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AEP, from Telegraph.uk, was wondering Should Germany bail out Club Med or leave the euro altogether?
Germany faces a terrible dilemma. Either Europe's paymaster agrees to underwrite a Greek bail-out and drops its vehement opposition to a de facto EU economic government, treasury, and debt union, or the euro will start to unravel, and with it Germany's strategic investment in the post-war order.
By Ambrose Evans-Pritchard
Published: 7:00PM GMT 31 Jan 2010
The spike in yields on 10-year Greek bonds to 400 basis points above German Bunds has been shockingly swift – a warning to Britain, too, that markets can suddenly strike any country that takes creditors for granted.
We can argue over whether Greece, Portugal, or Spain are at risk of being forced out of the euro. But there is another nagging question: whether events will cause Germany and its satellites to withdraw, bequeathing the legal carcass of EMU to the Club Med bloc.
This is the only break-up scenario that makes much sense. A German exit would allow Club Med to uphold contracts in euros and devalue with least havoc to internal debt markets. The German bloc would enjoy a windfall gain. The D-Mark II would be stronger. Borrowing costs would fall. The North-South gap in competitiveness could be bridged with less disruption for both sides.
To be sure, Germany is happily placed in the current EMU system. By compressing wages for a decade it has stolen a march on EMU. Critics unfairly call this a beggar-thy-neighbour policy. It is simply the way Lutheran society operates, in deep contrast to the way Latin society operates – a cultural clash that should have given pause for thought before Europe's elites launched headlong into their adventure.
German goods are flooding the South. In the 12 months to November, Germany-Benelux had a current account surplus of $211bn: Spain had a deficit of $82bn, Italy $74bn, France $57bn, and Greece $37bn. German industry will not give up this edge lightly. However, the matter will in the end be decided by democracy. German citizens were given a pledge by their leaders in the 1990s that loss of the D-Mark would not lead to monetary disorder, or leave them liable for Club Med debt. That is the sacred contract of EMU.
"Politically," said Bundesbank chief Axel Weber, "it's not possible to tell voters that they are bailing out another country so that it can avoid painful austerity measures that they themselves have gone through. Such aid, whether conditional, or – even worse – unconditional, is counterproductive."
Dr Weber is right on both counts. Fresh loans for Greece can achieve nothing useful at this stage. Greece already has a public debt hurtling towards 138pc of GDP by 2012 (Standard & Poor's). It is already in a debt compound spiral. The EU elites have yet to acknowledge that Greece and much of Club Med need gifts – not loans – akin to transfers paid to East Germany after unification, or North Italian perma-subsidies to the Mezzogiorno.
Athens has promised to slash the budget deficit by 10pc of GDP over three years, though the country is sliding deeper into slump, faces 20pc unemployment by the year's end, has a tottering banking system, and has already lost control of its streets before spending cuts have even begun. Such a policy is economically self-defeating – since it risks tipping the country into depression, and causing tax revenues to collapse – but will it be tolerated by Greek society?
The Papandreou government has craftily invited the European Commission to set up a vice-regal inspectorate in Athens, to become the focus of popular fury. The media talks of "guardianship". Ta Nea, an Athens newspaper, writes of "ultimatums" and "suffocating deadlines" for wage and pension cuts. "Either we obey the commands of unprecedented austerity and face the risk of widespread social unrest or we refuse to implement the orders."
Spain's troubles are less immediate, but it lost as much competitiveness during the early EMU boom, that debt trap of negative real interest rates. External corporate debt is dangerously high. The budget deficit was 11.3pc of GDP last year. Madrid has drawn up €50bn of cuts to sweeten the markets, even though unemployment is already 19pc. The jobless typically receive 50pc to 60pc of former earnings for around 18 months, then the axe falls. The social distress hits with a lag. How much more tightening can Spain endure before Catalan, Basque, and Galician seperatism rocks the Spanish state?
Fiscal austerity in these circumstances without monetary and exchange stimulus to offer a lifeline is incoherent. These policies must fail because they are based on EU wishful thinking that high-debt nations can regain competitiveness within EMU against a zero-inflation Germany. Such a strategy will drive them into a debt-deflation spiral.
Europe will have to embrace "fiscal federalism" if it is to hold monetary union together. That is when we will probe the limits of EMU solidarity. Hedge funds are betting that Berlin will pay to ensure stability. No doubt Chancellor Angela Merkel is of that mind, but the Free Democrats are not, nor are Bavaria's Social Christians, or the Bundestag's finance committee. Economy minister Rainer Bruderle said last week that there would be "no bail-outs" regardless of risks to EMU. Is that just brinkmanship?
EMU architects were warned in the early 1990s that monetary union would prove unworkable as constructed. They scoffed, sure that any crisis could be exploited to force the pace of economic union. Commission chief Romano Prodi later admitted as much. "The euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible now. But some day there will be a crisis and new instruments will be created."
We will soon learn if this gamble will pay off, or prove catastrophically wrong
http://www.telegraph.co.uk/finance/comment/7119986/Should-Germany-bail-out-Club-Med-or-leave-the-euro-altogether.html
'Europe will have to embrace "fiscal federalism" if it is to hold monetary union together.'
Robin the Taxpayer
on February 02, 2010
at 09:52 PM
And that, in a nutshell, has been Germany's aim all along.
_________________________________
archimbaud
on February 02, 2010
at 03:56 PM
The euro could go all the way down to 0.8$. Been there, done that. The germans won't go out on the streets because of that. The greeks and pretty much all southern and eastern Europe may have gone on a borrowing binge taking advantage of low interest rates, but then again there were lenders willing to lend them the money. Who were the greater fools? Greece can default and the euro and the world will keep running. In Europe we've had a monetary union for centuries. Gold, silver and copper ensured that. The real experiment is floating exchange rates. My hunch is that it's coming to an end.
Breaking News, Rumor Germany to Leave the Euro This Weekend?
Currencies / Euro
May 13, 2010 - 04:39 AM
By: Mac_Slavo
The internet, and especially gold forums, are getting excited over the possibility of very big news from Germany this Friday.
As reported by a Zero Hedge contributor, a forum post at GoldLikeProductions from a user identifying himself as a Deutsche Bank employee, suggests that the big news to be announced this Friday as stated by German politician Gregor Gysi at a recent press conference may be that Germany will announce a return to the Deutsche Mark, eliminating the Euro as their country’s currency:
From a forum post by an Anonymous user:
I’m working at the Deutsche Bank in Germany. Today we delivered 1 container with new Deutsche Mark notes and new coins. I will present a photo from the new banknotes tomorrow morning. The curencychange will be the night from Saturday to Sunday 5/16/2010. On Friday, 19.00 GMT Angela Merkel the germany chancelor, will speach to the german nation.
This forum post, coupled with a page identified at Kitco.com (screenshot), one of the leading precious metals dealers in the world, that looks like it is being built to price gold/silver/platinum in Marks, has gold bugs around the world buzzing.
If Germany were to announce that they are pulling out of the Euro and switching back to Marks, there would be serious implications around the world. The European crisis would likely accelerate and last Thursday’s stock market crash would just be an appetizer for what we can expect around the globe come Monday morning. Gold would likely make a serious move to the upside as a result.
Dispelling the Rumor
We warn our readers that this may very well be nothing more than a rumor, and recent gold price action in the upward direction may be partly attributed to the aforementioned forum post and Kitco page.
Regarding the Kitco.com web page, the SHTF Plan research team utilized Archive.org, an internet archival web site that tracks web site pages over the course of the last 15 or so years.
The very same page which is being listed at Kitco with the following URL: http://www.kitco.com/market/dm_charts.html is NOT A NEWLY CREATED PAGE and has existed at Kitco.com for quite some time.
The page has existed at the exact URL address since before the Euro was accepted by Germany.
According to Archive.org, the Web Archive’s earliest listing for this specific URL dates back to August 12, 2000 and the oldest available instance of this page can be viewed here: http://web.archive.org/..
Thus, this is not a new development and the page was simply never taken down by Kitco.com after the Deutsche Mark was removed from circulation.
The fact that the only available news about the new Deutche Mark comes from an anonymous poster at an internet forum should further dispel this rumor.
How likely is it that Germany would drop the Euro?
While we do believe in the eventual destruction of the Euro and breakup of the European Union, Germany announcing that it will be dropping out of the monetary union and introducing a new currency over the weekend is unlikely.
However, for inquiring minds, we direct readers to a Financial Sense University article from April 2010 titled German Windfall Profits From Exiting The Euro:
Germany is a nation that fears inflation for good historical reason, and among the nations of the world, Germany places a particularly high priority on price stability. Yet, so long as Germany remains in the European Economic and Monetary Union (EMU) with the euro as its currency, Germany may not be in control of German inflation. In particular, the current crisis with Greece, and the crises that may follow with other nations such as Portugal, Italy, Spain and Ireland may prove disastrous for German investors and taxpayers. For so long as it is in the EMU, Germany may have no effective choice but to bail out countries that have been running up huge deficits – despite Germany itself not having the economic capacity to do this for all of Europe on an indefinite basis, let alone the political will to do so. These are among the reasons why in a letter to clients late last week, Morgan Stanley warned that Germany may leave the euro and the EMU and that investors should be prepared for this event.
If this event happens, it may create an enormous financial windfall for millions of individual Germans, as well as German companies, not to mention the German government. While leaving the monetary union is still far from certain as Germany also has strong economic and political incentives to stay in the EMU, in this article we will say “what if” and explore some of the startling benefits for nations and individuals of quickly exiting a failing monetary union – as well as the many perils.
It is not completely out of the question that Germany will decide to leave the European Monetary Union but remain an EU member. Obviously, if the German people (The #2 exporters in the world) are going to be strapped with bailing out Greece, the rest of the PIIGS and Eastern Europe, they may be much better off just cutting their losses and getting out now.
Friday will be an interesting day, but we’re not holding our breath. At this point, the world economic and financial systems are such a mess that even if Germany announces a switch back to the Mark, the end result globally will be similar to what will happen at some point in the near future anyway - panic, collapse and all the goodies that go along with that.
By Mac Slavo
http://www.shtfplan.com/
Mac Slavo is a small business owner and independent investor focusing on global strategies to protect, preserve and increase wealth during times of economic distress and uncertainty. To read our commentary, news reports and strategies, please visit www.SHTFplan.com
© 2010 Copyright Mac Slavo - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2010 http://www.MarketOracle.co.uk
http://beforeitsnews.com/news/43/872/Breaking_News,Rumor_Circulating_Germany_to_Leave_the_Euro_This_Weekend.html
http://www.marketoracle.co.uk/Article19447.html
DM.uk: Could Germany quit euro over Greece crisis?
By Karl West
Last updated at 10:45 PM on 16th
Germany may be poised to quit the euro to set up a smaller monetary union because of the Greek crisis, according to a leading City economist.
Athens was yesterday edging closer to activating a bailout from fellow European Union countries and the International Monetary Fund, which is due to send teams to the country on Monday.
But Joachim Fels, co-chief global economist at investment bank Morgan Stanley in London, warned the Greek rescue proposal sets a 'bad precedent' for eurozone member states and makes it more likely that the euro area 'degenerates into a zone of fiscal profligacy, currency weakness and higher inflationary pressures'.
Mr Fels suggested Berlin may be 'better off with a harder but smaller currency union'.
He added that 'recent developments significantly raise the long-term risk of a euro break-up' and that a 'scenario where a country or a group of countries want to leave to introduce a stronger currency is more likely than a scenario where a country, like Greece, wants to leave to devalue'.
Though Germany has not officially considered the proposal, Mr Fels' comments reflect the radical options being considered by EU member states as the situation in Greece worsens.
Yesterday Greek Prime Minister George Papandreou told his parliament that he was pushing through a painful austerity plan of public sector cost-cutting in order to prevent the country sinking. Athens needs to refinance about £46.4billion of sovereign debt this year, with a big chunk of that due before May 19.
David Mackie, head of European economics at JP Morgan, said: 'Being part of the euro area complicates the situation significantly. We would never underestimate the euro area's inclination to keep kicking the can down the road for as long as possible.'
http://www.dailymail.co.uk/news/worldnews/article-1266659/Could-Germany-quit-euro-Greece-crisis.html
DANG! Carlsberg Strike May Leave Danes Without Beer During World Cup
By Christian Wienberg
May 17 (Bloomberg) -- Carlsberg A/S, the Danish brewer that sponsors the England soccer team, may be unable to provide beer to fans in its home country at next month’s World Cup because of a strike by local workers.
The strike by Carlsberg’s 1,100 Danish employees, including drivers and factory and warehouse staff, today entered a 12th day and some stores have run out of beer, Jens Bekke, spokesman for the Valby, Denmark-based brewer said in a phone interview.
“This strike is turning expensive for us,” Bekke said, declining to be specific on how much the stoppage has cost. “The World Cup is obviously a main sales event.”
About 500 workers walked out of Carlsberg’s Fredericia brewery in western Denmark on May 6, protesting that they wouldn’t get a pay increase this year. An additional 600 employees in eastern Denmark joined the strike eight days later. Some stores in western Denmark have run out of the brewer’s Carlsberg and Tuborg beers and outlets in the eastern part of the country will run dry “in a few days,” according to Bekke.
Carlsberg, which sells the equivalent of more than 100 million bottles of beer globally every day, gets 2 percent to 3 percent of its sales volume from Denmark. Its biggest domestic rivals are Royal Unibrew A/S, the Nordic region’s second-largest brewer, and low-cost producer Harboes Bryggeri A/S.
“This is an illegal strike, so we want the workers to go back to work before we can even begin to talk again,” Bekke said. The dispute will “probably and hopefully” end before the monthlong tournament starts on June 11, as a Danish labor court has imposed fines on the striking workers, he said.
Hans Andersen, the employee representative for the striking workers, won’t talk with Carlsberg management and said that the strike will continue even though the court ruled it illegal, newswire Ritzau cited him as saying. Andersen didn’t immediately return a call from Bloomberg News seeking comment.
Denmark’s soccer team is grouped with Cameroon, Japan and the Netherlands in the world’s biggest sporting event, which this year takes place in South Africa.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net.
Last Updated: May 17, 2010 07:28 EDT
Deja Vu: ‘Lack of Trust’ Pummels Bank Lending in Europe: Credit Markets
By Pierre Paulden and Shannon D. Harrington
May 17 (Bloomberg) -- Money markets are showing rising levels of mistrust between Europe’s banks on concern an almost $1 trillion bailout package won’t prevent a sovereign debt default that might trigger a breakup of the euro.
Royal Bank of Scotland Group Plc and Barclays Plc led financial firms punished by rising borrowing costs, British Bankers’ Association data show. The cost to hedge against losses on European bank bonds is 63 percent higher than a month ago. Investment-grade corporate debt sales in the region plummeted 88 percent last week to $1.2 billion from the previous period, according to data compiled by Bloomberg.
The rate banks say they charge each other for three-month loans in dollars rose to a nine-month high, even after a government-led rescue designed to prevent Greece from defaulting, and a new financial crisis. The euro fell to its weakest against the dollar since 2006.
Bank lending “conveys a lack of trust in the system,” said Robert Baur, chief global economist at Des Moines, Iowa- based Principal Global Investors, which manages $222 billion. “Banks are a little reluctant to lend overnight as they don’t know the full extent of what is on the bank balance sheets.”
The three-month London interbank offered rate in dollars, or Libor, rose to a nine-month high of 0.46 percent today, from 0.445 percent on May 14 and 0.252 at the end of February, according to the British Bankers’ Association. The three-month Singapore interbank offered rate, or Sibor, climbed to 0.45083 percent, also the highest level in nine months, according to the city state’s Association of Banks.
‘Access Spotty’
Concerns have spilled into the market for commercial paper, debt used by companies and banks for their short-term operating needs. Rates on 90-day paper are more than double the upper band of the federal funds rate, about twice the average in the five years before credit markets seized up in mid-2007.
“The list of banks able to tap the three-month market remains extremely limited with access spotty and expensive,” Joseph Abate, a money-market strategist at Barclays in New York, wrote in a May 14 note to clients.
The rate at which London-based Barclays, the U.K.’s third- largest bank by market value, told the BBA it could borrow for three months in dollars climbed 2 basis points as of May 14 to 47 basis points, the highest since July 2009 and up from 34 basis points on April 30, Bloomberg data show. The bank’s rate was 2.5 basis points above three-month Libor on the day. On average, Barclays reported a rate that was 1.3 basis points below Libor during the past year.
Barclays spokesman Mark Lane declined to comment.
Default Swaps
Elsewhere in credit markets, the extra yield investors demand to own corporate bonds instead of government securities climbed 3 basis points on May 14 to 171 basis points, or 1.71 percentage points, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. The index fell from 177 basis points a week earlier, the first decline since the period ended April 16.
Investors seeking to protect themselves from losses on corporate bonds or speculate on creditworthiness drove credit- default swaps higher today. The Markit iTraxx Europe Index of contracts linked to the debt of 125 companies climbed 1.1 basis point to 110.9 basis points as of 7:20 a.m. in New York, after earlier advancing to the highest level in more than a week, according to Markit Group Ltd. The contracts rise as investor confidence deteriorates and fall as it improves.
The Markit iTraxx Asia index climbed 10 basis points to 125 basis points, BNP Paribas SA prices show. The Markit CDX North America Investment Grade Index, tied to 125 companies in the U.S. and Canada, rose 6.8 to 107.9 at the end of last week. The index was at 118.7 on May 7.
Leveraged Loans
Yields on Fannie Mae and Freddie Mac mortgage securities that guide home-loan rates dropped to the lowest in five months on concern the sovereign debt crisis will stunt economic growth. Fannie Mae’s current-coupon 30-year fixed-rate mortgage bond yields tumbled 0.07 percentage point to 4.2 percent, the lowest since Dec. 17, according to data compiled by Bloomberg.
Global corporate bond sales rose to $20.2 billion last week from $11.9 billion in the previous five-day period, which was the lowest this year, Bloomberg data show. Issuance compares with a weekly average for 2010 of $53 billion.
Prices on the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index, which tracks the 100 largest dollar-denominated first-lien leveraged loans, rose 0.09 cent on the dollar last week to 90.98 cents.
About $111.4 billion in U.S. speculative-grade loans have been arranged this year, according to Bloomberg data, up from $34.4 billion in the comparable period in 2009. More than $373.1 billion of the loans were arranged during the period in 2007.
Cincinnati Bell
Cincinnati Bell Inc., a telephone company serving Ohio, is seeking a $760 million term loan to finance its acquisition of CyrusOne and to refinance existing bank debt. The loan is part of a $970 million senior secured credit facility, which also includes a $210 million revolving credit line, the Cincinnati- based company said in a May 13 filing.
The Province of Ontario plans to sell bonds denominated in yen, according to a person familiar with the matter who declined to be identified before a public announcement.
In Europe’s loan market, EMI Group Plc investors agreed to inject enough cash to maintain the banking agreements of the 79- year-old record company. Guy Hands’s Terra Firma Capital Partners Ltd. will put more cash into the label, EMI said in a May 14 statement. The investment will be made by June 14. Citigroup Inc. is the principal lender. No further details were disclosed.
Brazil
The extra yield investors demand to own emerging-market bonds instead of Treasuries rose 15 basis points on May 14 to 295 basis points, according to JPMorgan Chase & Co.’s Emerging Market Bond index. Spreads rose as high as 328 a week earlier.
Brazil central bank President Henrique Meirelles said May 14 that market volatility stems from “natural” doubts over the measures taken by Europe. Meirelles, speaking to reporters in Rio de Janeiro, said Brazil is prepared to face any international crisis because of its high currency reserves, floating exchange rate and inflation near target.
European policy makers’ plan to prevent a sovereign-debt collapse that threatened to tear apart the common currency was released May 10. The loan package offers as much as 750 billion euros ($923 billion), including International Monetary Fund backing, to countries facing instability, while the European Central Bank said it will buy government and private debt.
Euro Drop
The euro dropped to $1.2235, the lowest level since April 6, 2006, before recovering to 1.2332.
Deutsche Bank AG Chief Executive Officer Josef Ackermann said Greece may not be able to repay its debt in full, and former Federal Reserve Chairman Paul Volcker said he’s concerned the euro area may break up. Sony Corp., the world’s second- largest maker of consumer electronics, said it may suffer a “significant impact” if Europe’s deficit spreads, while Chinese Premier Wen Jiabao said the foundations for a worldwide recovery aren’t “solid” as the sovereign-debt crisis deepens.
Rates on commercial paper for 90 days are 24 basis points above the upper band of the Fed’s zero to 25-basis point target rate for overnight loans among banks. While far below the 245- basis point gap reached in October 2008, the spread is more than double the 10-basis-point average in the five years before credit markets seized up in the middle of 2007. As recently as February, financial CP rates were below the federal funds rate.
‘Scarce Liquidity’
The dollar Libor-OIS spread, another measure of banks’ unwillingness to lend, increased to 24 basis points, the most since Aug. 17, from 22 basis points.
Except for banks with little exposure to European sovereign risk, lenders “have found liquidity to be scarce, securing funding only one month and shorter and mostly concentrated inside one week,” Abate from Barclays wrote in the report.
Credit Suisse Group’s rate has jumped 11 basis points to 47 this month and was 2.5 basis points higher than the benchmark on May 14, compared with an average 1.5 basis points higher during the past year. The firm’s primary sources of funding are long- term debt, shareholders’ equity and deposits, said Marc Dosch, a spokesman for Switzerland’s biggest bank by market value.
Releasing its first-quarter results last month, the Zurich- based bank said its “exposure to Greece is not material” and its “exposure to the other southern European economies that have been subject to credit downgrades is relatively limited.”
The reported rate for Edinburgh-based Royal Bank of Scotland, the U.K.’s biggest state-controlled bank, climbed 10 basis points to 46 this month, 1.5 basis points higher than the benchmark.
RBS finance director Bruce Van Saun said last week the bank held 1.5 billion pounds ($2.2 billion) in Greek debt with about 400 million pounds of unrealized losses. Credit exposure to Greece was less than 1 billion pounds, he said. “Overall, our exposure to Greece is moderate, and any potential economic impact, I would say, is manageable,” Van Saun said on a May 7 conference call.
RBS spokesman Michael Strachan declined to comment further.
To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net
Last Updated: May 17, 2010 07:22 EDT
it hurts...headed 4 a hamd surgeon this AM - a new one, ugh. TY for asking :)
UAUA puts? Ash Cloud Halts 1,000 Flights Across Northwest Europe (Update1)
By Steve Rothwell and Maud Van Gaal
May 17 (Bloomberg) -- Airlines were forced to ground 1,000 flights across Europe today as the return of the Icelandic ash cloud closed terminals from Northern Ireland to the Netherlands.
London Heathrow, the region’s busiest airport, suffered more than 150 cancelations before reopening at 7 a.m. and Amsterdam Schiphol, the fifth-busiest, shut for seven hours until 1 p.m. Many flights that do operate are being delayed.
An eruption of the Eyjafjallajökull volcano on April 14 closed European airspace for six days last month, grounding 100,000 flights at a cost of $1.7 billion, according to industry figures. Dust from the 5,000-foot crater has drifted across the region intermittently in the 4 1/2 weeks since, shutting airports as far south as Morocco and the Canary Islands.
“After a relatively quiet period the volcano erupted again last week and the ash is reaching the sort of altitudes where it’s funneled south towards Europe,” U.K. Met Office spokeswoman Sarah Holland said in a telephone interview. “The forecast is for winds to become more southwesterly and that may help carry the ash away again and limit the disruption.”
Volcanic dust is a threat to planes because the abrasive, silica-based material may clog engines and scar windscreens. Speed sensors, critical in flight, can also be disabled.
No-Fly Zones
Maps of no-fly zones supplied by Eurocontrol, which oversees flight paths in the region, showed two ash clouds at lower levels, one stretching southeast from Iceland to Shetland and then south to southern Scotland, the other lying across Ireland, Wales, southern England and the English Channel.
About 28,000 flights should take place in Europe today, 1,000 less than the usual number, Eurocontrol said in a statement. About 400 services were canceled yesterday, mostly in the northwestern U.K. and Ireland, it said.
“Although the ash problem is not something that will last forever, we don’t know when it’s going to end,” said Jay Ryu, a Hong Kong-based analyst at Mirae Asset Securities Co. “This is delaying a recovery in the industry.”
The U.K. Civil Aviation Authority lifted a no-fly zone over central and northern Britain that had initially been due to apply until 1 p.m. “following further information from the Met Office about the nature and location of the ash cloud,” National Air Traffic Services Ltd. said on its website.
Dublin airport began accepting flights at midday, the Irish Aviation Authority said. Airports further north and west remain shut, including Belfast City in Northern Ireland and those in the Scottish islands of Shetland and Orkney.
BA, Ryanair
British Airways Plc reported “significant disruption” to operations this morning. Ryanair Holdings Plc, Europe’s biggest discount carrier, scrapped more than 200 flights because of airspace restrictions, according to its website.
Gatwick began accepting both takeoffs and landings from 10:55 a.m. after more than 100 cancellations. Both there and at Heathrow, passengers are being advised that some flights will still be delayed or canceled as a result of earlier closures.
“The difficulty for all of us is that this is a movable feast,” said Malcolm Robertson, a spokesman for BAA Ltd., which owns Europe’s busiest airport. “There are some operating restrictions in place which have been imposed by NATS which essentially mean there will be some delays and cancellations.”
Air France-KLM Group diverted flights headed for Amsterdam to cities including Paris, Dusseldorf and Frankfurt in Germany and Maastricht in the Netherlands.
Asian Impact
Cathay Pacific Airways Ltd. diverted two London-bound flights and one heading to Amsterdam that left Hong Kong overnight, according to an e-mailed statement. Singapore Airlines Ltd. diverted two European flights and said it would operate a flight due to depart Amsterdam from Frankfurt instead.
All Nippon Airways Co. planned to delay a London-bound flight from Tokyo by an hour and warned passengers that it may still need to divert to Frankfurt or Paris, said Yoshifumi Miyake, a spokesman, by phone. Japan Airlines Corp. and Qantas Airways Ltd. intended to continue operating flights, while saying disruption was possible. Malaysian Airline System Bhd. planned to reschedule London and Amsterdam flights.
To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net; Maud van Gaal at
Last Updated: May 17, 2010 07:41 EDT
BL: EU Officials Face Trichet Call for `Quantum Leap' in Policy as Euro Slides
By Mark Deen and Lorenzo Totaro
May 17 (Bloomberg) -- European finance ministers return to Brussels today as European Central Bank President Jean-Claude Trichet calls for a “quantum leap” in policy making to help stamp out the bloc’s sovereign debt crisis.
One week after agreeing to a $1 trillion financial lifeline for the euro region, ministers are under pressure to show they can reduce deficits fast enough to satisfy investors and then police budgets effectively once targets are met.
While Italy is following Spain and Portugal in announcing budget cuts, the drumbeat of skepticism about policy makers’ ability to end the crisis is getting louder. The euro dropped today to the lowest in more than four years against the dollar. The Euro Stoxx 50 Index on May 14 tumbled the most since March 2009.
“These are still measures taken under the gun,” said Marco Annunziata, chief European economist at UniCredit Group in London. “We need a credible strengthening of the euro zone’s fiscal rules to ensure discipline will be maintained after the immediate crisis is over.”
The European Commission said last week that it wants closer coordination and stricter rules, possibly including plans for euro-area finance ministers to submit spending plans to each other before their own parliaments vote on them.
‘Quantum Leap’
“There is a need for a quantum leap in the governance of the euro area,” Trichet said in an interview with German news weekly Der Spiegel published today. “There needs to be major improvements to prevent bad behavior, to ensure effective implementation of the recommendations made by peers and ensure real and effective sanctions in the case of breaches.”
Today’s meeting of euro-region finance ministers is schedule to start at 5 p.m. local time.
Changes to EU budget policy may take months or years to be implemented and for now governments across the region are scrambling to patch up their budgets.
Spain unveiled on May 14 the biggest cuts in at least 30 years and Portugal followed a day later, pledging to slash wages and raise taxes. Italian officials said yesterday that the government may make an extraordinary reduction in public spending, and France is slated to submit its latest tax and spending plans to the commission this week.
‘Target of Speculation’
“We need to have our public finances in order, otherwise we will become a target of speculation, too,” said Italian Public Administration Minister Renato Brunetta in an interview aired on RTL radio station.
The euro declined 3.1 percent against the dollar last week and continued falling today. The European currency traded at $1.2320 as of 11:50 p.m. in London from $1.2358 in New York on May 14, after earlier touching $1.2235, the lowest level since April 18, 2006. The euro has dropped more than 17 percent in the past six months.
ECB council member Ewald Nowotny said today the euro’s recent drop is of “no specific concern” for the central bank.
“We have no explicit exchange-rate target,” Nowotny, who heads Austria’s central bank, told reporters today in Berlin. “We are interested in orderly developments.”
The EU’s plan is nevertheless showing some signs of working as the ECB’s bond purchases give the most-indebted countries room to cut their deficits by keeping a lid on financing costs.
Risk Premium
The extra return that investors demand to hold 10-year Portuguese bonds over German bunds dropped by almost half to 179 basis points last week. The Spanish spread narrowed 56 basis points to 108 basis points and the Greek spread dropped almost 500 basis points to 485 basis points.
Even so, resistance to more European control is already sprouting in national capitals, with French Budget Minister Francois Baroin casting doubt on the legitimacy of the commission’s plans.
“We are sovereign states with elected parliaments and democratic governments,” Baroin said in an interview in the Journal du Dimanche published yesterday. Although having a European auditor review European budgets was conceivable, it would be an “after-the fact control, not an a priori censure,” he added.
Such sentiments are countered by Germany, the euro-area’s largest economy and the biggest single national contributor to the $1 trillion lifeline.
German Plan
German Finance Minister Wolfgang Schaeuble is working on a plan to create economic institutes that oversee national budgets, sanction violators with fines and remove their EU voting rights, WirtschaftsWoche said, citing a finance ministry document it obtained. The plan will be published May 21, it said.
Finance Ministry spokesman Michael Offer told reporters in Berlin today that the ministry is working on “concrete proposals” to help stabilize the euro, without being more specific.
The ECB decision last week to backstop the political leadership of the euro area by purchasing government bonds may have conditions attached, economists said.
“Trichet is constantly reminding the governments that the ECB will help in an emergency, but the institutional framework must be reformed and we need a mechanism to control deficits,” said Pierre-Olivier Beffy, chief economist at Exane BNP Paribas in Paris. “Everyone is now aware that something has to be done and if it isn’t, the very existence of the euro is threatened.”
In his Spiegel interview, Trichet rejected the suggestion that the ECB gave up its independence when it agreed to buy bonds and stepped up pressure on the region’s politicians.
“That is ridiculous,” Trichet said. “Just who has been weak over the past few months? It was not the ECB. The governments with their high debts were weak.”
To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net; Lorenzo Totaro in Rome at ltotaro@bloomberg.net.
Last Updated: May 17, 2010 07:03 EDT
BL: Manufacturing in New York Region Slows More Than Estimated as Sales Cool
By Courtney Schlisserman
May 17 (Bloomberg) -- Manufacturing in the New York region expanded in May at a slower pace than forecast as sales cooled.
The Federal Reserve Bank of New York’s general economic index fell to 19.1 from 31.9 in April, which was the second- highest level in four years. Readings greater than zero signal gains in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.
Today’s report indicates manufacturing is settling into a more sustainable pace of growth after helping pull the economy from the worst recession since the 1930s. Area factories boosted payrolls this month at the fastest pace in six years, showing they will probably keep expanding as consumer purchases strengthen, businesses rebuild inventories and exports pick up.
“There’s no sign of weakening for the moment,” James O’Sullivan, global chief economist at MF Global Ltd. in New York, said before the report. “We’ve seen solid growth in consumer spending as well as capital expenditures and on top of that we’ve seen some booming exports.”
Economists forecast the New York Fed’s index would decrease to 30, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 25 to 34. Manufacturers account for about 6 percent of New York’s economy.
The New York Fed’s gauge of new factory orders decreased to 14.3 this month from 29.5 in April. A measure of shipments dropped to 11.3 from 32.1.
More Jobs
The employment measure climbed to 22.4, the highest level since May 2004, from 20.3 in April. Factories nationally have added 101,000 workers to payrolls since the beginning of the year, according to Labor Department data.
Today’s report showed an index of prices paid advanced to 44.7, the highest level since September 2008, this month from 41.8, while prices received decreased to 5.3 from 6.3.
Factory executives in the New York Fed’s district were less optimistic about the future. The gauge measuring the outlook six months from now decreased to 42.1 from 55.7 in April.
A Fed report last week showed industrial production rose 0.8 percent in April. Another April measure, the Institute for Supply Management’s factory gauge, jumped to the highest level in almost six years, according to data released May 3.
Economists surveyed by Bloomberg News project the Philadelphia Fed’s general economic index, to be released May 20, climbed to 21.5 from 20.2 in April. Readings above zero for that measure also signal expansion.
Spending Picks Up
The biggest jump in consumer spending in three years and a 13 percent rise in business investment in new equipment helped the economy expand for a third straight quarter in the first three months of this year. Manufacturers make up 12 percent of the economy and are benefitting from the gains in spending and expanding global economies.
A pickup in consumer spending helped Corning Inc., the world’s largest maker of glass for flat-panel televisions, report a 57 percent jump in sales for the first quarter compared with the same time last year. Exports also were a boon for the Corning, New York-based company.
“The economy is getting a little better,” Senior Vice President Tony Tripeny said in an interview April 28. “A lot of people are out there buying TVs, especially in China and Japan. Both notebooks and monitors sold better than we expected, partly due to businesses and the developing world.”
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net
Last Updated: May 17, 2010 08:30 EDT
I'm waiting for Germany to pull out of the Euro. jmho
>>Columbia University and Communism
Posted on February 28th, 2010 in Campus Life
In 2009 the University of Alabama won its seventh AP-recognized national championship in football. Crimson Tide fans could probably be forgiven for thinking that their school is the nation’s all-time number one in football, but in reality there are several other universities with comparable records of excellence on the gridiron.
When it comes to left wing politics, however, one university stands alone as the all-time champion. Columbia University has been a training ground for America-hating radicals since at least the start of the twentieth century. The left has had to take new directions since the collapse of the Soviet Union in 1991, but before that, leftist scholars from Columbia often expressed their loathing of the American way by supporting Soviet-centered Communism, as the following examples will show.
CE Ruthenberg
In 1909 CE Ruthenberg received his law degree from Columbia. This was eight years before Lenin’s Bolshevik Revolution established with world’s first Communist nation, and ten years before Lenin’s government established the Communist International. (The Communist International, or “Comintern,” was the network of subordinate Communist parties the Soviet Union established in foreign countries, for purposes of subversion.)
Having no Communist party to join, Ruthenberg became active in the Socialist Party USA.
In 1919, upon the establishment of Comintern, Ruthenberg became a leader of one of the two or three different American Communist parties vying for Russian recognition and support. The Russians forced the rival parties to merge in 1922, under the name Communist Party of the United States of America (CPUSA). Ruthenberg was the first Executive Secretary of the CPUSA, a position he would hold until his death in 1927. After his death, Ruthenberg’s body was cremated, and an urn containing his ashes was placed in the Kremlin wall in Moscow.
Isaiah Oggins
Isaiah Oggins enrolled at Columbia in 1917. He worked as a Soviet agent for several years, but was arrested in 1939, during one of Joseph Stalin’s paranoia-driven purges. Oggins was sent to a prison camp that year. In 1947 he was executed.
Harry Dexter White
In 1922 Harry Dexter White enrolled at Columbia. He would go on to become one of the most influential Soviet agents in the Roosevelt and Truman administrations. During WWII he reported directly to Treasury Secretary Henry Morgenthau, and served as liaison between the Treasury Department and the State Department. He then went as the United States’ official representative (unofficially representing the Soviet Union) to the Bretton Woods conference where the World Bank and International Monetary Fund were founded.
Paul Robeson
In 1923 Paul Robeson received his law degree from Columbia. He turned from law to show business and was soon using his fame to promote and support Communist causes. In 1934 he went on a pilgrimage to the Soviet Union. In 1952 the Soviet government awarded him its Stalin Peace Prize. In 1954 he wrote a magazine article in praise of Vietnamese Communist leader Ho Chi Minh, who would soon be fighting a war against the United States.
Whittaker Chambers
In 1925 a recent Columbia graduate named Whittaker Chambers joined Ruthenberg’s Communist party. Chambers had become friends with Isaiah Oggins while both of them were students. In 1932 Chambers began his career as a Soviet spy, reporting indirectly to the party’s new General Secretary, Earl Browder. Eventually he would renounce Communism and give the names of dozens of his fellow spies to the FBI.
Philip Jessup
In 1927 Philip Jessup received his PhD in law at Columbia. In the 1940’s Jessup held several high level positions in the US State Department. He played a key role in undermining American support for Chinese leader Chiang Kai-shek, thus facilitating Mao Zedong’s ascent to power, and all the carnage that resulted therefrom. In 1951 Joseph McCarthy forced Jessup to admit that he belonged to five different Communist front groups, and that he had a close and ongoing relationship with Soviet agent Frederick Field.1
Rex Tugwell
In that same year Columbia professors Rexford Tugwell and George Counts traveled to the Soviet Union with Columbia law student Carlos Israels, and several other left wing scholars and union leaders.2 When they made the trip, the United States was still refusing, after ten years, to officially recognize the Soviet Union. Mainstream labor leaders like John L. Lewis and William Green refused to have anything to do with the Soviets.3 The Soviet economy was moribund, and dictator Joseph Stalin needed loans and technology from the free world to keep his grip on the country.4
Tugwell and his companions toured Russia and wrote about what they saw in glowing terms. Especially impressive to Tugwell was the collectivization of agriculture, which, he believed, was the path to efficient food production. The accounts Tugwell and his fellow pilgrims wrote of their travels in the Soviet Union helped encourage the transfers of credit and technology that Stalin needed to maintain control of the country.
When Columbia law school grad Franklin Roosevelt was elected President in 1932, he made Tugwell and two other Columbia scholars his “brain trust,” with Tugwell serving as Undersecretary of the Department of Agriculture. Tugwell was never a Communist, but his fondness for centralized government control over the private sector was one of the underpinnings of Roosevelt’s left wing New Deal policies.
Roosevelt, who could never believe anything bad about Stalin, soon gave formal recognition to the Soviet Union.
Chi Chao-ting
Chi Chao-ting was born in China and came to the United States in the 1920’s to study. He joined the Communist party soon after his arrival in the US. He was already a committed Communist when he enrolled in the graduate program in economics at Columbia in the 1930’s. During WWII he infiltrated Chiang Kai-shek’s Chinese government on behalf of Chiang’s Communist enemy Mao Zedong. After Mao defeated Chiang in 1949, and Chiang fled to the island of Taiwan with his supporters, Chi Chao-ting gave up all pretense of not being a Communist, and moved to Maoist China.5
Elizabeth Bentley
In 1935 Elizabeth Bentley joined the Communist party while working on her masters degree at Columbia. In 1938 she started an adulterous relationship with Soviet spy Jacob Golos. Upon Golos’ death in 1943, she took over his network of spies, reporting directly to Communist Party Secretary Earl Browder, and passing the collected information to Soviet diplomat Iskhak Akhmerov. In 1945 she left the party and started cooperating with the FBI, as fellow Columbia graduate Whittaker Chambers had done a couple years earlier.
The Foner Brothers
In 1941 the City College of New York fired over fifty faculty members who were believed to be Communists. The allegations were made by the state legislature’s Rapp-Coudert Committee, a committee formed to investigate subversive activities in the state’s educational system during the period of the Hitler-Stalin partnership that had the Communist Party USA opposing England in its war against the Nazis. Among the faculty members terminated were Columbia graduates Jack and Philip Foner, the father and uncle, respectively, of current Columbia professor of history Eric Foner.
Bernhard Stern
In 1953 Columbia professor Bernhard Stern was called before a Senate committee, and questioned by Joseph McCarthy about a book he had written praising the Soviet Union, and comparing Soviet Communism favorably to American capitalism. He took the Fifth when asked about his Communist Party membership.6
This is not by any means an exhaustive list of Soviet sympathizers at Columbia during the period before 1991.
It’s just a few easy-to-find names that turn up in books like Blacklisted by History and The Venona Secrets. These examples are presented to show the larger pattern, which is that Columbia faculty and graduates have always been over-represented in the ranks of Soviet sympathizers in this country.
In 1991 the Soviet Union sank ignominiously onto the ash-heap of history, and Soviet sympathizers in this country were left without a cause. Next week’s post will look at the left wing causes Columbia scholars have adopted since the fall of Soviet Communism.
1M. Stanton Evans, Blacklisted by History, pp. 402-409
2Amity Shlaes, The Forgotten Man pp. 47, 48
3ibid., p. 49
4ibid.
5Blacklisted by History, pp. 100, 101
6ibid., p. 470
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2 Responses
Spyder says:
March 5, 2010 at 11:25 pm
What, nothing about the University of Chicago? Come on Al. And nothing about Barry O’Bama? Didn’t he go to Columbia too?
We have plenty of traitors in this country today, whereever they may have gone to school. The elites always think they can tell the rest of us how to live.
admin says:
March 6, 2010 at 11:09 am
Spyder,
You spoke too soon. Wait for the next post.
Al Fuller
http://historyhalf.com/columbia-university-and-communism/
>>GOOD research:Google, your files and the CIA
>>Google's Deep CIA Connections
Front page / World / Asia
14.01.2010 Source: Pravda.Ru
By Eric Sommer
The western media is currently full of articles on Google's 'threat to quit China' over internet censorship issues, and the company's 'suspicion' that the Chinese government was behind attempts to 'break-in' to several Google email accounts used by 'Chinese dissidents'.
However, the media has almost completely failed to report that Google's surface concern over 'human rights' in China is belied by its their deep involvement with some of the worst human rights abuses on the planet:
Google is, in fact, is a key participant in U.S. military and CIA intelligence operations involving torture; subversion of foreign governments; illegal wars of aggression; and military occupations of countries which have never attacked the U.S. and which have cost hundreds of thousands of lives in Afghanistan, Iraq, Pakistan, and elsewhere.
To begin with, Google is the supplier of the core search technology for 'Intellipedia, a highly-secured online system where 37,000 U.S. spies and related personnel share information and collaborate on their devious errands.
Agencies such as the so-called 'National Security Agency' have also purchased servers using Google-supplied search technology which processes information gathered by U.S. spies operating all over the planet.
In addition, Google is linked to the U.S. spy and military systems through its Google Earth software venture. The technology behind this software was originally developed by Keyhole Inc., a company funded by Q-Tel http://www.iqt.org/ , a venture capital firm which is in turn openly funded and operated on behalf of the CIA.
Google acquired Keyhole Inc. in 2004. The same base technology is currently employed by U.S. military and intelligence systems in their quest, in their own words, for "full-spectrum dominance" of the planet.
Moreover, Googles' connection with the CIA and its venture capital firm extends to sharing at least one key member of personnel. In 2004, the Director of Technology Assessment at In-Q-Tel, Rob Painter, moved from his old job directly serving the CIA to become 'Senior Federal Manager' at Google.
As Robert Steele, a former CIA case officer has put it: Google is "in bed with" the CIA.
Googles Friends spy on millions of Internet Users
Given Google's supposed concern with 'break-in's to several of its email accounts, it's worth noting that Google's friends at In-Q-Tel, the investment arm of the CIA, are now investing in Visible Technologies, a software firm specialized in 'monitoring social media'.
http://english.pravda.ru/world/asia/14-01-2010/111657-google_china-0
Google-watch:"Spooks on board at Google - Google acquires CIA-linked company"
http://www.google-watch.org/jobad.html
October, 2004: Google acquires CIA-linked company
Google has acquired Keyhole, Inc., which has a database of 3-D spy-in-the-sky images from all over the globe. Their software provides a virtual fly-over and zoom-in with one-foot resolution.
Keyhole is supported by In-Q-Tel, a venture capital firm funded by the CIA, in an effort to "identify and invest in companies developing cutting-edge information technologies that serve United States national security interests."
In 2003, Keyhole's CEO John Hanke was quoted in an In-Q-Tel press release: "Keyhole's strategic relationship with In-Q-Tel means that the Intelligence Community can now benefit from the massive scalability and high performance of the Keyhole enterprise solution."
The spooks in Washington now had another hook into Google, Inc.
Then in mid-2005, Rob Painter joined Google as Senior Federal Manager. He came straight from In-Q-Tel, where he had been Director of Technology Assessment.
November, 2006: Comment from Robert Steele
from John Battelle's Searchblog
It would be useful to get specifics on who at Google denied this. I am quite positive that Google is taking money and direction from my old colleague Dr. Rick Steinheiser in the Office of Research and Development at CIA, and that Google has done at least one major prototype effort focused on foreign terrorists which produced largely worthless data.
Hopefully Google learned from Bill Clinton that the denial is often more costly than the deed when it completely undermines one's integrity.
CIA is not very sophisticated. In 1986 they knew the 18 functionalities for an all-source analysis workstation (Google for CATALYST and CIA) and they still don't have it. CIA is a kludge of contractor-provided stovepipes, none of which play well together.
I like Google. I think they have enormous potential. I think they are seriously stupid to be playing with CIA, which cannot keep a secret and is more likely to waste time and money than actually produce anything useful.
Best wishes to all, Robert Steele Posted by: Robert David Steele, November 9, 2006 03:17 PM
Same old trick as TA: THIS SITE MAY HARM YOUR COMPUTER:
Google O defenders and internal censors use every dirty trick to keep people from checking out facts for themselves, and that totally PISSES ME OFF. I didn't like it when I thought Bush and his merry band of totalitarian Neo-Cons were censoring the news and going after independent press and bloggers, and I totally detest it now that someone who campaigned on a platform of 'transparency' does it, with the assistance of hypocrites who claim to 'do no evil'.
What, is multi-billion dollar, totally for-profit Google now the farkin Dali Lama? Forgive me if I barf.
If we both hadn't experienced this personally, whie we were active on TA and MA, and later attempting to post a few facts on yahoo message boards, maybe we wouldn't be so sensitive and angry about this issue...
The party doesn't matter. Their actions do.
How about we agree that trusting Google search results may "harm your brain"?
Hey, I didn't go along with the birth certificate thing, it just seemed like a non-starter.
Frankly, I don't even really care if the social security number in question was from a pool from Connecticut. I'm sure that kind of anamoly has happened before...after all people working at SSN adminsitration are civil servants, not rocket scientists. They make mistakes all the time. (HOWEVER IF it's true that the number belonged to a dead person, that WOULD be a big deal, and having two social security numbers - unless you're in the witness protection program - is fraud, as far as I know)
I know that I had to have a social security number from the age of 16, when I got my first real summer job. I needed an SSN when I applied for a Driver's Learner's Permit the same year. I definitely needed an SSN to apply for college as well as loans.
How did Obama, who is just about my age, get through all of those same landmarks in the late 1970s without a social security number? What was he using for a SSN before then?
And what about that Selective Service stuff? Why did Obama he say he applied in 1979, when the form obtained through FOIA clearly says 1980? I know it's only a year difference, but why lie about something when you don't have to? That's just weird to me
This is more troubling to me than the other issues, I can't explain why.
ROFL! Thank you :)
Troubling POTUS Secrets: Obama Has Numerous Social Security Numbers, Including One from Connecticut — Selective Service Draft Registration Raises Fraud Questions
Posted By Vicki McClure Davidson on May 13, 2010
(visit original site for hot links, and here, where it's suggested the CT SSN was previously owned by a man born in 1890...http://www.opposingviews.com/i/is-obama-using-a-fraudulent-social-security-number)
http://www.frugal-cafe.com/public_html/frugal-blog/frugal-cafe-blogzone/2010/05/13/troubling-potus-secrets-obama-has-numerous-social-security-numbers-including-one-from-connecticut-selective-service-draft-registration-raises-fraud-questions/
Whether you’re a hardcore “birther” or a misty-eyed Obama supporter, this post from Western Journalism is deeply troubling. From what many investigators have been able to unearth and piece together, there is reportedly much from Barack H. Obama’s past that has either been locked up, altered, or lied about. Why?
As I’ve asked numerous times, why are all his school records, from grade school up, off limits to the American public? How did a poor young man manage to swing an expensive Harvard Law education? I’m not even going to bring up the ongoing issue about his suspicious-looking birth certificate, but the documentation from his past about his legislative records from the Illinois State Senate, childhood medical records, passport records, scholarly articles, and his Selective Service draft card are either reportedly lost, suspected to be altered or fraudulently created years later, or sealed from the American public.
Now there are troubling questions about numerous Social Security numbers linked to our president, including one beginning with the digits 042, a series which is issued by Connecticut. A state where Obama has never lived and, based on the reported date of issue, he was living in Hawaii. So where are the Hawaiian Social Security numbers in the series?
From Western Journalism, The Mystery of Barack Obama Continues:
Researchers have discovered that Obama’s autobiographical books are little more than PR stunts, as they have little to do with the actual events of his life. The fact is we know less about President Obama than perhaps any other president in American history and much of this is due to actual efforts to hide his record. This should concern all Americans.
A nation-wide network of researchers has sprung up to attempt to fill in the blanks, but at every opportunity Obama’s high-priced lawyers have built walls around various records or simply made them disappear. It is estimated that Obama’s legal team has now spent well over $1.4 million dollars blocking access to documents every American should have access to. The question is why would he spend so much money to do this?
[...]
Indeed, everywhere one looks into Obama’s background, we find sealed records, scrubbed websites, altered documents, deception and unanswered questions. Can anyone imagine for a second if John McCain or George Bush had blocked access to his school, medical, and birth records? It would have been headlines but as with everything else concerning Obama, the media has given him a pass on this.
Of all these marvels, the latest mystery and probably most perplexing is that of Obama’s social security number. It appears that Obama has multiple identities in term of possessing numerous social security numbers. Orly Taitz, an attorney who has filed numerous suits against Obama regarding his eligibility to serve as president, appears to be the first to discover this. In her suit, representing a number of military officers who are refusing to serve under an ineligible commander in chief, she hired private investigator Neil Sankey to conduct research on Obama’s prior addresses and Social Society numbers. Using Intelius, Lexis Nexis, Choice Point and other public records, Sankey found around 25 Social Security numbers connected with Obama’s name.
However, it may not be as many as 25, since Sankey also searched using closely related names such as: “Barak Obama,” “Batock Obama,” “Barok Obama,” and “Barrack Obama.” There may very well be some Kenyans living in America with the same last name and a similar first name. In any case, I will exclude these records for the purpose of this research and focus only on names spelled exactly like his name. Moreover, we can verify many of the Social Security numbers as valid since they’re connected to addresses at which we know Obama resided. Needless to say, there are also a slew of address and social security numbers connected to addresses in states that Obama has no known connection to.
In Obama’s home state, Illinois, Sankey tracked down 16 different addresses for a Barack Obama or a Barack H. Obama, of which all are addresses he was known to have lived at. Two Social Security numbers appear for these addresses, one beginning with 042 and one starting 364.
In California, where Obama attended Occidental College, there are six addresses listed for him, all within easy driving distance of the college. However, there are three Social Security numbers connected to these addresses, 537 and two others, each beginning with 999.
There are no addresses listed in New York where he attended Columbia University, but there is one listed for him in nearby Jackson, NJ, with a Social Security number beginning with 485.
In Massachusetts – where Obama attended Harvard Law School – we find three addresses, all using the 042 Social Security number.
After Obama was elected to the United States Senate in 2005, he moved into an apartment at 300 Massachusetts Ave NW; the Social Security number attached to that address is the 042 one. Yet, three years later, Obama used a different Social Security number for an address listed as: 713 Hart Senate Office Building. This was the address of his United States Senate office. This Social Security number began with 282 and was verified by the government in 2008.
This mystery grows even stranger as other addresses and Social Security numbers for Barack Obama appear in a dozen other states not known to be connected to him. Again, I am excluding those records names not spelled exactly like his name.
Tennessee, one address with a Social Security number beginning with 427
Colorado, one address, with a Social Security number beginning with 456.
Utah, two addresses, with two Social Security numbers beginning with 901 and 799.
Missouri has one address and one Social Security number beginning with 999.
Florida has two addresses listed for his him, three if you count one listed as “Barry Obama.” One is connected to a Social Security number beginning with 762.
In Georgia there are three addresses listed for him, all with different Social Security numbers: 579, 420, and 423.
In Texas there are four different addresses listed for him, one is connected to Social Security number 675.
There are two addresses listed for Barack Obama in Oregon and one address listed for him in the states of Wisconsin, Michigan, South Carolina, and Pennsylvania.
All told, there are 49 addresses and 16 different Social Security numbers listed for a person whose name is spelled “Barack Obama.”
In some cases, the middle initial “H” is listed. If you were to expand the search to include closely related names such as:
“Barac,” “Barak,” and “Barrack” Obama, you would find more than a dozen additional addresses and Social Security numbers.
Finally, the one Social Security number Obama most frequently used, the one beginning with 042, is a number issued in Connecticut sometime during 1976-1977, yet there is no record of Obama ever living or working in Connecticut. Indeed, during this time period Obama would have been 15-16 years old and living in Hawaii at the time.
Nevertheless, all this mystery surrounding Obama appears to be a generational thing. Researchers have discovered nearly a dozen aliases, at least two different Social Security numbers, and upwards of over 99 separate addresses for Ann Dunham, his mother.
We do know she worked for the ultra liberal Ford Foundation but we also know she may have earned some income from pornographic poses, as evidenced by photos recently discovered by some researchers—how embarrassing. The only thing researchers are able to find out about Obama’s mother is the fact she made porn. I’m sure that’s a first for presidential mothers.
[...]
While the private investigator who compiled this list says multiple social security numbers does not automatically prove there’s criminal activity involved, he states that “having said that, I have personally experienced many, many cases where such information has led to subsequent exposure of fraud, deception, money laundering and other crimes.“What is interesting to note is that Obama’s grandmother, Madelyn Dunham, was a volunteer at the Oahu Circuit Court probate department and had access to the Social Security numbers of deceased people.
There is much more — visit Western Journalism to read the piece in its entirety. As I stated earlier, this is troubling.
More on Obama’s questionable CT Social Security number from WorldNetDaily: Investigators: Obama uses Connecticut Soc. Sec.
Number – 3 experts insist White House answer new questions about documentation:
NEW YORK – Two private investigators working independently are asking why President Obama is using a Social Security number set aside for applicants in Connecticut while there is no record he ever had a mailing address in the state.
In addition, the records indicate the number was issued between 1977 and 1979, yet Obama’s earliest employment reportedly was in 1975 at a Baskin-Robbins ice-cream shop in Oahu, Hawaii.
WND has copies of affidavits filed separately in a presidential eligibility lawsuit in the U.S. District Court of the District of Columbia by Ohio licensed private investigator Susan Daniels and Colorado private investigator John N. Sampson.
The investigators believe Obama needs to explain why he is using a Social Security number reserved for Connecticut applicants that was issued at a date later than he is known to have held employment.
The Social Security website confirms the first three numbers in his ID are reserved for applicants with Connecticut addresses, 040-049.
“Since 1973, Social Security numbers have been issued by our central office,” the Social Security website explains. “The first three (3) digits of a person’s social security number are determined by the ZIP code of the mailing address shown on the application for a social security number.”
The question is being raised amid speculation about the president’s history fueled by an extraordinary lack of public documentation. Along with his original birth certificate, Obama also has not released educational records, scholarly articles, passport documents, medical records, papers from his service in the Illinois state Senate, Illinois State Bar Association records, any baptism records and adoption papers.
Robert Siciliano, president and CEO of IDTheftSecurity.com and a nationally recognized expert on identity theft, agrees the Social Security number should be questioned.
“I know Social Security numbers have been issued to people in states where they don’t live, but there’s usually a good reason the person applied for a Social Security number in a different state,” Siciliano told WND.
WND asked Siciliano whether he thought the question was one the White House should answer.
“Yes,” he replied. “In the case of President Obama, I really don’t know what the good reason would be that he has a Social Security number issued in Connecticut when we know he was a resident of Hawaii.”
Blogger Debbie Schlussel wrote about the many problems with Obama’s Selective Service card. In 2008, she wrote:
A friend of mine, who is a retired federal agent, spent almost a year trying to obtain this document through a Freedom of Information Act request, and, after much stonewalling, finally received it and released it to me.
But the release of Obama’s draft registration and an accompanying document, posted below, raises more questions than it answers. And it shows many signs of fraud, not to mention putting the lie to Obama’s claim that he registered for the draft in June 1979, before it was required by law.
Barack Obama’s 2008 Selective Service Card. 'Blogger Debbie Schlussel discovered damning evidence that Obama’s Selective Service registration form was submitted not when he was younger as required, but rather in 2008 and then altered to look older.' Click image to enlarge.Schlussel points out in her post and identifies, item by item, what she called “oddities and irregularities.” There are numerous inexplicable errors in the document, such as the numbers used in the Document Locator Number (DLN) which indicate that Obama’s Selective Service form was actually created in 2008, a puzzling postage stamp that was discontinued in 1970, inconsistent dates, and the SSS Form 1 states “NO ID”. Why and how was Obama issued a federal document, supposedly in Hawaii, without any ID? There is also a missing printout page in the FOIA response, Obama’s Selective Service number is missing on the card itself, and the response to the FOIA was stonewalled for a nearly a year, being fulfilled just before the 2008 presidential election.
As an update following her initial post, Schlussel wrote the following and provided copies of the letter and envelope, which I’ve not included here, but are on her website:
Some Obamapologists are claiming this is a fake and want to see evidence that retired agent Coffman actually got these documents from the Selective Service System Data Management Center. Below are scans of the letter and envelope that accompanied Barack Obama’s fraudulent registration for the draft (I’ve cropped the blank white space)…
Visit Schlussel’s blog to read this exposé in its entirety.
Additional related reading:
Pat Dollard: “Obama’s Use Of This Social Security Number Is Fraudulent”
Goodtimepolitics: President Obama is using a Social Security number set aside for applicants in Connecticut – Why? and Obama Attorney Threatens Distinguished Veteran on Obama Birth Certificate Issue: WHY?
Seven-Sided Cube: What is with President Obama’s Social Security Number?
Free Republic: Obama’s 16 Different Social Security Numbers
Politico: Rep. Paul Broun not sure if Obama is citizen
Citizen Wells: Chanise Foxx, free republic, FreeRepublic.com, March7, 2010, I helped Obama campaign staffer Divorah Adler create a fake birth certificate, Fact Check, COLB
Uncensored Magazine: VERY QUIETLY OBAMA’S CITIZENSHIP CASE REACHES THE SUPREME COURT
Atlas Shrugs: ATLAS EXCLUSIVE: FINAL REPORT ON OBAMA BIRTH CERTIFICATE FORGERY CHANGE YOU CAN BELIEVE IN and Mystery, Clarification and Obfuscation of Obama’s Birth Certificate Forgery
Native and Natural Born Citizenship Explored: Third Obama birth certificate appears in court
VotingFemale: Obama’s Worst Legal Nightmare; Orly Taitz and her friendship with Chief Justice Roberts, a Republican
WorldNetDaily: Multi-state car dealer plans birth-certificate billboards and Appeal promised in eligibility lawsuit – Accuses Obama of fraudulently serving as senator and Supreme Court asked to cooperate with FBI – Attorney investigating Obama’s eligibility reports cyber attacks
RedState: If Bush Birth Certificate Were Missing…
The Town Talk: Internet site takes its Obama challenge to local billboards
Hot Air: Poll: 28% of Republicans don’t believe Obama was born in America? Update: Skeptics mostly southern and Gibbs on Birthers: Nothing will convince them and Quotes of the day (Obama’s citizenship) and Video: America’s most trusted newsman takes on birth certificate Truth and CNN president to Lou Dobbs: Stop covering the birth certificate story
Can I Just Finish My Waffle?: Rewind: What Chris Matthews was saying last July
Confederate Yankee: Two Generals Joined Cook Case On Obama Citizenship… Just Before It Was Dismissed.
Texas Fred’s: Birth certificate issue No. 1 at Fox News
A Conservative Edge: Snopes Dopes Complicit In Obama Birth Certificate Immaculate Deception?
WorldNetDaily: Obama birth mystery: More than 1 hospital – Myth-busting website, news articles say president not born in location he claims
Citizens Against Pro-Obama Media Bias: Kerchner ad re: Barry’s eligibility
Frugal Café Blog Zone: ‘Obama the Usurper’: Federal Judge Will Hear Case on Barack Obama’s Eligibility and White House Website Transparency… Except Obama’s Birth Certificate
WorldNetDaily: New bid to unseal Obama’s birth certificate, challenge claims Hawaii waived privacy by talking about document
THE “G” BLOGS ~ Gunny G Online : Obama’s ‘birth certificate’ not acceptable in Hawaii ?
Cynthia Yockey, A Conservative Lesbian: Obama’s mama was trash, now with nude photos
Joseph Farah, Between the Lines, WorldNetDaily: Where’s the birth certificate?
Right Pundits: Obama Mother Nude Photos Reported (PICS)
Michelle Malkin: The more he talks about nationalizing health care and spending more money…
The Right Scoop: President Obama, Please Quit Lying to Me
Cam Cannon, Big Hollywood: Obama’s Jedi Mind Trick: We’ve Been Put on Notice
Irregular Times: Photo Proves Obama Birth Certificate Was Faked!
Just Americans Making Ethical Statements Weblog: “Birth Certificate” Billboards Start to Appear
RedState: If Bush Birth Certificate Were Missing…
Categories: Government, Law & Constitution, Media & Communication, Social and Political Climate
Tags: aliases, altered documents, Ann Dunham, Barack H. Obama, Barack Obama, Barack Obama Connecticut Social Security number, birth certificate, Connecticut, draft registration, fraud, Harvard, Harvard Law, Harvard university, Obama Social Security, Obama Social Security fraud, Obama Social Security number, Obama's mother, Obama's Selective Service card, Orly Taitz, POTUS, Pres. Obama, school records, Selective Service, Selective Service card, Social Security
About the author
Vicki McClure Davidson
I'm a conservative frugalist. My priorities: Watchdogging the government, making sure our tax dollars are spent wisely, living within our budgets (at home and in Washington, DC), and adhering to our Constitution and the conservative principles upon which it was developed by our founding fathers. Also, loving God, my family, and my country. Be wise, be frugal. God bless America!
Comments
7 Responses to “Troubling POTUS Secrets: Obama Has Numerous Social Security Numbers, Including One from Connecticut — Selective Service Draft Registration Raises Fraud Questions”
Troubling POTUS Secrets: Obama Has Numerous Social Security … < Read what Young Americans Read says:
May 13, 2010 at 10:45 AM
[...] More: Troubling POTUS Secrets: Obama Has Numerous Social Security … [...]
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brett says:
May 13, 2010 at 10:58 AM
Every time I see more proof of the false identity Obama has assumed, I find myself wondering just what exactly he’s really up to. Besides bankrupting the USA, I mean. I suspect a much more nefarious endgame is part of the plan, but only time will tell.
Reply
Tweets that mention Troubling POTUS Secrets: Obama Has Numerous Social Security Numbers, Including One from Connecticut — Selective Service Draft Registration Raises Fraud Questions « Frugal Café Blog Zone -- Topsy.com says:
May 13, 2010 at 11:09 AM
[...] This post was mentioned on Twitter by Roxanna. Roxanna said: Troubling POTUS Secrets: Obama Has Numerous Social Security …: Now there are troubling questions about numerous … http://bit.ly/caCYup [...]
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Right-Wing Links (May 13, 2010) says:
May 13, 2010 at 1:42 PM
[...] Troubling POTUS Secrets: Obama Has Numerous Social Security Numbers, Including One from Connecticut … The first step in saving our liberty is to realize how much we have already lost, how we lost it, and how we will continue to lose it unless fundamental political changes occur. — James Bovard [...]
Reply
Larry says:
May 13, 2010 at 2:32 PM
Thanks for covering this very important story, Vicki.
Manchurian President indeed!!
Here was a short, focused post from yesterday showing a major administrative problem with O’s online COLB:
http://obamareleaseyourrecords.blogspot.com/2010/05/obamas-certification-of-live-birth-form.html
Reply
Marilyn says:
May 13, 2010 at 3:15 PM
What Larry said. The Manchurian President for sure,.
I’ve been sayin’ it since well before the big Zer0 was elected. I am really wondering why no one in a position to take action is doing anything about this? It seems like everyone in Washington is afraid to take this one on.
Reply
| NwoDaily.com says:
May 13, 2010 at 6:01 PM
[...] Troubling POTUS Secrets: Obama Has Numerous Social Security Numbers, Including One from Connecticut … [...]
Reply
NOTE:
this is from CACHE...the actual link from the google search kept sending me to a link farm. Google is back to their old tricks
____________________________________________
Is Obama Using a Fraudulent Social Security Number?
News by Mark Berman Opposing Views
(1 Day Ago) in Politics / Obama Presidency
http://www.opposingviews.com/i/is-obama-using-a-fraudulent-social-security-number
First there was President Obama's refusal to release his medical and college records. Then there was the brouhaha over his birth certificate. Well, get ready for what is sure to be the next big controversy to get conspiracy theorists salivating -- Obama's social security number.
According to an exclusive report on World Net Daily, the president has a social security number that was not issued in the state in which he lived. Oh, and it appears his number was issued for someone who was born in 1890.
Social security numbers are not a random as one might think. The first three numbers are assigned to certain states.
"Since 1973, Social Security numbers have been issued by our central office," the Social Security web site explains. "The first three (3) digits of a person's social security number are determined by the ZIP code of the mailing address shown on the application for a social security number."
According to two investigators working separately -- Susan Daniels and John Sampson -- the first three numbers of Obama's social security number are 042. The Social Security web site confirms that numbers between 040 and 049 are reserved for Connecticut residents. Obama lived in Hawaii, and there is no record of him ever having a Connecticut address.
Records indicate the card was issued to Obama between 1977 and 1979. Obama's earliest employment is reported as 1975 or 1976 at a Baskin-Robbins ice-cream shop in Hawaii. Obama would have needed to have a social security number to work there.
"I doubt this is President Obama's originally issued Social Security number," Daniels told WND. "Obama has a work history in Hawaii before he left the islands to attend college at Occidental College in California, so he must have originally been issued a Social Security number in Hawaii."
Another problem the investigators found is the birth date of the cardholder. The records reportedly show the date 1890 alongside Obama's birth date of 8/4/61. Daniels said she couldn't be sure if the 1890 figure has any significance. But she said it appears the number Obama is using was previously issued by the Social Security Administration.
Daniels said there is only one logical explanation. She is "staking my reputation on a conclusion that Obama's use of this Social Security number is fraudulent.
"There is obviously a case of fraud going on here," Daniels insisted. "In 15 years of having a private investigator's license in Ohio, I've never seen the Social Security Administration make a mistake of issuing a Connecticut Social Security number to a person who lived in Hawaii. There is no family connection that would appear to explain the anomaly."
Robert Siciliano, president and CEO of IDTheftSecurity.com and a well-known expert on identity theft, can't explain it, either.
"I know Social Security numbers have been issued to people in states where they don't live, but there's usually a good reason the person applied for a Social Security number in a different state," Siciliano told WND.
"In the case of President Obama," he continued, "I really don't know what the good reason would be that he has a Social Security number issued in Connecticut when we know he was a resident of Hawaii."
The Social Security Administration does sometimes issue new social security numbers to people upon request. But there are very limited reasons, such as for victims of identity theft, harassment or abuse.
The Daniels and Sampson affidavits were originally recorded in an eligibility case against Obama last year.
The White House has not commented on this latest controversy.
OT: OBAMA SSN Story - Google Back to their OLD TRICKS!
Ah, so well I remember my site being sandbagged last year, within 3 hours of my asking pesky questions about the health of a few of the banks being bailed out. That's when I found out how many other bloggers and site administrators had had the same experience with supposedly neutral Google. The disturbing trend was that the immediate and disastrous sandbagging happened shortly after we had added certain kinds of political posts and critical articles.
Now, I'm getting flashbacks to last year. Earlier this morning, I did a search for "Obama's Social Security Number", a big story circulating the past few days. Silly me, I attempted to click through on a link from this search:
I tried to click on the second story: "Obama social security number: He has one too many… Entertainment and Showbiz! "
Google instead sent me to this place:
http://dealparty.com/ac/deals.php?phrase=Social+Security&uid=767fa5e67adced0432dc7e141c3dfd29&kuid=f8d3d9177ace51325ad0cecc6cabe9d0&src=7s
Earlier, an attempt to click through on a story on the ParcBench.com blogsite, took me here:
http://www.emergency24.com/security/dealer-referral.htm
WTF??
The Google search said there were 240 articles on the subject, ( http://img20.imageshack.us/img20/710/obamasocialsecuritynumb.png )
but when I attempted to click through on the "240" link, to view a few of those, Google would only display the same 3:
You're chitting me! You mean out of 240 stories, those are the only 3 Google, in their wisdom, are permitting to me to see, and TWO of those three are heavily biased against the issue in question?
To me, it is no coincidence that the site Google chooses to place at the top of every search is a highly condescending 'flowchart' (basically a finger to anyone questioning the official story) an image provided by TNN - Taco News Network (always a reliable source, lol)
Flowchart to Determine if Barack Obama is a U.S. Citizen
Before It's News - ?13 hours ago?
Unfortunately, nobody can provide hard evidence to support their claim, because it's really hard to track down the President's real Social Security Number. ...
However, even an attempt to click through to that screed site, leads to this instead:
http://shopcompareus.com/ac/search.php?phrase=social+security&uid=93b592ba3ca678a76b542cd3ee3a21c7&kuid=1c7b9028d18d0428ae41b45de50ee017&src=7s
I had to go through cache to get the image (enjoy)
DEAR GOOGLE OBAMA-VOTING CHITHEAD CENSORS:
I would like to make up my mind for myself, and read all the relevant stories, blogs and articles associated with this search, however apparently Google has decided which stories I should be reading (Elena Kagan, Financial Reform, and LA Times and Washington Post stories mocking any attempt to find out more about this social security number queston).
F*ck you Google. There is far too much evidence for me that there is considerable censorship going on with our supposedly "good" search-engine monopoly. But I guess the ends always justifies the means, especially when important social-reengineering and 'change' is at stake
Bite me. I'm too old to be re-educated
BOTTOM LINE:
DO NOT TRUST the search results that come out of google. Be aware that you often need to try 4-5 variations or more to get the kind of non-party line site you might be looking for. Understand that there is an agenda behind Google's algorithms. It is far harder now to get alternative news than even a few years ago.
It may be impossible to stop Google, even though I would love to see a viable competitor arrive! But try using "Dogpile" or one of the other competitors.
We do not need a search engine monopoly, unless we wish to be Communist China
OBAMA SSN Story - Google Back to their OLD TRICKS!
Ah, so well I remember my site being sandbagged within hours of my asking pesky questions about the health of a few of the banks being bailed out.
Now, when I justdid a search for "Obama's Social Security Number", an attempt to click through on a link from this search:
"Obama social security number: He has one too many… Entertainment and Showbiz! "
sends me to this place:
http://dealparty.com/ac/deals.php?phrase=Social+Security&uid=767fa5e67adced0432dc7e141c3dfd29&kuid=f8d3d9177ace51325ad0cecc6cabe9d0&src=7s
Earlier, an attempt to click through on a story on the ParcBench blogsite, took me here:
http://www.emergency24.com/security/dealer-referral.htm
WTF??
The Google search said there were 230 stories on the subject, ( http://img20.imageshack.us/img20/710/obamasocialsecuritynumb.png )
but when I clicked through on the "240" link, to view a few of those, Google would only display 3:
It is no coincidence that the site Google chooses to place at the top of every search is condescending 'flowchart' provided by Taco News Network (always a reliable source, lol)
Flowchart to Determine if Barack Obama is a U.S. Citizen
Before It's News - ?13 hours ago?
Unfortunately, nobody can provide hard evidence to support their claim, because it's really hard to track down the President's real Social Security Number. ...
However, even an attempt to click through to that screed site, leads to this instead:
http://shopcompareus.com/ac/search.php?phrase=social+security&uid=93b592ba3ca678a76b542cd3ee3a21c7&kuid=1c7b9028d18d0428ae41b45de50ee017&src=7s
I would like to make up my mind for myself, and read all the relevant stories, blogs and articles associated with this search, however apparently Google has decided which stories I should be reading (Elena Kagan, Financial Reform, and LA Times and Washington Post stories mocking any attempt to find out more about this social security number queston).
F*ck you Google. There is far too much evidence for me that there is considerable censorship going on with our supposedly "good" search-engine monopoly. But I guess the ends always justifies the means, especially when important social-reengineering and 'change' is at stake
Bite me. I'm too old to be re-educated
BOTTOM LINE:
DO NOT TRUST the search results that come out of google. Be aware that you often need to try 4-5 variations or more to get the kind of non-party line site you might be looking for. Understand that there is an agenda behind Google's algorithms. It is far harder now to get alternative news than even a few years ago.
It may be impossible to stop Google, even though I would love to see a viable competitor arrive! But try using "Dogpile" or one of the other competitors.
We do not need a search engine monopoly, unless we wish to be Communist China
BL: Euro Breakup Talk Increases as Germany Sees Greece Becoming Currency Proxy
By James G. Neuger
May 14 (Bloomberg) -- Romano Prodi recalls how he persuaded Germany to allow debt-swamped Italy into the euro: support our membership and we’ll buy your milk, he said.
When Prodi toured Germany’s agricultural heartland after becoming Italian leader in 1996, he pitched “a big milk pipeline from Bavaria,” pointing to a three-year, 40 percent plunge in the Italian lira that was hurting dairy sales. “To have Italy outside the euro, a huge quantity of exports from Germany would have been endangered,” Prodi, now 70, said.
Germany got the message, allowing entry rules to be bent to create a 16-nation market for its exporters. Now, German taxpayers are footing the bill for that permissiveness as Europe bails out divergent economies lashed to a single currency with little control over national taxes and spending.
The consequences are an 860 billion-euro ($1 trillion) bill for a debt binge led by Greece, sagging confidence in the European Central Bank’s independence and mounting speculation that a currency designed to last forever might break apart.
“You have the great problem of a potential disintegration of the euro,” former Federal Reserve Chairman Paul Volcker, 82, said yesterday in London. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.”
German-led northern Europe, with its zeal for budget discipline, is attempting to fix the mistakes made by the euro’s founding fathers in the 1990s. It is squaring off against the governments of the south over who will control the euro and the ECB; whether the currency will be used to promote growth or squelch inflation, and ultimately, whether some countries should be disbarred from the monetary union.
European Club
What was conceived as a club for Europe’s strongest economies was expanded for political reasons, leaving the currency union with minimal powers to police deficit spending and no safety net for dealing with countries, like Greece, that veer toward default.
“There was no discussion of that at all, of a crisis mechanism,” said Niels Thygesen, a retired Copenhagen University economics professor who served on the 1989 group led by European Commission President Jacques Delors that mapped out the path to the euro. “It was believed that if countries adhered more or less to prudent budgetary policies, that would not or could not happen.”
Kohl’s Role
Former German Chancellor Helmut Kohl, seeing the euro as the capstone of Europe’s economic integration and Germany’s return to the European family after two world wars, opened the door to the deficit-prone southern European countries that the Bundesbank, haunted by the memory of hyper-inflation, wanted to keep out.
Returning from the December 1991 summit in Maastricht, the Netherlands, that kicked off the euro project, Kohl told the German parliament that he wanted “the greatest possible number of countries” in the euro. That gave Italy, Spain and Portugal the encouragement to meet the economic targets to join in 1999 and Greece to follow two years later.
Defenders of the German economic model knew the threat posed by countries such as Italy, whose budget deficit was 10.2 percent of gross domestic product in 1991, when they forced European leaders to set 3 percent as the limit for euro members.
“A well-known German financial leader told me: Fortunately for Germany, Austria is between Italy and Germany,” said Alfons Verplaetse, who oversaw the Belgian central bank from 1989 to 1999. The reckoning was that only Germany and its immediate neighbors would pass the economic tests, limiting the euro to a handful of countries, Verplaetse, 80, said.
Nobel Laureate
Today’s euro is far from what economists like Nobel laureate Robert Mundell call an “optimum currency area.” Gross domestic product per person ranges from 69,300 euros in Luxembourg to 18,100 euros in Slovakia, debt from 14.5 percent of GDP in Luxembourg to 115.8 percent in Italy, and unemployment from 4.1 percent in the Netherlands to 19.1 percent in Spain.
“A currency without a state is difficult to manage,” said former Italian Prime Minister Lamberto Dini, 79, who also served as the nation’s finance and foreign minister. “The decision to create a single currency in Europe was an eminently political decision. It was supposed to bring about greater European integration not only at an economic level, but at a political one.”
Europe’s multi-state structure leaves it without a U.S.- style federal tax and financial-transfer system to smooth discrepancies between richer and poorer regions. The EU’s budget, mostly for farm aid and infrastructure projects, represents barely 1 percent of the bloc’s GDP, compared with European national budgets that average 47 percent of GDP.
The Blueprint
Signs of a mismatch between strong and weak economies and a loose coordination of fiscal policies were noticeable in the earliest blueprint for a common currency.
“In view of the marked divergences that persist between member states in realizing the goal of growth and stability, there is a risk of surging disequilibriums unless economic policy can be harmonized,” Luxembourg Prime Minister Pierre Werner wrote in the 1970 report that introduced Europe’s first bid for a single money.
Four decades later, Werner’s prophecies are coming true, as euro-region governments prioritize domestic needs to pacify voters after the deepest recession in a half century. The EU Commission estimated May 5 that the overall economy will grow 0.9 percent in 2010, not enough to create jobs, after shrinking 4.1 percent in 2009. It predicts unemployment will climb to 10.3 percent in 2010 from 9.4 percent in 2009.
Euro Rejection?
German officials are already debating what was unthinkable to the euro’s architects: that a currency union designed in its founding treaty to be “irrevocable” might not be. Finance Minister Wolfgang Schaeuble said March 12 that expulsion from the euro may be the ultimate penalty for serial violators of debt rules.
Under current EU law, ejection is “legally next to impossible,” the ECB said in December. Changing the treaty requires unanimity among the EU’s 27 governments, so the euro’s current lineup -- likely to be joined by Estonia next year -- will have to find a way of making do.
Markets have rendered a mixed verdict on the euro’s resistance to the crisis. The currency’s decline below $1.25 from a record high of $1.60 in July 2008 still leaves it above the 1999 starting rate of $1.17. The euro is about 11 percent overvalued against the dollar, data compiled by Bloomberg of purchasing power parities show.
Maastricht Treaty
Greece’s ability to get into the euro illustrates what is wrong with Europe’s uncoordinated economic management. Greece, the EU’s poorest country at the time of Maastricht, set about cutting its budget deficit from 16.3 percent and persuading the Germans that it was serious about being fiscally prudent.
By 1996, with Greece’s deficit at 7.4 percent of GDP, Finance Minister Yannos Papantoniou was confident enough of making the grade that he pleaded for the euro’s paper money to feature the name “euro” in the Greek alphabet.
The German reaction wasn’t encouraging. Theo Waigel, Germany’s finance minister at the time, responded by saying he had “enough trouble in Germany trying to sell this idea of giving up the mark, and now you want me to put funny letters on it as well,” said Ruairi Quinn, then Irish finance minister, recalling the altercation at an April 1996 meeting in Verona, Italy. Waigel added that “it’s all irrelevant because you’re never going to qualify,” according to Quinn.
Greek Letters
The global economic boom of the late 1990s enabled Greece to meet the targets for deficits, debt, inflation, interest rates and currency stability. Greece joined the monetary union in 2001 and a year later, banknotes featuring generic architectural symbols and embossed with Greek lettering went into Europe-wide circulation.
Waigel started with a “very negative position,” said Papantoniou, 60, the Greek finance minister from 1994 to 2001. He responded to the German’s outburst in Verona by offering him “an appointment in two years’ time to check this out and you’ll change your mind.”
“Once we entered the euro, we forgot about the necessity of carrying on this structural effort and we now pay the price,” Papantoniou said. Waigel, now 71 and a lawyer at GSK Stockmann + Kollegen in Munich, wasn’t available to comment for this article.
What Societe Generale SA economist Dylan Grice dubs a “Greek tragedy” dates to 2004, when the new Conservative government of Costas Karamanlis accused its predecessor of fiddling the budget numbers to pass the euro test -- a charge Papantoniou denies. EU records now show that Greece has never brought its deficit under the limit.
‘Greek Drachma’
“Investors had always regarded the euro as a de jure German mark,” Louis Bacon, founder of the $15 billion hedge- fund firm Moore Capital Management LLC, wrote in an April 16 letter to investors who have made an annual return of 20.5 percent from his flagship fund during the past two decades. “It’s dawning on the world that it is becoming, de facto, a Greek drachma.”
Greece’s credit rating was cut to junk by Standard & Poor’s on April 27, making it the first euro member to lose its investment grade.
The nation’s slipping competitiveness was masked by an economic expansion buoyed by the euro-driven drop in bond yields to 3.23 percent in September 2005. Growth peaked at 5.9 percent in 2003, topping the euro zone that year. Unit labor costs that bounded ahead by as much as 10.2 percent in 2002 put Greece at a disadvantage to countries like Germany, where wages declined in 2004, 2005 and 2006.
‘New Odyssey’
Greece’s fiscal crisis was exposed after another change in government, from the conservatives back to the socialists last October. Prime Minister George Papandreou, elected on a promise of higher wages and benefits, is now on what he calls a “new Odyssey” that may end with the dismantling of the welfare state built by his father Andreas, Greek leader from 1981 to 1989 and 1993 to 1996.
Italy’s journey to the euro followed a similar script to Greece, from German opposition to reluctance to acceptance. Then the paths diverged. Italy kept its deficit under the limit five times in the euro’s first 11 years. Deficit-obsessed Germany has only done so six times.
Led by Prodi, Italy snuck under the deficit ceiling in 1997, the test year for the first group of euro aspirants, helped by a one-off “Eurotax” and a yen-denominated swap. Italy wasn’t alone in coming up with one-time savings and accounting dodges. France transferred pension funds from France Telecom SA to graze the 3 percent limit.
Bundesbank Bid
Even Waigel made an ill-fated bid to get the Bundesbank to boost the paper value of its currency reserves to reduce Germany’s debt.
Germany’s tight-money faction dictated the rules for the euro, yet it lost out when Waigel’s call for automatic sanctions on countries with deficit overruns was rejected by other governments in talks that culminated in Dublin in December 1996.
Prodi, who served two stints as Italian leader and ran the EU Commission from 1999 to 2004, said the “crisis isn’t unexpected. It came much later than I thought.”
The euro project is “half baked,” he said in an April 20 telephone interview. “You cannot have a monetary policy without coordination in fiscal and economic policy, because otherwise you will have problems.”
The budgetary lapses cloud EU efforts to quell Greece’s crisis and prevent a stampede by speculators against Portugal as well. Germany, for example, is again pressing for curbs on deficits as long as its own economy escapes closer oversight.
‘Fractious Mobilization’
Bickering over Greece, exacerbated by Germany overruling French opposition to making the International Monetary Fund part of a rescue, contributed to the euro’s slide this year against the dollar. Moody’s Investors Service cited the “fractious mobilization” of EU support as a reason why it cut Greece’s credit rating on April 22.
Spain, France and Germany have scoffed at a May 12 EU Commission proposal for more coordination of taxing and spending plans before they are voted on by national parliaments. The commission also urged more “expeditious” enforcement of the deficit rules, without calling for tougher fines on violators.
“The old idea that you discuss with peers your budgetary plans before they’re announced is very difficult to implement,” said Jean Pisani-Ferry, a Maastricht-era EU economic adviser who now runs the Bruegel research institute in Brussels. “It runs up against the politics.”
For Related News and Information: European Union news: NI EU BN <GO> Government news: TOP GOV <GO> European economic statistics: EUST <GO> Global economy watch: GEW <GO>
Last Updated: May 14, 2010 07:10 EDT
>>Criminal Probe into Banks Now Includes JP Morgan (JPM), Citigroup (C), Deutsche Bank (DB), UBS (UBS), Morgan Stanley (MS) and Goldman Sachs (GS)
By Damien Hoffman
Posted on May 13 2010. ShareThis
Ladies and Gentlemen. Welcome to the title bout for the Heavy-Weight championship of the world. Fighting out of the blue corner is the Securities and Exchange Commission (SEC) and Federal Prosecutors. Fighting out of the red corner is the banking cartel of JP Morgan (NYSE: JPM), Citigroup (NYSE: C), Deutsche Bank (NYSE: DB), UBS (NYSE: UBS), Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS).
The fight centers around the issue of whether “major Wall Street banks misled investors about their roles in mortgage-bond deals.” All other information at the moment is strictly conjecture for talking heads because:
Prosecutors so far are simply gathering evidence. They haven’t issued criminal subpoenas, nor have they homed in on the outlines of any potential case.
To win a criminal case, they would have to prove beyond a reasonable doubt that a firm or its employees intentionally misled investors. It’s possible the probe could end with no charges being brought against any of the firms. It is unclear whether any individuals are of particular interest to the authorities.
Lucky for us, this world-class fight for the ages won’t be televised on pay-per-view like Sugar Shane Mosley versus Floyd Mayweather. Instead, you can catch all the drama right here at Wall St. Cheat Sheet for free. Let’s get ready to rumbllllllllllle!!
http://wallstcheatsheet.com/breaking-news/criminal-probe-into-banks-now-includes-jp-morgan-jpm-citigroup-c-deutsche-bank-db-and-ubs-ubs-join-morgan-stanley-ms-and-goldman-sachs-gs/?p=11222/
>>Schwarzenegger: "Welfare to be Eliminated"
unless Fed Govt Bails out California
NYP: Gold rises on sovereign debt-load concerns
By PAUL THARP
Last Updated: 4:32 AM, May 13, 2010
Posted: 12:52 AM, May 13, 2010
Wall Street's recovery rally gained steam for the third straight day while gold raced to a new pinnacle as the world's safest bet against market jitters.
Gold approached the breakthrough $1,250-an-ounce mark, with analysts predicting its climb won't slow until the price hits $1,500, thanks to flat outlooks for both the dollar and euro as all currencies struggle to hold value against mounting sovereign debt.
"Every major government in the world has been reckless stewards of their currencies," portfolio manager James Daily of Team Financial Asset Management told Bloomberg News. He sees gold hitting $1,300 this month and $1,500 by the fourth quarter.
Gold continued its recent tear — breaking its previous record high of $1,226.30 yesterday. Since early February, spot gold prices are up 14 percent.
Gold futures reached a record $1,243.10 per ounce during New York trading, but climbed in after-market trading to an all-time high of $1,249.20 an ounce. Its price has soared 14 percent in the past three months. Dealers said demand for pure gold jumped 10-fold since last Thursday's Wall Street crash and Europe's controversial $1 trillion bailout package.
Meanwhile, investors pushed up stocks here and abroad amid signs that the global economy is showing hints of a comeback.
US shares posted their best three-day run in nearly a year, led by technology stocks.
The Dow Jones industrial average climbed 1.4 percent to 10,896.91, up 148.65 points, while the Standard & Poor's 500 index rose 1.4 percent to 1,171.67, up 15.88 points. The Nasdaq composite index fueled the rally with a 2.1 percent jump to 2,425.02, a gain of 49.71 points.
Among tech winners, China's big search company Baidu soared 9.6 percent to $78.30 following a 10-for-1 split to make the shares more widely available to investors. Strong earnings outlooks also boosted US tech giants, such as IBM, which jumped 4.6 percent to $132.68 after it issued an upbeat outlook, and Intel, up 3.6 percent to $23.09.
Investors also took some solace from a report yesterday that showed the eurozone's GDP rose a bigger-than-expected 0.2 percent, indicating that despite the rampant worries about the region's debt loads there are signs economies there are beginning to turn a corner.
In addition, Spain unveiled its own belt-tightening measures, including laying off 13,000 civil servants, cutting public-sector wages by 5 percent and imposing a hiring freeze next year and paring back the country's generous pension plan.
Further, Portugal was able to raise $1.3 billion in new cash at much lower interest rates than expected, with a 10-year bond offering yielding 4.5 percent vs. 6.3 percent a year ago.
Borrowing costs for Spain and Italy also dipped below 4 percent.
However, that positive news wasn't enough to staunch a slide in the euro, which retreated yesterday to $1.2628, and is down 12 percent this year against the dollar.
"I still think the euro is going to continue to slide," said currency trader Fabian Eliasson at Mizuho Corporate Bank. With Post wires
paul.tharp@nypost.com
Read more: http://www.nypost.com/p/news/business/heavy_metal_marts_QlPxVzY1h7s5j5baNxlqBK#ixzz0nu3hrQsu
BL: Gulf of Mexico Oil Leak May Be 14 Times Greater Than Reported, Markey Says
By James Paton
May 14 (Bloomberg) -- U.S. Representative Edward Markey said he is concerned BP Plc’s well in the Gulf of Mexico may be leaking as much as 70,000 barrels of oil a day, compared with previous estimates of 5,000 barrels.
Underestimating the spill may hinder efforts to control it, the Massachusetts Democrat said in a statement yesterday. Markey said he plans to investigate how much oil is gushing into the Gulf and send a letter to the company asking about their methods of determining the size.
“If you don’t understand the scope of the problem, the capacity to find the answer is severely compromised,” said Markey, chairman of a House Energy and Environment subcommittee. Estimates have risen to as much as 70,000 barrels a day, he said, citing “independent analyses reported in the media.”
BP’s Macondo well, about 40 miles (64 kilometers) off Louisiana’s coast, began leaking oil after the Deepwater Horizon drilling rig exploded on April 20. U.S. Energy Secretary Steven Chu has picked a team of scientists to help BP and industry experts come up with back-up plans to stop the leak. The National Oceanic and Atmospheric Administration has estimated the well is spewing 5,000 barrels of oil a day.
On the Surface
“The assessment that is being used remains 5,000 barrels of oil a day, as estimated by NOAA,” Toby Odone, a spokesman for the London-based company, said by telephone today. Measuring the exact volume of oil leaking from the well is difficult and estimates are based on what appears on the surface, he said.
National Public Radio reported May 13 that 70,000 barrels of oil a day may be spilling into the sea, relying on analysis by an associate professor at Purdue University in Indiana. The accident may be worse than the Exxon Valdez incident of 1989, NPR said.
BP’s effort to use robots on the seafloor to close off the well failed, and a 40-foot steel structure meant to cap the leak was scuttled when the containment box became clogged with an icy slush of seawater and gas. The company is deliberating between using a smaller containment chamber to control the well or inserting a tube directly into the leaking pipe to channel the oil.
About $450 million has been spent on cleanup operations and settlements, or an average of $20 million a day since the rig exploded, up from the previous $6-million-a-day estimate. BP is also considering injecting debris including tire pieces and golf balls to seal the top of the well.
All of the options are interim measures to reduce the spill while the oil company drills a relief well that will permanently plug the leak. Drilling began on May 2 and will take about 90 days, the company has said.
To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.
Last Updated: May 14, 2010 04:06 EDT
BL: Euro Breakup Talk Increases as Germany Loses Currency Proxy
By James G. Neuger - May 14, 2010
Romano Prodi recalls how he persuaded Germany to allow debt-swamped Italy into the euro: support our membership and we’ll buy your milk, he said.
When Prodi toured Germany’s agricultural heartland after becoming Italian leader in 1996, he pitched “a big milk pipeline from Bavaria,” pointing to a three-year, 40 percent plunge in the Italian lira that was hurting dairy sales. “To have Italy outside the euro, a huge quantity of exports from Germany would have been endangered,” Prodi, now 70, said.
Germany got the message, allowing entry rules to be bent to create a 16-nation market for its exporters. Now, German taxpayers are footing the bill for that permissiveness as Europe bails out divergent economies lashed to a single currency with little control over national taxes and spending.
The consequences are an 860 billion-euro ($1 trillion) bill for a debt binge led by Greece, sagging confidence in the European Central Bank’s independence and mounting speculation that a currency designed to last forever might break apart.
“You have the great problem of a potential disintegration of the euro,” former Federal Reserve Chairman Paul Volcker, 82, said yesterday in London. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.”
German-led northern Europe, with its zeal for budget discipline, is attempting to fix the mistakes made by the euro’s founding fathers in the 1990s. It is squaring off against the governments of the south over who will control the euro and the ECB; whether the currency will be used to promote growth or squelch inflation, and ultimately, whether some countries should be disbarred from the monetary union.
European Club
What was conceived as a club for Europe’s strongest economies was expanded for political reasons, leaving the currency union with minimal powers to police deficit spending and no safety net for dealing with countries, like Greece, that veer toward default.
“There was no discussion of that at all, of a crisis mechanism,” said Niels Thygesen, a retired Copenhagen University economics professor who served on the 1989 group led by European Commission President Jacques Delors that mapped out the path to the euro. “It was believed that if countries adhered more or less to prudent budgetary policies, that would not or could not happen.”
Kohl’s Role
Former German Chancellor Helmut Kohl, seeing the euro as the capstone of Europe’s economic integration and Germany’s return to the European family after two world wars, opened the door to the deficit-prone southern European countries that the Bundesbank, haunted by the memory of hyper-inflation, wanted to keep out.
Returning from the December 1991 summit in Maastricht, the Netherlands, that kicked off the euro project, Kohl told the German parliament that he wanted “the greatest possible number of countries” in the euro. That gave Italy, Spain and Portugal the encouragement to meet the economic targets to join in 1999 and Greece to follow two years later.
Defenders of the German economic model knew the threat posed by countries such as Italy, whose budget deficit was 10.2 percent of gross domestic product in 1991, when they forced European leaders to set 3 percent as the limit for euro members.
“A well-known German financial leader told me: Fortunately for Germany, Austria is between Italy and Germany,” said Alfons Verplaetse, who oversaw the Belgian central bank from 1989 to 1999. The reckoning was that only Germany and its immediate neighbors would pass the economic tests, limiting the euro to a handful of countries, Verplaetse, 80, said.
Nobel Laureate
Today’s euro is far from what economists like Nobel laureate Robert Mundell call an “optimum currency area.” Gross domestic product per person ranges from 69,300 euros in Luxembourg to 18,100 euros in Slovakia, debt from 14.5 percent of GDP in Luxembourg to 115.8 percent in Italy, and unemployment from 4.1 percent in the Netherlands to 19.1 percent in Spain.
“A currency without a state is difficult to manage,” said former Italian Prime Minister Lamberto Dini, 79, who also served as the nation’s finance and foreign minister. “The decision to create a single currency in Europe was an eminently political decision. It was supposed to bring about greater European integration not only at an economic level, but at a political one.”
Europe’s multi-state structure leaves it without a U.S.- style federal tax and financial-transfer system to smooth discrepancies between richer and poorer regions. The EU’s budget, mostly for farm aid and infrastructure projects, represents barely 1 percent of the bloc’s GDP, compared with European national budgets that average 47 percent of GDP.
The Blueprint
Signs of a mismatch between strong and weak economies and a loose coordination of fiscal policies were noticeable in the earliest blueprint for a common currency.
“In view of the marked divergences that persist between member states in realizing the goal of growth and stability, there is a risk of surging disequilibriums unless economic policy can be harmonized,” Luxembourg Prime Minister Pierre Werner wrote in the 1970 report that introduced Europe’s first bid for a single money.
Four decades later, Werner’s prophecies are coming true, as euro-region governments prioritize domestic needs to pacify voters after the deepest recession in a half century. The EU Commission estimated May 5 that the overall economy will grow 0.9 percent in 2010, not enough to create jobs, after shrinking 4.1 percent in 2009. It predicts unemployment will climb to 10.3 percent in 2010 from 9.4 percent in 2009.
Euro Rejection?
German officials are already debating what was unthinkable to the euro’s architects: that a currency union designed in its founding treaty to be “irrevocable” might not be. Finance Minister Wolfgang Schaeuble said March 12 that expulsion from the euro may be the ultimate penalty for serial violators of debt rules.
Under current EU law, ejection is “legally next to impossible,” the ECB said in December. Changing the treaty requires unanimity among the EU’s 27 governments, so the euro’s current lineup -- likely to be joined by Estonia next year -- will have to find a way of making do.
Markets have rendered a mixed verdict on the euro’s resistance to the crisis. The currency’s decline below $1.25 from a record high of $1.60 in July 2008 still leaves it above the 1999 starting rate of $1.17. The euro is about 11 percent overvalued against the dollar, data compiled by Bloomberg of purchasing power parities show.
Maastricht Treaty
Greece’s ability to get into the euro illustrates what is wrong with Europe’s uncoordinated economic management. Greece, the EU’s poorest country at the time of Maastricht, set about cutting its budget deficit from 16.3 percent and persuading the Germans that it was serious about being fiscally prudent.
By 1996, with Greece’s deficit at 7.4 percent of GDP, Finance Minister Yannos Papantoniou was confident enough of making the grade that he pleaded for the euro’s paper money to feature the name “euro” in the Greek alphabet.
The German reaction wasn’t encouraging. Theo Waigel, Germany’s finance minister at the time, responded by saying he had “enough trouble in Germany trying to sell this idea of giving up the mark, and now you want me to put funny letters on it as well,” said Ruairi Quinn, then Irish finance minister, recalling the altercation at an April 1996 meeting in Verona, Italy. Waigel added that “it’s all irrelevant because you’re never going to qualify,” according to Quinn.
Greek Letters
The global economic boom of the late 1990s enabled Greece to meet the targets for deficits, debt, inflation, interest rates and currency stability. Greece joined the monetary union in 2001 and a year later, banknotes featuring generic architectural symbols and embossed with Greek lettering went into Europe-wide circulation.
Waigel started with a “very negative position,” said Papantoniou, 60, the Greek finance minister from 1994 to 2001. He responded to the German’s outburst in Verona by offering him “an appointment in two years’ time to check this out and you’ll change your mind.”
“Once we entered the euro, we forgot about the necessity of carrying on this structural effort and we now pay the price,” Papantoniou said. Waigel, now 71 and a lawyer at GSK Stockmann + Kollegen in Munich, wasn’t available to comment for this article.
What Societe Generale SA economist Dylan Grice dubs a “Greek tragedy” dates to 2004, when the new Conservative government of Costas Karamanlis accused its predecessor of fiddling the budget numbers to pass the euro test -- a charge Papantoniou denies. EU records now show that Greece has never brought its deficit under the limit.
‘Greek Drachma’
“Investors had always regarded the euro as a de jure German mark,” Louis Bacon, founder of the $15 billion hedge- fund firm Moore Capital Management LLC, wrote in an April 16 letter to investors who have made an annual return of 20.5 percent from his flagship fund during the past two decades. “It’s dawning on the world that it is becoming, de facto, a Greek drachma.”
Greece’s credit rating was cut to junk by Standard & Poor’s on April 27, making it the first euro member to lose its investment grade.
The nation’s slipping competitiveness was masked by an economic expansion buoyed by the euro-driven drop in bond yields to 3.23 percent in September 2005. Growth peaked at 5.9 percent in 2003, topping the euro zone that year. Unit labor costs that bounded ahead by as much as 10.2 percent in 2002 put Greece at a disadvantage to countries like Germany, where wages declined in 2004, 2005 and 2006.
‘New Odyssey’
Greece’s fiscal crisis was exposed after another change in government, from the conservatives back to the socialists last October. Prime Minister George Papandreou, elected on a promise of higher wages and benefits, is now on what he calls a “new Odyssey” that may end with the dismantling of the welfare state built by his father Andreas, Greek leader from 1981 to 1989 and 1993 to 1996.
Italy’s journey to the euro followed a similar script to Greece, from German opposition to reluctance to acceptance. Then the paths diverged. Italy kept its deficit under the limit five times in the euro’s first 11 years. Deficit-obsessed Germany has only done so six times.
Led by Prodi, Italy snuck under the deficit ceiling in 1997, the test year for the first group of euro aspirants, helped by a one-off “Eurotax” and a yen-denominated swap. Italy wasn’t alone in coming up with one-time savings and accounting dodges. France transferred pension funds from France Telecom SA to graze the 3 percent limit.
Bundesbank Bid
Even Waigel made an ill-fated bid to get the Bundesbank to boost the paper value of its currency reserves to reduce Germany’s debt.
Germany’s tight-money faction dictated the rules for the euro, yet it lost out when Waigel’s call for automatic sanctions on countries with deficit overruns was rejected by other governments in talks that culminated in Dublin in December 1996.
Prodi, who served two stints as Italian leader and ran the EU Commission from 1999 to 2004, said the “crisis isn’t unexpected. It came much later than I thought.”
The euro project is “half baked,” he said in an April 20 telephone interview. “You cannot have a monetary policy without coordination in fiscal and economic policy, because otherwise you will have problems.”
The budgetary lapses cloud EU efforts to quell Greece’s crisis and prevent a stampede by speculators against Portugal as well. Germany, for example, is again pressing for curbs on deficits as long as its own economy escapes closer oversight.
‘Fractious Mobilization’
Bickering over Greece, exacerbated by Germany overruling French opposition to making the International Monetary Fund part of a rescue, contributed to the euro’s slide this year against the dollar. Moody’s Investors Service cited the “fractious mobilization” of EU support as a reason why it cut Greece’s credit rating on April 22.
Spain, France and Germany have scoffed at a May 12 EU Commission proposal for more coordination of taxing and spending plans before they are voted on by national parliaments. The commission also urged more “expeditious” enforcement of the deficit rules, without calling for tougher fines on violators.
“The old idea that you discuss with peers your budgetary plans before they’re announced is very difficult to implement,” said Jean Pisani-Ferry, a Maastricht-era EU economic adviser who now runs the Bruegel research institute in Brussels. “It runs up against the politics.”
For Related News and Information: European Union news: NI EU BN <GO> Government news: TOP GOV <GO> European economic statistics: EUST <GO> Global economy watch: GEW <GO>
GM! Stocks, Euro Tumble on Concern Debt Crisis Will Hurt Economy; Gold Surges
By Stuart Wallace
May 14 (Bloomberg) -- Stocks fell around the world on concern that Europe’s debt crisis will limit growth and earnings. The euro fell below $1.25, oil retreated for a fourth day and bunds rallied.
The Stoxx Europe 600 Index slumped 1.8 percent at 10:36 a.m. in London and the MSCI Asia Pacific Index fell 1.1 percent. Futures on the Standard & Poor’s 500 Index declined 0.8 percent. Crude oil retreated 2 percent and copper dropped 2.4 percent as the euro weakened against the dollar to levels not seen since March 2009. German bonds climbed, sending the yield on the 10- year bund down 4 basis points. The cost of insuring against a default by Greece rose.
The foundations for a worldwide recovery aren’t “solid” and the sovereign-debt crisis is “deepening,” Chinese Premier Wen Jiabao said last night. Deutsche Bank AG Chief Executive Officer Josef Ackermann said Greece may not be able to repay its debt in full and former Federal Reserve Chairman Paul Volcker said he’s concerned the euro area may break up. Sony Corp., the world’s second-largest maker of consumer electronics, said it may suffer a “significant impact” if Europe’s deficit spreads.
“Euro-phoria has faded fast,” Ian Williams, U.K. strategist at Altium Securities in London, wrote in a note. “The symptoms of the region’s problems had to be addressed quickly, but the causes are very deep-seated, and through the week growing acknowledgement of the inevitable impact of austerity packages on the outlook for growth has driven the euro lower.”
Stocks Pare Advance
The Stoxx 600 pared its weekly advance to 6.8 percent, still the biggest gain since July. The gauge rallied 7.2 percent on May 10 after the European Union unveiled a 750 billion-euro ($938 billion) financial assistance package for indebted countries.
Banks led declines among the 19 industry groups in the Stoxx 600 today as Credit Suisse Group AG forecast new regulation may cost the industry 244 billion euros. Banco Santander SA, Spain’s biggest lender, tumbled 5.1 percent in Madrid. Barclays Plc fell 3.1 percent in London. Saras SpA declined 3.5 percent in Milan after the Italian oil refiner swung to loss in the first quarter.
The yield on the bund fell to 2.89 percent, and the two- year German note yield declined two basis points to 0.58 percent. Greek 10-year bonds dropped, with the yield climbing eight basis points to 7.65 percent. The euro slipped 0.2 percent to $1.2412, after depreciating to $1.2494, the lowest level since March 5, 2009.
Credit-default swaps on Greek debt climbed 42.5 basis points to 572.5, according to CMA DataVision prices.
China Lacks Buyers
China failed to draw enough bids at a treasury bill sale for a second time in a month on speculation banks are seeking higher returns in longer-maturity debt. The finance ministry sold 17.4 billion yuan ($2.5 billion) of the 20 billion yuan of 273-day securities on offer at an average yield of 1.72 percent, compared with 1.54 percent at the last sale, according to data compiled by Bloomberg. China didn’t complete sales of 273-day and 91-day debt on April 9.
Crude oil for June delivery fell 1.1 percent to $73.62 a barrel in New York trading, taking its four-day slump to 4.1 percent. Refiners must be ready for oil prices to rebound to more than $100 a barrel on growing consumption in Asia, Mukesh Ambani, Asia’s richest man and chairman of Reliance Industries Ltd., said at a conference in Mumbai today.
Industrial Metals Fall
Copper for delivery in three months dropped $160 to $7,000 a metric ton on the London Metal Exchange, leading a decline in industrial metals. Gold rose to $1,249.40 an ounce in London and futures reached $1,249.70 in New York, a record in both cities.
Asian stocks fell for a third day. Sony plummeted 6.8 in Tokyo. Toyota Motor Corp., a Japanese carmaker that gets about 70 percent of its sales abroad, dropped 1.9 percent. Commonwealth Bank of Australia led financial shares lower, falling 2.2 percent in Sydney.
The decline in U.S. futures indicated the S&P 500 may extend yesterday’s 1.2 percent slump, even before a report that may show sales at U.S. retailers rose in April for a seventh straight month, showing consumers are joining the recovery as employment picks up.
Purchases increased 0.2 percent, extending the most successive gains since 1999, according to the median estimate of 83 economists surveyed by Bloomberg News. The Commerce Department’s report is due at 8:30 a.m. in Washington. Other reports today may show manufacturing picked up, consumer confidence increased and businesses boosted inventories.
Turkey ‘Contagion Risk’
The MSCI Emerging Markets Index dropped 0.7 percent, paring the biggest weekly rally in seven months. Turkey’s ISE National 100 Index fell 1.9 percent, the biggest decline among major emerging markets, after Credit Suisse advised reducing stock holdings in the country in part because of “contagion risk” from indebted European nations. Poland’s zloty weakened 1 percent against the euro and the Hungarian forint depreciated 0.9 percent to lead declines in developing-nation currencies.
The cost to protect Thai government bonds from default surged by the most in 15 months, while stocks and the baht fell as the death toll from anti-government protests in Bangkok rose.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
Last Updated: May 14, 2010 05:40 EDT
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BL: Ash Cloud Shuts Spain, Portugal Airports; Ryanair, EasyJet Ground Flights
By Cornelius Rahn and Steve Rothwell
May 11 (Bloomberg) -- A volcanic ash cloud over the North Atlantic drifted across the Iberian peninsula today, shutting airports in Spain and Portugal and forcing carriers including Ryanair Holdings Plc and EasyJet Plc to ground flights.
Faro in southern Portugal is closed until at least 3 p.m., according to Ryanair, which halted 14 services to the Algarve tourist hub after scrapping more than 90 flights across Europe yesterday. Spanish airports including Seville are also shut and EasyJet said travel to France and Gibraltar is disrupted.
Unsafe ash levels extend from the Canary Islands across Spain and Portugal as far as the Pyrenees, according to flight- path coordinator Eurocontrol. EasyJet said today that costs from the eruption of Iceland’s Eyjafjallajökull volcano on April 14 already amount to as much as 75 million pounds ($111 million).
“The northerly winds are here for a while yet,” U.K. Met Office spokesman Dave Britton said in a phone interview. “If any ash is produced from the volcano, then it will move south.”
Volcanic dust is a threat to planes because the abrasive, silica-based material may clog engines and scar windscreens. Speed sensors, critical in flight, can also be disabled.
Madeira, Morocco
European flights were reduced to 27,400 yesterday, down about 5.5 percent from a typical Monday in May, Eurocontrol said on its Twitter page. While the 29,000 services due to operate today are close to the daily norm, airport closures will affect areas as far south as Madeira, Morocco and Tenerife, with the cloud likely to drift northeast as far as France, it said.
A shutdown of European airspace last month grounded 100,000 flights and cost carriers $1.7 billion in lost sales, according to the International Air Transport Association.
Aer Lingus Group Plc, which canceled flights yesterday, said today that the closures are excessive and called on the European Union to replace predictions based on Volcanic Ash Advisory Center models with real-time sampling by aircraft.
“The VAAC model has been proven inaccurate several times and we have lost confidence in its reliability,” Aer Lingus Chief Executive Officer Christoph Mueller said in a statement. “We propose that specialised aircraft equipped with appropriate measurement devices be deployed around the Atlantic rim in order to respond swiftly and decisively to any approaching ash cloud.”
The Irish Aviation Authority said in a statement that the ash “will continue to cause difficulty for some trans-Atlantic operations and operations into some areas of southern Europe.”
Restrictions Reduced
Eurocontrol said work by the U.K. Met Office and Civil Aviation Authority has confirmed the effectiveness of the models used in locating areas of ash above engine-tolerance levels. For that reason, a 60-mile (97-kilometer) buffer area added to no- fly zones will be removed, easing restrictions, it said.
Eight Spanish airports are closed today, grounding 282 flights, national air traffic controller Aena said on its website. Terminals in Seville, Jerez and Badajoz in the south of the country are shut, together with five landing strips in the Canary Islands. Madrid-based Iberia Lineas Aereas de Espana SA was among carriers that canceled flights yesterday.
“We are in constant discussions with authorities and airports,” Pauline McAlester, a spokeswoman for Dublin-based Ryanair, Europe’s biggest discount carrier, said by telephone. “Our goal is to minimize the disruption for passengers and flight schedules as much as possible.”
West of Ireland
Eurocontrol’s latest map shows unsafe ash concentrations stretching thousands of miles from Greenland south toward the British Isles. The bulk of the cloud lies west of Ireland, with a branch at the southern end extending northeast over Iberia.
The chart is based on data from the London VAAC, which is located at the U.K. Met Office and covers the North Atlantic, and the Toulouse, France, VAAC, which is responsible for the whole of continental Europe, Africa and western Asia.
EasyJet’s net loss narrowed to 58.9 million pounds in the six months through March 31 from 85.9 million pounds a year earlier as lower fuel costs helped offset the impact of the ash cloud and disruption from heavy snow. Sales rose 13 percent to 1.17 billion pounds, the Luton, England-based company said.
EasyJet traded down 17 pence, or 3.8 percent, at 425.2 pence as of 10:51 a.m. in London. Iberia declined 1.8 percent to 2.22 euros in Madrid, while Aer Lingus fell 3.6 percent to 68 cents and Ryanair was 3 percent lower at 3.38 euros in Dublin.
To contact the reporters on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Steve Rothwell in London at srothwell@bloomberg.net
Last Updated: May 11, 2010 06:09 EDT
FT: America has good reason to worry about Greece
By Clive Crook
Published: May 9 2010 20:17 | Last updated: May 9 2010 20:17
http://www.ft.com/cms/s/0/bb184e6a-5b9b-11df-85a3-00144feab49a.html
At the end of last week, the US looked hard at Greece and was scared. So tiny an economy should not be bringing all of Europe low and even threatening to explode the euro, but it is. What started as a US financial crisis plunged Europe into recession; was Europe about to return the compliment? What, Americans began to wonder, did Europe’s problems tell them about their own?
The cause of the present turmoil, Greek public debt, has aroused fears of a wider sovereign-debt crisis and heightened concern about US government borrowing. More immediately, investors are asking, what if the European Union keeps making a hash of the problem? Will there be a second European banking crisis, and would it infect the US financial system? Even if the answer is no, the US recovery is still fragile. The economy would not be immune to another slump in EU demand.
These fears can be exaggerated, but none is unfounded. In any event, fears do not have to be well-reasoned to make a bad situation worse and justify themselves.
The least substantial line of alarm is Greece as fiscal harbinger. The US might not be Greece, say pessimists, but California could be. Here is a state so strapped for cash that it recently resorted to paying its workers with IOUs rather than money. (If that is not default, it is the next best thing.) Could California do for the US what Greece is doing for the EU?
Unlikely, is the answer. California is a bigger economy: in that sense its problem is on a larger scale. But its debts and deficits are puny compared with Greece’s. Other defences and safety-valves, notably lacking in Europe, are to hand: an activist federal government, a compliant central bank, a currency that cannot conceivably split apart.
The parallel should not be dismissed altogether. A country whose government borrows beyond its capacity must eventually pay the price. Greece does teach that lesson, in case anybody had forgotten it – and in the US, some have. But the greater worry for the US at the moment is not that Europe shows where it is heading but that secondary effects from Greece and any widening emergency will squash its fledgling recovery.
These influences are pushing in opposite directions. A flight to safety from European markets brings investors back to US bonds and pushes US interest rates lower. On the other hand, it depresses the euro, which makes US exports less competitive in a crucial market. If Europe’s economic recovery – which is both weak and delayed as compared with the US – should fail altogether, the US will not be immune.
Financial contagion is the other big risk. Suppose Greece defaults. That will spread losses across the European banking system. Pressure to default could mount on other European countries, starting with Portugal and Spain but maybe spreading further. Just how badly US banks and non-banks are exposed to to these risks – directly, or through credit default swaps and other derivatives – may be unclear until it happens. Any new financial waves would crash over a US government whose fiscal capacity is all but maxed out and a country whose willingness to rescue banks is exhausted.
Up to now, the US has wanted to think that Greece was a European problem that could be left to the EU to solve. Both parts of that supposition have turned out to be wrong. In recent days, the administration said it pressed for a speedier resolution of the Greek mess, and the involvement of the International Monetary Fund in the deal to supply new lending gave the US formal standing on the issue. Yet the problem is no closer to being solved.
The EU-IMF adjustment programme for Greece improves on the previous EU position that Greece must bear all the costs of its troubles alone – but not by much. European and international taxpayers are now on the hook, too. Greece’s creditors are not, however, which is wrong. Partly for that reason, the new plan is nearly as delusional as the old one. As Arvind Subramanian argued on this page last week, it implies three years of crippling austerity, at the end of which Greece’s flattened economy will have to support a far larger public debt than today’s. (This is assuming things go well.) The plan resolves nothing. It is a delaying action at best, and a pretty desperate one at that.
Default looks ever more likely. This can be planned, with some hope of keeping things orderly – though the best chance of that has now been missed. Or it can be unplanned, after a further period of denial in which the problem worsens. Notice the irony. Conventional wisdom holds that early-resolution mechanisms are needed for failing banks and non-banks: the key thing is to get in front of the problem. But a similar logic applies to distressed governments, especially where sharing pain with creditors is concerned. This lesson, evidently, will have to be learnt all over again.
The harder question is whether even a Greek default will resolve Europe’s difficulties. My bet would be no. Greece has a huge primary budget deficit. At least for a time after a debt restructuring it would struggle to find lenders. So even with its debts written down to nothing, it faces a period of fiscal austerity that will be wrenching at best and politically impossible at worst – with no central bank to support demand, and no currency of its own to devalue.
The EU says that default must be avoided at any cost. I say default will happen. The EU says exit from the euro is not an option. I would not count on that, either. In any event, the US had better brace itself.
clive.crook@gmail.com
More columns at www.ft.com/clivecrook
FT: Chinese tightening fears weaken commodities
By Jack Farchy
Published: May 11 2010 11:22 | Last updated: May 11 2010 11:22
Oil and metals slid on Tuesday as Monday’s optimism waned in the face of fears of Chinese monetary policy tightening.
Data released on Tuesday showed Chinese consumer price inflation at 2.8 per cent in April – its highest for 18 months, but below Beijing’s full-year target of 3 per cent.
Analysts believe that if the rate of CPI inflation moves above 3 per cent, more aggressive monetary policy measures, such as raising the benchmark lending and deposit rates, are likely.
The fear of Chinese policy tightening has dogged commodities markets in recent weeks, with base metals well off their mid-April peaks.
On Tuesday copper for delivery in three months fell 2.1 per cent to $6,970 a tonne on the London Metal Exchange. Aluminium was off 2.9 per cent at $2,075 a tonne, while lead – particularly exposed to moves in Chinese demand as it is used in car and electric bike batteries – dropped 3.7 per cent to $2,022 a tonne.
In oil, Nymex June West Texas intermediate dropped $1.16 to $75.64 a barrel and ICE June Brent fell $1.07 to $79.05.
Meanwhile, gold regained some ground as the euphoria created by the eurozone rescue plan began to fade. Spot gold was 0.6 per cent higher at $1,208.95 a troy ounce.
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GLD one of the only good ones for playing gold as a stock. GDX does not reflect the price of gold accurately...too affected by market sentiment
BL: European Stocks Drop on Concern Aid Plan Won’t End Debt Crisis
By Julie Cruz
May 11 (Bloomberg) -- European stocks fell on concern a $1 trillion lending package, which sent the Stoxx Europe 600 Index to the biggest gain in 17 months yesterday, won’t solve the region’s debt crisis. Asian shares and U.S. index futures slid.
Banco Santander SA, Spain’s biggest lender, sank 5.8 percent as banks led declines in Europe. BHP Billiton Ltd., the world’s largest mining company, retreated 3 percent as accelerating Chinese inflation increased pressure for the government to tighten monetary policy. E.ON AG, Germany’s biggest utility, fell 1.4 percent after reporting earnings that missed analysts’ estimates.
The Stoxx 600 slid 1.8 percent to 249.57 at 12:48 p.m. in London. The benchmark gauge for European shares jumped 7.2 percent yesterday after the European Union and International Monetary Fund unveiled a 750 billion-euro ($954 billion) financial assistance package and the European Central Bank said it will purchase government and private debt. The index is still down 8.3 percent from this year’s high on April 15.
“You cannot resolve the debt crisis by issuing more debt or putting up guarantees,” Christian Blaabjerg, the Hellerup, Denmark-based chief equity strategist at Saxo Bank A/S, said in an interview with Bloomberg Television. “Markets will come back and test the will of the ECB/EU on how to deal with this enormous debt.”
Asian, U.S. Stocks
The MSCI Asia Pacific Index sank 1.1 percent as China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate. Futures on the Standard & Poor’s 500 Index dropped 1 percent.
The Stoxx 600 retreated 8.8 percent last week, the biggest slump since November 2008, amid concern that a previously announced 110 billion-euro assistance program for Greece would be insufficient to keep Europe’s most indebted nations from defaulting. Greece may have its credit rating lowered to junk within the next month, Moody’s said late yesterday, citing the country’s “dismal” economic prospects.
Marek Belka, the director of the IMF’s European department, yesterday said he doesn’t consider the latest European rescue package a “long-term solution.” ECB council member Axel Weber said the bank’s purchase of government bonds poses “significant” risks, Germany’s Boersen-Zeitung reported.
Brown Quits
In the U.K., Prime Minister Gordon Brown’s decision to quit late yesterday threw into disarray efforts to form a government, pitting his Labour Party against the Conservatives as both bid to forge an alliance with the Liberal Democrats.
The multiparty haggling to form a government is unprecedented in post-World War II British politics and may unnerve investors as it threatens to drag on. With talks in their fifth day after inconclusive May 6 elections, Conservative leader David Cameron said it was “decision time” for his Liberal Democrat counterpart, Nick Clegg, as Clegg’s deputies opened negotiations with Labour.
National benchmark indexes fell in all 18 western European markets, except Iceland. Germany’s DAX lost 1.3 percent, France’s CAC slid 2.4 percent and the U.K.’s FTSE 100 decreased 1.7 percent. In Greece, the benchmark ASE Index tumbled 2.2 percent and Spain’s IBEX 35 plunged 4.5 percent.
Santander fell 5.8 percent to 8.95 euros after yesterday jumping 23 percent, leading the Stoxx 600 Banks Index to a 3.6 percent decline. Barclays Plc sank 3.3 percent to 318.85 pence, while Allied Irish Banks Plc slumped 7.1 percent to 1.28 euros.
Mining Companies
BHP Billiton dropped 3 percent to 1,924.5 pence and Rio Tinto Group, the world’s third-biggest mining company, lost 4 percent to 3,234 pence as copper slid as much as 2.8 percent. Basic-resource shares had the biggest drop among 19 industry groups in the Stoxx 600.
Salzgitter AG lost 2 percent to 56.85 euros. Germany’s second-biggest steelmaker was downgraded to “sell” from “buy” at UBS AG, which said “the risks are now more biased to the downside as the current uncertain real demand outlook and the usual summer lull reduces the likelihood of any panic buying of steel in the near term.”
E.ON dropped 1.4 percent to 24.98 euros as the utility’s adjusted net income, which the company uses to calculate its dividend, climbed to 2.09 billion euros from 1.8 billion euros a year earlier. That missed the 2.13 billion-euro average estimate of 11 analysts surveyed by Bloomberg.
Solarworld AG slid 6.8 percent to 9.13 euros, the lowest level since July 2005. The German solar-panel maker said first- quarter earnings before interest and taxes fell to 24.8 million euros from 37.8 million euros.
Deutsche Boerse
Deutsche Boerse AG retreated 1.7 percent to 54.64 euros. Europe’s biggest exchange said first-quarter net income fell 24 percent to 156.9 million euros, missing the 164.2 million-euro average of six analyst estimates compiled by Bloomberg. The company took a charge of 27.8 million euros for previously announced job cuts.
Portugal Telecom SGPS SA jumped 7.9 percent to 7.68 euros. Portugal’s biggest telephone company rejected an offer from Telefonica SA for its 50 percent stake in Brasilcel, the venture that controls Brazilian wireless operator Vivo Participacoes SA.
Telefonica slid 6.2 percent to 15.64 euros.
Carlsberg A/S advanced 3 percent to 460.30 kroner. The Danish owner of Russia’s largest brewer reported first-quarter earnings that beat analysts’ estimates as improved revenue and profitability in Europe and Asia helped offset plunging sales in Russia.
Of the companies on the Stoxx 600 that have reported earnings since April 12, about 64 percent have beaten analysts’ estimates, according to data compiled by Bloomberg. In the U.S., more than 80 percent of S&P 500 companies have topped projections.
To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net
Last Updated: May 11, 2010 07:49 EDT
BL: U.S. Stock-Index Futures Fall on Concern EU Plan Won't Solve Debt Crisis
By Sarah Jones
May 11 (Bloomberg) -- U.S. stock-index futures fell, after the Standard & Poor’s 500 Index yesterday surged by the most in more than a year, on concern an almost $1 trillion emergency lending package for European countries will hamper growth.
Alcoa Inc., the largest U.S. aluminum producer, declined 2.7 percent in early trading in New York. Metal prices fell after Chinese inflation accelerated at the fastest pace in 18 months, increasing pressure on the government to raise borrowing costs. MBIA Inc. dropped 7 percent after the largest bond insurer posted a first-quarter loss.
June contracts on the Standard & Poor’s 500 Index declined 1.1 percent to 1,144.00 at 12:33 p.m. in London. The S&P 500 yesterday surged 4.4 percent and the VIX, the benchmark for U.S. stock options, had a record drop after European policy makers unveiled an unprecedented loan package and a program of bond purchases to contain the region’s sovereign-debt crisis. Dow Jones Industrial Average futures lost 0.9 percent to 10,648 and Nasdaq 100 futures slid 1 percent to 1,921 today.
“Gains from the $1 trillion bailout were short-lived as speculators foresee tough cutbacks for the troubled European states,” said Manoj Ladwa, a senior trader at ETX Capital in London. “Fears that China is overheating and could raise rates soon also has traders on the backfoot today.”
Significant Risks
Marek Belka, the director of the International Monetary Fund’s European department, yesterday said he doesn’t consider the European rescue package a “long-term solution.” ECB council member Axel Weber said the bank’s purchase of government bonds poses “significant” risks, Germany’s Boersen-Zeitung reported.
Yesterday’s advance for the S&P 500 followed an 8.7 percent slide since April 23 and the biggest weekly retreat since the start of the bull market in March 2009 as concern grew that European leaders weren’t doing enough to keep indebted nations from defaulting.
Alcoa retreated 2.7 percent to $12.25 in early trading, trimming some of yesterday’s 4.9 percent advance, as base metals including copper, lead and nickel fell on the London Metal Exchange.
Asian commodity producers fell today after a Chinese statistics-bureau report showed inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.
A separate report showed industrial production last month in China, the world’s biggest metals user, expanded 17.8 percent from a year earlier, less than the 18.5 percent gain forecast by economists surveyed by Bloomberg.
MBIA Loss
MBIA declined 7 percent to $8.68 in New York after the bond insurer reported a first-quarter loss of $7.22 a share, largely the result of an accounting rule that required the company to revalue some of its obligations. That compares with a profit of $3.34 a year earlier.
Priceline.com Inc. dropped 13 percent to $217.58 in Germany after the second-biggest online travel agency said second- quarter profit will fall short of analysts’ estimates after the euro weakened and the political crisis in Greece threatened consumers’ travel plans.
To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net.
Last Updated: May 11, 2010 07:34 EDT
Gold $1216, Nadler from Kitco on Tom Keene's right now...thinks gold cannot sustain these prices, although it could oveshoot to 1350 (GS's target)
He says we're headed towards a deflationary scenario, esp if China starts clamping down on asset prices
Kitco's only risk is a too strong Loonie (USD .95/.93c to CAD at $1.05)
He says gold at $880-$890 in 12 months.
LOL
BL: Euro Erases Gains as Optimism Cools; Stocks, Commodities Fall on China CPI
Share Business ExchangeTwitterFacebook| Email | Print | A A A By James Regan and Ron Harui
May 11 (Bloomberg) -- The euro lost all of yesterday’s gains on concern the almost $1 trillion lending plan to bail out indebted nations in Europe will trim economic growth in the region. Stocks, copper and U.S. index futures fell after China’s inflation rate hit an 18-month high.
The euro weakened to $1.2737 at 8:27 a.m. in London and was 0.2 percent below last week’s close, after strengthening as much as 2.7 percent yesterday. The MSCI Asia Pacific Index dropped 1 percent to 118.99, with five stocks sliding for every two that gained. The Stoxx Euro 600 decreased 1.1 percent to 251.35. Standard & Poor’s 500 Index futures lost 0.8 percent, following the biggest jump in U.S. stocks since March 2009. Copper led commodities lower, falling 1.6 percent.
“Markets realized quickly that this crisis won’t be cured by adding liquidity, no matter how big it is,” said Toshihiko Sakai, head of trading for currencies and financial products at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “The structural problems of the euro zone will persist. I’m not surprised at all the euro is losing strength again.”
Accelerating inflation may prompt policy makers in China, the world’s third-largest economy, to tighten lending controls as the European Union’s bailout plan forces nations including Greece, Spain and Portugal to increase taxes and rein in public spending. Greece may have its credit rating lowered to junk within the next month, Moody’s Investors Service said yesterday, citing the country’s “dismal” economic prospects.
‘Multiyear Contractions’
The euro fell 0.5 percent, after yesterday gaining 0.3 percent. It reached $1.2529 on May 6, the weakest level since January 2009. Against the yen, the currency today dropped 1.3 percent to 117.73.
Every “fix” is accompanied by “an adjustment in the real economy,” Stephen Roach, chairman of Morgan Stanley Asia Ltd., said late yesterday in an interview on Bloomberg Radio with Tom Keene. “We saw that in Asia in the late ‘90’s, we saw that in the U.S. in ‘08, ‘09, and we’re going to see that in Europe, certainly in the peripheral countries, with significant multiyear contractions in the years ahead.’’
Hong Kong’s Hang Seng Index dropped 1.7 percent, the worst performance among Asia’s major benchmark stock indexes, and the Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 51.31, or 1.9 percent, to close at 2,647.44, the lowest in almost a year. The measure slid 21 percent from the close on Nov. 23, entering a bear market.
China Risk
China today said consumer prices rose 2.8 percent from a year earlier in April and property prices jumped 12.8 percent, the most since data began in 2005. New lending of 774 billion yuan ($113 billion), reported by the central bank, was more than any of 24 economists forecast in a Bloomberg survey.
‘‘Price pressures have been building throughout the economy, strengthening the case for higher interest rates and a stronger yuan,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “China is at risk of overheating, with spot fires breaking out in various parts of the economy.”
Copper futures on the London Metal Exchange fell to $7,003.50 a metric ton and crude oil decreased 0.6 percent to $76.37 a barrel in New York, paring an earlier 0.8 percent gain. Shares of BHP Billiton Ltd., the world’s largest mining company, declined 2.2 percent to A$38.13 in Sydney.
Mizuho Financial Group Inc. sank 4.7 percent to 163 yen, leading Japanese banks lower, on reports the company plans to sell about 1 trillion yen ($11 billion) of stock to bolster capital. Mitsubishi UFJ Financial Group Inc., the nation’s largest publicly traded bank, fell 1.7 percent to 460 yen.
Philippine Election
The Philippine Stock Exchange Index surged 3.9 percent, the most in eight months, after early results suggested a landslide presidential election victory for Benigno Aquino, whose late mother helped oust former dictator Ferdinand Marcos. Aquino, who was leading in opinion polls prior to the vote, said April 26 only fraud could stop him winning and such an outcome would trigger unrest comparable with the protests that swept his mother to power 24 years ago.
“It looks like it will be a landslide victory,” said Marvin Fausto, who oversees $10.8 billion as chief investment officer at Banco de Oro in Manila. “It seems we are going to a situation where there is a clear mandate.”
To contact the reporter for this story: James Regan in Hong Kong Jregan19@bloomberg.net;
Last Updated: May 11, 2010 03:27 EDT
FYI! >>Bank Default Risk Soars to Record; Credit-Default Swaps Beat Lehman Crisis
May 07, 2010, 10:13 AM EDT
By Abigail Moses
May 7 (Bloomberg) -- The cost of insuring against losses on European bank bonds soared to a record, surpassing levels triggered by the collapse of Lehman Brothers Holdings Inc., as the sovereign debt crisis deepened.
The Markit iTraxx Financial Index of credit-default swaps on 25 banks and insurers soared as much as 40 basis points to 223, according to JPMorgan Chase & Co. The index closed at 212 basis points March 9, 2009. Swaps on Greece, Portugal, Spain and Italy rose to or near all-time high levels.
Credit risk rose for a sixth day on concern the Greek debt crisis is spiraling out of control and triggering concern banks may face losses on their sovereign bond holdings. The Group of Seven plans to hold a conference call today to discuss the turmoil, after a global stock rout that briefly erased more than $1 trillion in U.S. market value.
“Financials are caught in a really bad place right now,” said Aziz Sunderji, a London-based credit strategist at Barclays Capital. “Investors are selling bonds, not just hedging with CDS. It shows investors are repositioning portfolios and there’s a more long-term repricing of peripheral risk.”
Pacific Investment Management Co.’s Mohamed El-Erian and Loomis Sayles & Co.’s Dan Fuss said Europe’s crisis may spread across the globe because of investor concern that governments have borrowed too much to revive their economies.
Portugal, Spain
Markit’s financial gauge was trading at 198 basis points at 2:30 p.m. in London, according to JPMorgan. Contracts on Spanish and Portuguese banks rose to records, according to CMA DataVision prices. Portugal’s Banco Comercial Portugues SA increased 53 basis points to 579 and Spain’s Banco Santander SA rose 12 basis points to 253.
In the U.K., swaps on Royal Bank of Scotland Group Plc jumped 41 to 229 after Britain’s biggest government-owned bank posted the only first-quarter loss among British rivals.
The spread between the three-month dollar London interbank offered rate and the overnight indexed swap rate, a barometer of the reluctance of banks to lend that’s known as the Libor-OIS spread, is at 18 basis points, up from 6 basis points on March 15 and near the highest level in more than five months. It’s still far from the record 364 basis points in October 2008, almost a month after Lehman’s bankruptcy.
Swaps on Greece surged 75 basis points to 1,008 before the advance was pared to 950. Portugal climbed 42 to 502 before falling to 430 and Italy rose 24 to 255.5 before dropping to 227 and Spain increased 14 to 288 before trading at 246, CMA prices show.
British Swaps
Contracts on the U.K. rose 8 basis points to 99, according to CMA. Britain’s election produced a parliament without a majority for the first time since 1974, stoking concern the new government will be too weak to rein in its record budget deficit.
European policy makers are under mounting pressure from investors and foreign officials to broaden their response to the Greek fiscal crisis after a 110 billion euro ($140 billion) bailout package failed to ease concerns.
“We do not see a clear sign that markets will calm down in the absence of decisive action by authorities, which so far have ignored the opportunity to convince investors that they are capable of battling the European sovereign debt crisis,” Markus Ernst, a credit strategist at UniCredit SpA in Munich, wrote in a note to investors.
Merkel Meeting
German lawmakers approved their nation’s share of loans to Greece worth as much as 22.4 billion euros before Chancellor Angela Merkel and other euro region governments meet in Brussels to review the bailout and look for ways to stop the burgeoning crisis. The leaders arrive in Brussels about 6:15 p.m. local time and the final press conference is slated for 10 p.m.
The cost of insuring against losses on corporate bonds also rose. Contracts on the Markit iTraxx Crossover Index linked to 50 companies with mostly high-yield credit ratings increased as much as 74 basis points to 625, JPMorgan prices show, the highest since September. The index pared its advance to 611.
The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed as much as 29.5 basis points to 152.5, JPMorgan prices show, the highest since April 2009. It was trading at 139.
A basis point on a credit-default swap contract protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. An increase signals deterioration in perceptions of credit quality.
The extra yield investors demand to own investment grade corporate bonds rather than government debt jumped 21 basis points from last week to 174, the largest weekly rise in a year, according to Bank of America Merrill Lynch index data. The gauge has also increased 10 basis points from yesterday, the biggest one-day increase since October 2008.
--With assistance Sonja Cheung in London. Editors: Michael Shanahan, Andrew Reierson
To contact the reporter on this story: Abigail Moses in London at Amoses5@bloomberg.net