eurobonds," saying such discussions were
premature.

However, Van Rompuy's memo appears to open the door to such an idea further down the line.

He recommends leaders consider "opening up the possibility in a
longer term perspective of moving towards common debt issuance in a
staged and criteria-based approach," according to the leaked memo.

Sarkozy said Monday in Paris that the debt crisis, which has shaken
markets around the world, must be resolved by March next year.

Meanwhile, Standard and Poor's placed 15 members of the euro currency
union on review for a possible downgrade Monday, as the debt crisis in
the eurozone continues to worsen.

The warning applies to AAA-rated nations such as Germany, France, the
Netherlands, Austria, Finland and Luxembourg, the U.S.-based credit
rating agency said in a press release.

A downgrade of France or another of the region's top-rated nations
would have serious consequences for the European Financial Stability
Facility.

The EFSF, a government-backed bailout fund, could lose its AAA rating if the nations that stand behind it are downgraded.

You know that old saying "you can take a Horse to water but you can"t make it drink".....well there is no way a new Treaty would work
since the same criteria would apply only this time Countries would be monitored closely. What this new Treaty does not allow for is the
Citizens of some of these Countries who will have strikes and riots having to cope with stringent measures in a recession.

What this crisis has highlighted is the inability of the EU Leaders to cope with it which is exasperating the rest of the World and proved
how cumbersome it is having no central Bank . It remains to be seen whether Friday produces any Rabbits out of a Hat.

Eurozone crisis: New EU treaty 'may not be needed'











EU leaders will be discussing ways of fixing the euro at the two-day summit


Continue reading the main story













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  Italy on the spot
  
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Tougher
rules to tackle the eurozone debt crisis can be achieved without
changing EU treaties, European Council President Herman Van Rompuy says.


In a leaked report for a crucial EU summit beginning on
Thursday, he offers a fast-track "fiscal compact" that does not need
lengthy ratification by parliaments or national referendums.

Germany and France are pushing for a new EU treaty by March, saying stricter rules should be enshrined there.

The US has backed their plans.

But Treasury Secretary Timothy Geithner said the US Federal
Reserve had no plans to give money to the International Monetary Fund to
boost the eurozone's bailout fund.

Mr Geithner, who is meeting all major eurozone leaders during
his three-day visit of Europe, stressed that more action was needed to
boost economic growth in Europe, alongside the longer-term reforms. He
meets President Nicolas Sarkozy in Paris on Wednesday.


Continue reading the main story Five crucial days for the euro

• Monday: Nicolas Sarkozy and Angela Merkel propose tighter eurozone controls
  
• Italian PM Mario Monti seeks parliamentary approval for his austerity package
  
• Tuesday: US Treasury Secretary Timothy Geithner arrives in Germany before travelling to France and Italy for talks with euro leaders
  
• Wednesday: The talking continues as many EU leaders gather in Marseille for a European People's Party congress
  
• Thursday: ECB's monthly policy meeting could produce new measures
  
• Thursday and Friday: Crucial EU summit in Brussels to consider Sarkozy-Merkel plan
  

• Mardell: Geithner's Grand tour
  
• Q&A: Key EU summit on debt crisis
  

'Negative implications'
Mr Van Rompuy will be chairing the
two-day summit, and all the signs are that it could be a bruising
affair, the BBC's European affairs correspondent Chris Morris reports.

In the interim report, details of which have been obtained by
the media, Mr Van Rompuy proposes a plan aimed at agreeing a "new
fiscal compact" without holding a referendum or ratification by the
parliaments of each eurozone country.

The draft says that tougher fiscal reforms can be adopted
simply by amending a protocol - a procedure that needs national
consensus but does not require substantial changes to the EU treaties.

This, Mr Van Rompuy argues, would speed up the implementation of reforms and remove any potential political complications.

The interim report contains the following key provisions:


Continue reading the main story Analysis





Chris Morris
BBC News, Brussels




The political battle lines are being drawn up before this
week's summit, and all the signs are that it could be a bruising affair.

Some of Herman Van Rompuy's proposals tally with what we know of the Franco-German plan - others don't.

But France and Germany appear to want to push through more radical measures.

And if all 27 member states can't agree, then they are
prepared to work towards a new treaty outside EU structures, involving
the 17 members of the eurozone and any other country that wants to join.

• Each eurozone member's budget deficit should be below 3% of GDP and national debt under 60%
  
• A "golden rule" should be enshrined into national legislation to guarantee a balanced budget in the medium-term
  
• The eurozone bailout fund to be given a banking licence to borrow directly from the European Central Bank
  
• The European Commission to have the power to impose austerity measures automatically on countries which require bailouts
  

However, Mr Van Rompuy acknowledges that more far-reaching reforms would eventually require a change in EU treaties.

Some of the report's proposals tally with the Franco-German plan how to tackle the crisis, but some do not.

Paris and Berlin appear to be pushing through more radical
measures, our correspondent says, and if all 27 EU members cannot
agree, then they are prepared to work towards a new treaty involving the
eurozone bloc and any other country that wants to join.

Such a move could leave Britain - a non-eurozone EU member - feeling more isolated, he says.

Continue reading the main story



Crisis jargon buster


Use the dropdown for easy-to-understand explanations of key financial terms:


AAA-rating









AAA-rating

The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule.





Glossary in full




UK Prime Minister David Cameron has said
he will not sign a new treaty without safeguards for to protect
financial interests of the City of London and Britain's role in the
European single market.

But such is the depth of the crisis surrounding the eurozone
that the main focus is not on the EU solidarity but on restoring market
confidence in whatever way proves possible, our correspondent says.

Earlier this week, Standard & Poor's put all eurozone nations on credit watch "with negative implications".

The ratings agency said the decision was prompted "by our
belief that systemic stresses in the eurozone have risen in recent weeks
to the extent that they now put downward pressure on the credit
standing of the eurozone as a whole".








More on This Story











Global Economy













Esse

Tim Geithner continues on his meetings with EU Finance Mmade to so far,but a firewall is needed and full fiscal union and financial support.

German Finance Minister says he thinks good progress has been made.

Simon Lack of SL Advisors says he thinks at least one or two Countries will leave the Euro, March is much too late to implement their
proposed changes. Sees slow growth and negativity for the Euro.He also feels there are too many Banks and sees closures of many
around the World over the coming months.

Brendan Brown , Chief Economist at Mitsubishi Bank also expects some Countries to drop out of the EURO and since there are at least
5 Countries seeking aid and slow growth around the World, it will be impossible for the Euro Countries to adhere to a 3% above GDP
rule.

Eurozone Crisis: Tories Call For EU Referendum

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2:59pm UK, Wednesday December 07, 2011





David Cameron is facing pressure from senior Conservatives
to call a referendum over Europe if a treaty change is proposed at the
eurozone crisis summit in Brussels.


London mayor Boris Johnson said: "If Britain was asked to sign up to
such a thing within the 27 (EU members), it would be right for us either
to veto it... If we felt unable to veto it, then certainly it should be
put to a referendum."


Cabinet member Owen Paterson, the Northern Ireland Secretary, also
threw weight behind the call for a referendum saying it would be an
"inevitable" result of proposals for closer fiscal union in the
eurozone.


David Cameron had said he would veto plans for a new EU treaty unless European leaders agree to a list of British demands.







joey jones on a eurozone dominated pmqs












A heated Prime Minister's Questions session in Westminster was
dominated by the crisis, with Labour leader Ed Miliband accusing Mr
Cameron of going soft on Europe, saying one thing to placate his
eurosceptic MPs and another to European leaders.


The Prime Minister insisted he wanted "more power and control" for
the UK saying: "The more that countries in the eurozone ask for, the
more we will ask for in return.


"But we will judge that on the basis of what matters most for Britain."


Follow comment and analysis on Wednesday's PMQs from the Sky News team below:

Eurozone: France and Germany urge common taxes











The Franco-German alliance is going at full throttle ahead of the summit


The leaders of France and
Germany have called jointly for eurozone countries to have common
corporation and financial transaction taxes.

The tax policy would apply initially to the 17-member
eurozone. France has long complained about Ireland's low corporation tax
rate of 12.5%.

The proposal came in a letter to European Council President Herman Van Rompuy, on the eve of a key EU summit.

Both countries want changes to the EU treaties to enforce budget discipline.

The push for EU tax harmonisation is highly controversial.
The UK especially has for years resisted moves towards tax harmonisation
in the 27-nation bloc.

"We must strengthen growth through competitiveness and
convergence of the economic policies of eurozone members at least," said
the letter from French President Nicolas Sarkozy and German Chancellor
Angela Merkel.

It called for "a new common legal framework fully compatible with the internal market", covering:

• financial regulation;
  
• the labour market;
  
• convergence and harmonisation of the corporation tax base and introduction of a financial transaction tax;
  
• policies that support growth and a better use of European funds within the eurozone.
  

The leaders of France and
Germany have called jointly for eurozone countries to have common
corporation and financial transaction taxes."

If they try to enforce Ireland to change their Corporation tax I think Ireland would leave the Eurozone. Similarly, if Merkel demands a
financial transaction Tax Britain would leave. These suggestions are very dictatorial and as long as Countries abide by the 3%of GDP
debt limit each Country should Govern as it sees fit. Ireland was out of recession before the Italy crisis and the low Corporation Tax has
brought a lot of IT Companies to the Country.

Sebastian Mallaby, of the Council of Foreign Relations believes Merkel is driving the Bus and it is going over a cliff.Her insistance on a
New Treaty will not only take time to prepare, but is not necessary according to the German Finance Minister. The main consideration
should be how to finance the bailouts of Greece, Italy, Spain, Belgium and Portugal.

david cameron is opposed to a fanancial tranaction tax because it would affect the city,i think i have heard.

Badboy wrote:david cameron is opposed to a fanancial tranaction tax because it would affect the city,i think i have heard.

Yes, your"e right Badboy, Britain is far more developed as a Financial Centre, the biggest in Europe which is why any Tax on transaction would hit the British economy badly........not that it is very profitable at the moment.!!! Boris Johnson is the latest to demand a referendum
if the Treaty is altered and Cameron has said if the Treaty is amended he will go to the Country.He says he wants some of our rights back.

BTW, make a note, the programme about the Tsunami is on Channel 4 on Sunday night at 9o.15pm.....so I woln"t miss Merlin.

Britain Suffers as a Bystander to Europe’s Crisis

By SARAH LYALL and STEPHEN CASTLE

Published: December 7, 2011

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LONDON — No matter what happens at the European summit meeting on the euro in Brussels that begins Thursday, Britain is sure to lose.

Enlarge This Image

Press Association/European Pressphoto Agency

Prime Minister David Cameron said that he would protect Britain's interests in Europe. The image is from a video taken Wednesday during a session of Parliament in London.



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Interactive Feature
Tracking Europe's Debt Crisis



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Press Association/European Pressphoto Agency

Ed Miliband, the opposition leader, in a video image from a Parliament session. Mr. Miliband said Mr. Cameron had been reduced to “hand-wringing.”


There is looming recognition at 10 Downing Street that if the euro falls, Britain will sink along with everyone else. But if Europe manages to pull itself together by forging closer unity among the 17 countries that use the euro, then Britain faces being ever more marginalized in decisions on the Continent.
Many Europeans have been irritated by British Conservatives’ quiet satisfaction throughout the crisis with the decision not to join the euro (the United Kingdom ostentatiously kept its currency, the pound), particularly when juxtaposed with the panic over Britain’s inability to have any significant impact on Europe’s biggest crisis since the end of the cold war.
“Germany is the unquestioned leader of Europe,” said Charles Grant, director of the Center for European Reform. “France is definitely subordinate to Germany, and Britain has less influence than at any time I can recall.”
Of particular concern here is the health of Britain’s financial industry, a vital economic engine at a time of slowing growth and deep cuts in government spending, which is seen to be vulnerable to new European regulations that could hurt British competitiveness in global markets.
Despite all that is at stake, Prime Minister David Cameron’s coalition government looks doomed to be cast in the role of impotent bystander, torn between anti-Europe forces and European leaders’ moves toward greater fiscal integration on the Continent — with or without Britain.
On Wednesday, Mr. Cameron told a fractious Parliament that his main goal in Brussels was to “seek safeguards for Britain” and “protect our own national interest” by resisting measures like a proposed financial transaction tax. But such Britain-centric rhetoric has annoyed the brokers of Europe’s future, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, who are trying to find a way to save the euro while imposing legally binding fiscal discipline on the Continent’s floundering southern economies.
They have not been shy about expressing their frustration. Just six weeks ago, after Mr. Cameron tried to inject himself into talks about the euro, Mr. Sarkozy said bluntly, “You have lost a good opportunity to shut up.” He later added: “We are sick of you criticizing us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings.”
Steven Fielding, director of the Center for British Politics at the University of Nottingham, said: “Cameron might sound off to look good to his backbenchers, but in Europe, he hasn’t got much to negotiate with. It’s been made clear that France and Germany can do whatever the hell they like and Britain can say yes or no, but it doesn’t matter, since they’ll do it anyway.”
The paradox of this is that plans for tighter integration among the 17 euro zone countries are at the same time destined to create greater divisions within Europe — divisions between countries that use the euro and those that do not, and divisions within the euro zone itself, depending on the health and importance of the various economies. A two-, three-, four- and even five-tier Europe could possibly emerge.
“The markets have defined who are the good guys and who are the bad guys, and their interest rates are in many ways the manifestation of this,” said Alexander Stubb, Finland’s minister for European affairs. “When we look at future E.U. rules, it is the triple-A countries that are running the show.”
The political price of Britain’s self-proclaimed exceptionalism was made clear with a vengeance to Mr. Cameron on Wednesday, when he was pounded from all sides in a raucous session in the House of Commons. Fractious Europe-hating Conservative backbenchers called for him to stand firm on Europe, to “show bulldog spirit,” in a “resolute and uncompromising defense of British national interests,” as one legislator, Andrew Rosindell, put it.
Trying to placate them, the prime minister pledged not to sign anything that did not contain “British safeguards.”
Next Page »
Sarah Lyall reported from London, and Stephen Castle from Brussels.



A version of this article appeared in print on December 8, 2011, on page A1 of the New

PaddyPower PLC in Dublin is taking bets on the break-up of the Eurozone.at 2015 the odds were 5/10, now at 2012the odds are 4/6
with the odds on Greece being the first to leave being 3/10. Also the odds of Ireland having a Referendum next year have narrowed
considerably.

Draghi, the new ECB President is giving a Press conference , here is the gist,

ECB to offer 3 yr Loans to Banks by easing collateral criteria and will adopt non standard measures to aid them.

He sees a substantial downside risks to growth outlook.

The new rules for fiscal policy will be in Primary Legislation to ensure Countries adhered to them.

Currently, these are the current 10 year Bond Prices:-

Greece, 34.2% Spain 5.1% Italy 6.4% Germany 2.11%

There are currently E132 Billion assets for sale in European Banks.

If there was a case where National Central Banks wanted to lend money to the IMF to help say, Thailand or Indonesia, that"s O.K.,
but if it was done for the IMF to buy Euro Bonds, that is illegal.

It is not the job of the ECB to act as a bank to bail out Countries in financial difficulty, it"s prime responsibility is to maintain price
stabilty.

As I type, the yield on the Spanish and Italian Banks has gone up and the Euro/Dollar rate gone down, as have share prices in
the European Markets and British stock exchange to a lesser degree. Looks as though the summit tomorrow is not going to solve
anything.

IT IS BEING SAID THAT THE BRITISH GOVERNMENT WANTS THE FINANCIAL SECTOR TO DO WHAT THEY DID BEFORE THE CRISIS,BECAUSE THERE IS LITTTLE ELSE TO PRODUCE MONEY FOR THE GOVERNMENT.
THIS COULD WELL LEAD TO ANOTHER CRISIS.

It"s like fiddling while Rome burns. Germany and France were the two Countries who reneged on the existing Treaty which States that
debt should not rise above 3%of GDP. This is the least of the problems at the moment, the World is heading for recession and the
priority should be to stimulate growth and exports.

Britain is not very popular with Merkel and Sarkozy, we are seen as the whiners and they would be quite happy to see us leave but we
would be faced with a big problem of not having an open trading market which is what the Treaty was originally supposed to be.