Bharat Rakshak

Germany’s idea is coyly named the European Redemption Pact and it is nothing if not creative. While details are scant, here is roughly how this gilded baby would work. Countries with debts greater than 60 per cent of gross domestic product – the (ignored) limit under the European Union’s Maastricht Treaty – would transfer those debts into a redemption fund, which would be covered by joint bonds. The scheme has been called “euro bonds lite.”

Here’s the catch. Countries using the scheme (most would, including Germany, because of generally high debt-to-GDP ratios) would have to cover 20 per cent of their debt with collateral, payable in gold or currency reserves. Default on the payments and you lose your gold. The “sinking” fund would retire the debt over 20 years.

1.A week ago the bankrupt Greek state borrowed 4.2 billion from Europe’s bailout fund (the EFSF) and immediately passed it on to the European Central Bank (ECB) so as to redeem Greek government bonds that the ECB had previously purchased in a failed attempt to shore up their price. This new loan boosted Greece’s debt substantially but netted the ECB a profit of around 840 million (courtesy of the 20% discount at which the ECB had purchased these bonds).

2.During the same week, the fiscally stressed Spanish government was injecting large amounts of capital into Spanish banks. Simultaneously, to help finance the Spanish state, the ECB has provided large loans to Spanish banks (at 1% interest rate) which they then re-lent to their ‘saviour’, i.e. the Spanish state, at interest rates often exceeding 6%. {We know that this happens in uncle land}.

This is day light robbery by ECB....

For Europe’s sake Greece must renege on its bailout commitments – my op-ed in Le Monde

The reason neighbors don't like these multiple family is that it turns into an unfair drain on utilities and resources. Though there is some anti-hispanic sentiment too. Yogi is talking like a MUTU, maybe he is minute man.

http://www.spiegel.de/international/europe/europe-prepares-for-the-worst-despite-spain-bailout-a-838370.html
06/12/2012
The Next Domino Europe Unprepared as Euro Crisis Deepens
A Commentary by Stefan Kaiser
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Indeed, it is now imperative that the troika -- made up of the European Commission, the European Central Bank and the International Monetary Fund -- take over control of banking reform efforts in Spain. Rajoy's fear of outside influence notwithstanding, oversight of Spain must be strengthened. Troika experts must make sure that the bailout money is used wisely and that the banking sector is made more efficient. Such an effort might include closing bank branches and shedding jobs, a task that the government would like to avoid at all costs.

The geopolitics of the Greece crisis
June 11, 2012 12:29 pm by Tony Barber
Cypriot and EU flags in the city of Nicosia. Patrick Baz /AFP/GettyImages

Sometimes it’s easy to forget that the Greek crisis is not just financial in nature. It has geopolitical implications that extend beyond whether or not Greece remains in the eurozone.

There is, for example, the potential impact on one of Europe’s longest-running territorial disputes: Cyprus. Whatever events unfold in Greece after next Sunday’s election, the Greek Cypriot-controlled state of Cyprus will continue to be vulnerable because of its financial system’s massive exposure to Greece and because of its decision last year to turn to Russia for a €2.5bn loan.

Will this make the Greek Cypriots more open to a comprehensive settlement with the Turkish Cypriots on the Cyprus question? At present there is little to support this theory. But it is one of the European Union’s worst-kept secrets that many EU countries blame the impasse to a large extent on the obstructiveness of Greek Cypriot political leaders.

Might the Greek crisis prompt a breakthrough in relations with Turkey on divisive issues such as the demilitarisation of the Aegean islands, airspace rights and the delineation of the continental shelf? Or will a self-confident Turkey use its muscle to seek diplomatic advantage over a weakened Greece? If Turkey overplays its hand, there is every chance that Greece will respond by drawing closer to Israel and Russia.

A final thought concerns the former Yugoslav republic of Macedonia, to which all Greek governments since the early 1990s have refused to extend recognition under the name of Macedonia. As the debt crisis intensified last year, it looked for a while as if the former Greek government of George Papandreou, the socialist premier, was getting close to finding a compromise solution with the Macedonian leaders. This would have been a real breakthrough for long-term stability in the Balkans.

Then Papandreou fell in November. Whatever the political complexion of the government that takes power after next Sunday’s vote, it would win an awful lot of international sympathy if it struck a swift deal on the Macedonia issue.

Gerard Lyons, chief economist at Standard Chartered, has told Sky News that the euro has been driven by poilitics, and the economics underpinning it are poor. The euro has to be a political union to survive. He adds that Greece is only 2pc of the euro economy, the country needs growth to make changes and Germany should help Greece. Lyons says Greece lost the confidence of the markets some time ago. Markets less focused on the Greek economy and more on the issue of contagion.

He continues: "Greece needs to make changes and collect taxes. Germany does not want to give it a free rise. But key issue is Greece needs growth. The key is Germany and the ECB have the ability to pull Greece and the euro back from the brink. But Germany is prepared to let Greece go. Italy is in a very different and better position to Greece. It has large domestic savings and northern Italy is a dynamic economy. Europe needs a two-speed euro - hard euro for the north, soft for the south. France is politically in the north, economically in the south.

"Greek statistics" has become something of a running joke in Brussels and Strasbourg. The term stands for tricks, political manipulation and creative accounting.
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according to one government official, "virtually everyone cheats, and virtually everyone evades taxes." The Greeks, out of necessity, are about to embark on a kind of cultural revolution. The money that has been pledged to save them from collapse comes with stringent conditions.
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His staff have become very creative when it comes to tracking down tax offenders: They use police helicopters .. use satellite pictures by Google Earth to locate country villas, swimming pools and properties. And these tactics have revealed that the suburbs didn't have 324 swimming pools, as was reported, but rather 16,974.
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The sale of coveted truck licenses has, up to now, ensured that they can retire with ample pensions, but now authorities want to do away with these costly concessions and open up the trucking market.
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There is no doubt, however, that permanent positions in the public sector are often awarded very generously, all too often in the wake of elections. Up until last week, nobody could say precisely how many jobs were concerned.
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Los Cabos: India and four other countries of the five-nation BRICS bloc on Tuesday gave a big boost to IMF's $ 430 billion bailout fund for the debt-wracked 17 nation Eurozone pledging to contribute $ 75 billion with New Delhi's contribution being $ 10 billion.

The pledge was made at an informal meeting of BRICS Leaders presided by Prime Minister Manmohan Singh ahead of the opening of the seventh G20 Summit in this Mexican resort town. Besides India, the other nations in BRICS are China, Russia, Brazil and South Africa.

According to Indian officials, China has agreed to contribute $ 43 billion while the contribution from Russia and Brazil will be $ 10 billion each. The South African contribution is $ 2 billion.

All the BRICS Leaders agreed that the Eurozone crisis threatened global financial and economic stability and that it was necessary to find cooperative solutions to resolve this crisis. The BRICS countries have been the new growth poles of the global economy.

The pledges for fresh contributions were made after the Leaders agreed to increase resources available with the International Monetary Fund. In this context, they agreed to enhance their own contributions to the IMF.

This is with the understanding that these resources will be called upon only after existing resources, including the New Arrangements to Borrow, are substantially utilised, an official statement said.

"This would promote adequate burden sharing amongst IMF creditors. These new contributions are being made in anticipation that all the reforms agreed upon in 2010 will be fully implemented in a timely manner, including a comprehensive reform of voting power and reform of quota shares," the statement said.

But European Commission president Jose Manuel Barroso has hit back at those critical of Europe's approach, telling reporters: "We are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy".

India may not have to inject $10 bn for Eurozone crisis: India may not be called upon to inject $10 billion (Rs 55,000 crore) into the IMF bailout fund to help the debt-wracked Eurozone tide over its financial crisis if the global economic situation gets better, an official said today.

R Gopalan, secretary in the department of economic affairs, said that the $10 billion dollar contribution announced by Prime Minister Manmohan Singh at the G20 Summiton Tuesday is still considered part of the country's reserves.

"It (contribution) is considered part of our reserves. The country may not be called upon to give the money if the world situation gets better," he said.

Okay, Folks, Let's Put Aside Politics And Look At The Facts... [CHARTS]
Henry Blodget | Jun. 21, 2012, 12:29 PM | 500,952 | 125

The most important issue in this year's election is the economy.
Unfortunately, this topic has now been "politicized," which means that you can't talk about it without being instantly cheered or jeered by fans of each respective political team.
But the economy is much more important than this year's election or either political team.
And both teams are responsible for the mess we're in--and so, I am sorry to say, are the rest of us.
And fixing that mess is going to take decades, regardless of who's in power.
But we have to fix it. Or we're going to become a nation of a few million landed aristocrats and 300 million serfs.
The first step is getting past the political blame-game and understanding what's wrong.


Read more: http://www.businessinsider.com/politics ... z1yddHi99u

How does US manage to keep its borrowing rate lower at 1.5 % making it among the cheapest in the world ? Is it because they can print as many dollar as they want without worrying about inflationary effects on its economy ?

Iceland, whose economy has recovered rapidly following the 2008 collapse of its banking sector, on Friday repaid $483.7 million in loans to the International Monetary Fund, the lender said.

The early repayment, which follows another one of more than $900 million in March, is a symbolic step for the country of just 320,000 people as it works its way out of a financial meltdown that ravaged the economy.

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties- not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo.

The defendants in the case- Dominick Carollo, Steven Goldberg and Peter Grimm- worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street, these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America.

The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes- from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. [...] But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. [..] In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open and it was a hell of a show.

To grasp the full insanity of these revelations, one must step back and consider all this information together: the bribes, yes, but also the industrywide, anti-competitive bid-rigging scheme. It turns into a kind of unbroken Möbius strip of corruption: the banks pay middlemen to rig auctions, the middlemen bribe politicians to win business, then the politicians choose the middlemen to run the auctions, leading right back to the banks bribing the middlemen to rig the bids.

When we allow Wall Street to continually raid the public cookie jar, we're not just enriching a bunch of petty executives [..], we're effectively creating an alternate government, one in which money lifted from the taxpayer's pocket through mob-style schemes turns into a kind of permanent shadow tax, used to maintain the corruption and keep the thieves in place. And that cuts right to the heart of what this case is all about.

Wall Street is tired of making money by competing for business and weathering the vagaries of the market. What it wants instead is something more like the deal the government has regularly collecting guaranteed taxes. What's crazy is that in order to justify that dream of regular, monopolistic tribute, they've begun to see themselves as a type of shadow government, watching out for the rest of us. Amazingly enough, this even became a defense at trial.

Instead of anything resembling real censure, a few young executives got spanked, while the offending banks got off with slap-on-the-wrist fines and were allowed to retain their pre-eminent positions in the municipal bond market. Last year, the two leading recipients of public bond business, clocking in with more than $35 billion in bond issues apiece, were Chase and Bank of America- who combined had just paid more than $365 million in fines for their role in the mass bid rigging. Get busted for welfare fraud even once in America, and good luck getting so much as a food stamp ever again. Get caught rigging interest rates in 50 states, and the government goes right on handing you billions of dollars in public contracts.

Who ultimately loses in these deals? Well, to take just one example, the New Jersey Health Care Facilities Finance Authority, the agency that issues bonds for the state's hospitals, had their interest rates rigged by the Carollo defendants on $17 million in bonds. Since then, more than a dozen New Jersey hospitals have closed, mostly in poor neighborhoods.

Bailout to cover budget deficit as well as banking sector
Needs €1.8bn to recapitalise second largest bank
Exposure to Greece has left island with limited funding options
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The full amount would be decided over the course of weeks.

If you do not make $250k in massa now, you have not made it to the six-figure levels in reality.

http://finance.yahoo.com/news/inflation ... 38493.html

Barclays should be wound up.

Bob Diamond, CEO, and Chairman Marcus Agius fought to contain the damage.
Diamond apologized and promised to give up one of his bonuses. But shareholders still questioned the future of both.

As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report.

With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion.

The report from the US Commodity Futures Trading Commission (CFTC) highlights communications between Barclays traders and those tasked with submitting Libor estimates which it claims show an attempt to manipulate rates on "numerous occasions and sometimes on a daily basis".

David Meister, the CFTC's director of enforcement, said:

Quote -- The American public and our markets rely upon the integrity of benchmark interest rates like LIBOR and Euribor because they form the basis for hundreds of trillions of dollars of transactions and affect nearly every corner of the global economy.

Banks that contribute information to those benchmarks must do so honestly. When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports that result from senior management orders to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined. The CFTC launched this investigation to protect the markets and the public from such illegal conduct, and today’s action demonstrates that we will bring the full force of our authority to bear as we carry out that mission.

Deceased French president Francois Mitterrand in 1989 gave his approval to German unification on condition that then Chancellor Helmut Kohl opened the way for the creation of an only currency in the European Union.