ZeroHedge.com - Australian Banks Given One Week To Prepare For European "Meltdown"

ZeroHedge.com

12/15/2011 

http://www.zerohedge.com/news/australian-banks-given-one-week-prepare-european-meltdown

Whereas previously we had heard extensive horror stories about banks being told to prepare for the end of the world in case the European summit (the latest and greatest one from last Friday which was supposed to find a cure for cancer among other things) failed, and even went so far as to read about preparations for trading in the drachma on a when issued basis, once the summit passed (and it was clear that media posturing would do nothing to fix what has already been a failure and it would be best to remove the threats of "reality" from the public's attention) all such "end of the world" speculation promptly disappeared - after all why remind people that things are now worse than ever.  Until today. According to the Australian Finance Review (link - subscription required), banks down under "have been given 1 week by regulators to stress test how they would handle a spike in joblessness, plunge in home prices spurred by EU debt crisis." Aka a European "Meltdown." And since we don't have immediate access to the article, we leave it to Bloomberg First Word to describe for us what the article says:

• Australian Prudential Regulation Authority envision worst-case scenario of 12% unemployment, 30% drop in house prices, 40% fall in commercial property values, AFR says
• Banks will assume that write-offs, other mitigation measures are unavailable; later stress tests might allow for such steps, AFR says
• Australia’s banks have A$87.2b of exposure to Europe, or 2.7% of assets, with A$74.6b of it mostly tied to bank borrowers in France, Germany, Netherlands, AFR says, citing RBA statistics

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John Cavanagh - Why the 99 Percent Are Protesting at the World Bank Today

Published on Thursday, December 15, 2011 by IPS Blog

http://www.ips-dc.org/blog/why_the_99_percent_are_protesting_at_the_world_bank_today

by John Cavanagh

Undemocratic provisions in treaties enable corporations to sue governments in international tribunals over environmental, health, and other measures foreign countries take to protect the public.

Today I will join leaders from the labor, environmental, faith, and human rights communities to protest in front of the World Bank.

Why?

We'll be there to stand up for the democratic rights of people everywhere in the face of ever-expanding corporate rule.

There's a set of people from the 1 percent who don't think we should be there. Twenty-one years ago, those people got together just two blocks north of the World Bank, in the K Street corporate lobbyist corridor, and crafted a set of corporate rights that they then inserted in the North American Free Trade Agreement (NAFTA).

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247WallStreet.com - Fitch Downgrades The Entire World

247WallStreet.com: December 12, 2011 

http://247wallst.com/2011/12/12/fitch-downgrades-the-entire-world/#ixzz1gXOsXwk5

Research firm Fitch downgraded its forecasts for the growth rate of almost every region in the world. It is yet another warning that the slowdown in the EU economy has begun to spread rapidly to other regions.

The firm wrote in a new note:

In its latest quarterly Global Economic Outlook (GEO) Fitch Ratings forecasts the economic growth of major advanced economies (MAE) to slow to 1.3% in 2011 and remain weak at 1.2% in 2012, followed by only a modest acceleration to 1.9% in 2013. 

Compared with the previous GEO in October, Fitch has revised down its GDP forecasts over the entire forecast horizon to 2013. The agency forecasts global growth, based on market exchange rates, at 2.4% for 2012 and 3.0% in 2013, compared with 2.7% and 3.1% previously.

According to Fitch, the American economy will not escape the downdraft:

The recovery in the US will remain lacklustre in the short run with stronger growth momentum expected from H212 onwards, weighed down by the continued drag from the housing market as well as fiscal tightening equivalent to around 1% of GDP. In line with weak GDP growth in the EZ, the economic outlook has also weakened in the UK, where Fitch has revised down its GDP growth forecasts again to just 0.7% in 2012 and 2.0% in 2013.

Read more: Fitch Downgrades The Entire World - 24/7 Wall St. http://247wallst.com/2011/12/12/fitch-downgrades-the-entire-world/#ixzz1gXOsXwk5

Carmel Crimmins and Gavin Jones - Analysis: Europe's austerity zeal risks killing the patient

Published on Wednesday, December 14, 2011 by Reuters

http://www.reuters.com/article/2011/12/14/us-europe-austerity-idUSTRE7BD0OY20111214

by Carmel Crimmins and Gavin Jones

Europe's "no pain no gain" attitude to solving its sovereign crisis risks exacerbating the bloc's problems, choking off the very growth needed to raise the money to pay down the debt.

From Athens to Dublin, and almost everywhere in between, administrations are imposing wave after wave of spending cuts and tax increases to persuade investors they are serious about improving their public finances and persuade them to start buying euro zone sovereign debt again. But the austerity zeal risks tipping the continent back into recession and a downward spiral of austerity as pitiful growth prospects undermine budgetary targets and ramp up debt burdens, meaning further austerity is required. From Athens to Dublin, and almost everywhere in between, administrations are imposing wave after wave of spending cuts and tax increases to persuade investors they are serious about improving their public finances and persuade them to start buying euro zone sovereign debt again.

The austerity zeal risks tipping the continent back into recession and a downward spiral of austerity as pitiful growth prospects undermine budgetary targets and ramp up debt burdens, meaning further austerity is required.

"The expansionary fiscal contraction story says that you cut, you show you are serious about cutting and then the confidence fairy will come along and she will start pulling in private investment," said Stephen Kinsella, professor of economics at the University of Limerick.

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Sam Pizzigati - Presenting America’s Ten Greediest of 2011

http://toomuchonline.org/presenting-america%E2%80%99s-ten-greediest-of-2011/

Published on Monday, December 12, 2011 by Too Much

One puts on football pageants. Another makes mega millions on a virtual farm. They all remind us how much needs to change, economically and politically, in 2012 and beyond.

by Sam Pizzigati

The greediest among us in 2011 probably haven’t been any greedier, as a gang, than any greedy of the recent past. They just seem that way.  

Why so? We have a whole new frame of reference. This fall’s sudden — and exhilarating — rise of the Occupy movement has helped us remember what we, as a society, had sadly forgotten: that decent, smart societies never let the few grab away rewards that ought to be shared among the many.

Who grabbed most greedily in 2011? We have no statistical yardstick to help us make that call. You don’t, after all, have to make a million to rate as an all-star greedster. You do have to be ruthless, self-absorbed, and grossly insensitive.

That description, we’ll admit, fits far more folks than our ten dis-honorees below. Maybe next year, we can hope, we’ll have a harder time filling out our top ten.

10/ Paul Hoolahan: Skimming the Sugar

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Michael Hudson - Europe’s Deadly Transition From Social Democracy to Oligarchy

WEEKEND EDITION DECEMBER 9-11, 2011

HTTP://WWW.COUNTERPUNCH.ORG/2011/12/09/EUROPE’S-DEADLY-TRANSITION-FROM-SOCIAL-DEMOCRACY-TO-OLIGARCHY/

Welcome to a new era of polarization as financial oligarchy replaces democratic government and reduces populations to debt peonage

by MICHAEL HUDSON

The easiest way to understand Europe’s financial crisis is to look at the solutions being proposed to resolve it. They are a banker’s dream, a grab bag of giveaways that few voters would be likely to approve in a democratic referendum. Bank strategists learned not to risk submitting their plans to democratic vote after Icelanders twice refused in 2010-11 to approve their government’s capitulation to pay Britain and the Netherlands for losses run up by badly regulated Icelandic banks operating abroad. Lacking such a referendum, mass demonstrations were the only way for Greek voters to register their opposition to the €50 billion in privatization sell-offs demanded by the European Central Bank (ECB) in autumn 2011.

The problem is that Greece lacks the ready money to redeem its debts and pay the interest charges. The ECB is demanding that it sell off public assets – land, water and sewer systems, ports and other assets in the public domain, and also cut back pensions and other payments to its population. The bottom 99% understandably are angry to be informed that the wealthiest layer of the population  is largely responsible for the budget shortfall by stashing away a reported €45 billion of funds stashed away in Swiss banks alone. The idea of normal wage-earners being obliged to forfeit their pensions to pay for tax evaders – and for the general un-taxing of wealth since the regime of the colonels – makes most people understandably angry. For the ECB, EU and IMF “troika” to say that whatever the wealthy take, steal or evade paying must be made up by the population at large is not a politically neutral position. It comes down hard on the side of wealth that has been unfairly taken.

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Joseph Stiglitz - What Can Save the Euro?

Monday 5 December 2011

by: Joseph E. Stiglitz, Project Syndicate [3] | Op-Ed

http://www.truth-out.org/what-can-save-euro/1323441211

New York - Just when it seemed that things couldn’t get worse, it appears that they have. Even some of the ostensibly “responsible” members of the eurozone are facing higher interest rates. Economists on both sides of the Atlantic are now discussing not just whether the euro will survive, but how to ensure that its demise causes the least turmoil possible.

It is increasingly evident that Europe’s political leaders, for all their commitment to the euro’s survival, do not have a good grasp of what is required to make the single currency work. The prevailing view when the euro was established was that all that was required was fiscal discipline – no country’s fiscal deficit or public debt, relative to GDP, should be too large. But Ireland and Spain had budget surpluses and low debt before the crisis, which quickly turned into large deficits and high debt. So now European leaders say that it is the current-account deficits of the eurozone’s member countries that must be kept in check.

In that case, it seems curious that, as the crisis continues, the safe haven for global investors is the United States, which has had an enormous current-account deficit for years. So, how will the European Union distinguish between “good” current-account deficits – a government creates a favorable business climate, generating inflows of foreign direct investment – and “bad” current-account deficits? Preventing bad current-account deficits would require far greater intervention in the private sector than the neoliberal and single-market doctrines that were fashionable at the euro’s founding would imply.

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AD McKenzie - In Crisis, The Rich Get Richer

Published on Wednesday, December 7, 2011 by Inter Press Service

http://www.commondreams.org/headline/2011/12/07-1

World Inequality Rises Following Failed Economics

by A.D. McKenzie

PARIS - Mansions on one side of the road, and slums on the other. People queuing for food rations, while others drive by in shiny Land Rovers with tinted windows.

These are just some of the sights that have confronted Danielle Nierenberg as she traveled through 30 countries to supervise the Worldwatch Institute’s report titled ‘State of the World 2011: Innovations that Nourish the Planet’.

"You can see the stark differences within a single country very easily, and you see it every day," she told IPS. "In Africa it doesn’t look like the recession has affected the very wealthy. It has affected poor people the most."

Nierenberg was in Paris this week to launch ‘Comment Nourir 7 Milliards d’Hommes’ (How to Feed 7 Billion People), the French edition of the Washington-based think tank’s report.

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Gail Tverberg - Saudi Arabia - Headed For A Downfall?

By Gail Tverberg

06 December, 2011
ASPO-USA

http://countercurrents.org/tverberg061211.htm

Saudi Arabia recently announced that it had halted a $100 billion oil production expansion plan to raise capacity to 15 million barrels a day by 2020. At this point, the country claims to have capacity of 12 million barrels a day. What does this mean for its future? Let’s take a look behind the figures.

The figure shows that Saudi Arabia has not been increasing its production for many years. At the same time, the country’s oil consumption has been rising rapidly. The combination means that oil exports have already started declining.

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Ian Traynor - Radical Eurozone Shakeup Could See Brussels Get Austerity Powers

Published on Tuesday, December 6, 2011 by The Guardian/UK

http://www.guardian.co.uk/business/2011/dec/06/eurozone-shakeup-voting-rights-confidential-paper

Confidential paper from council president Herman Van Rompuy proposes empowering the commission to impose austerity

by Ian Traynor

The European commission could be empowered to impose austerity measures on eurozone countries that are being bailed out, usurping the functions of government in countries such as Greece, Ireland, or Portugal.

Bailed-out countries could also be stripped of their voting rights in the European Union, under radical proposals that have been circulating at the highest level in Brussels before this week's crucial EU summit on the sovereign debt crisis.

A confidential paper for EU leaders by the EU council president, Herman Van Rompuy, who will chair the summit on Thursday and Friday, said eurobonds or the pooling of eurozone debt would be a powerful tool in resolving the crisis, despite fierce German resistance to the idea.

It called for "more intrusive control of national budgetary policies by the EU" and laid out various options for enforcing fiscal discipline supra-nationally.

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