(BN) EU Weighs New Fund to Attract Outside Money to Fight Crisis (1)

Politician is someone that is having gains without any financial burden or risk of financial loss.

They should run the country like running a multi national company. No welfare, do things which are only profitable. Otherwise chuck them aside. If people are not happy and go on strike throw them in jail or encourage them to migrate. Tons of people are willing to come anyway. That's the country I am going whatever I earn is MINE! Minimal tax!

Bloomberg News, sent from my iPad.

EU Weighs New Fund to Attract Outside Money to Fight Crisis

Oct. 22 (Bloomberg) -- European finance ministers are considering setting up a fund to entice outside investors to buy troubled euro-area government bonds, as they struggled over how to tame the Greece-fueled debt crisis, said a person familiar with the matter.

The insured investment vehicle was one of two options being weighed, along with using the European Financial Stability Facility to boost the rescue firepower from 440 billion euros ($611 billion) currently, the person said.

"The principle that we leverage the EFSF with private money is being subscribed by everyone, but the level of success is uncertain," Dutch Finance Minister Jan Kees de Jager told reporters on the second day of crisis talks in Brussels. "How much can we raise, that is being looked at."

Europe's room for maneuver narrowed yesterday with a report that Greece's economy is deteriorating, piling on pressure to build a stronger anti-crisis firewall by a self-imposed Oct. 26 deadline. Measures being considered include a boost in bailout funds to 940 billion euros, deeper writedowns on Greek debt, and a demand that banks increase Tier 1 capital to 9 percent by mid-2012.

Stocks and the euro rallied yesterday on signs that warnings from global leaders including President Barack Obama have jolted European policy makers into action.

European Union office buildings, luxury hotels and a suburban Brussels flower park were the scenes today for a crisis-management convention involving national and EU-level leaders, finance ministers, central and commercial bankers and their aides.

Bank Recapitalization

All 27 EU finance ministers discussed bank recapitalizations in the morning, followed by the second session in two days of the 17 ministers from euro countries. Neither session yielded a formal announcement.

German Chancellor Angela Merkel and French President Nicolas Sarkozy meet privately in early evening before a later sitdown with European Central Bank President Jean-Claude Trichet, EU President Herman Van Rompuy, European Commission President Jose Barroso and EU Economic and Monetary Affairs Commissioner Olli Rehn. International Monetary Fund Managing Director Christine Lagarde will also be there.

The special purpose investment vehicle, the newest option on the table, would buy bonds in the primary and secondary markets, the person said. The purpose would be to attract outside investors and sovereign wealth funds, tapping reserves built up by countries like China.

EFSF Guarantees

A special-purpose vehicle was also discussed at this month's meeting of the Group of 20 finance ministers and central bankers to be run by the IMF as a way to channel loans from countries such as China and Brazil.

"To be able to do this we'd have to create a special purpose vehicle, which we have done in the past in other circumstances," Antonio Borges, the IMF's European department head, said Oct. 5. "It could be done, it's not to be excluded."

The other option also involves EFSF first-loss guarantees, yet without creating the special fund. It was backed by Germany and was the front-running option until this week, when France complained that it wouldn't be enough and sought to turn the fund into a bank that could borrow from the ECB.

Aid of 256 billion euros for Greece, Ireland and Portugal has failed to stabilize markets or prevent the turmoil from spreading to France, co-anchor with Germany of the European economy. French bank shares have tumbled on concern they are vulnerable to losses around Europe's periphery.

France's climbdown was signaled late yesterday by Finance Minister Francois Baroin. Tapping the central bank "is not a definitive point of discussion for us," he said. "What matters is what works."

ECB Opposition

Yesterday's start of the six-day summit marathon was overshadowed by the report by the EU Commission, ECB and IMF on Greece that highlighted the dilemmas of righting Greece's finances without sending shockwaves through the banking system.

Divisions over the handling of Greece were thrown into relief by the report, which was obtained by Bloomberg News. It contained a footnote that the ECB, which has lobbied against writedowns, "does not agree" with the inclusion of the bond- loss scenarios.

Officials are considering five scenarios to update a July agreement that foresaw 21 percent losses on Greek debt for private bondholders, people familiar with the deliberations said. They range from sticking with a voluntary swap to a so- called hard restructuring that forces investors to exchange Greek bonds for new ones at 50 percent of their value, the people said.

A deepening recession and delays in enacting budget cuts have raised Greece's financing needs by at least 20 billion euros since July, when euro leaders hammered out a 159 billion- euro package, the people said.

"We have to discuss with the private sector and see what is suitable," Spanish Economy Minister Elena Salgado told reporters. Ministers discussed investor losses of "more than 21 percent," she said.

The ministers yesterday signed off on the payout of its 5.8 billion-euro share of an 8 billion-euro loan to Greece. It's the sixth installment of a 110 billion-euro package awarded in May 2010.

To contact the reporters on this story: Tony Czuczka in Brussels at aczuczka@bloomberg.net Fred Pals in Brussels at fpals@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my Money Making Machine

(BN) Merkel Says Bigger Losses on Greek Debt a ‘Troubling Message’ to Investors

Bloomberg News, sent from my iPad.

Merkel Calls Greek Debt Losses 'Troubling Message' to Investors

Oct. 22 (Bloomberg) -- German Chancellor Angela Merkel said asking holders of Greek bonds to accept a cut in their value sends a "troubling message" to investors in European debt, which must be corrected to protect other states from suffering the same fate.

Moves at a summit in Brussels this weekend to persuade banks to accept cuts in the value of Greek debt must be accompanied by steps to protect other euro-region bonds, Merkel told Young Christian Democrats today in the German city of Braunschweig. "That's why we must make it very clear that what we're doing in Greece is because Greece has very particular problems," she said.

Investors assumed the euro region is "a secure terrain, only to find out that you can lose money here -- that's for all of us in Europe a troubling message," Merkel said. "We need to protect the other countries in the region -- that's why we're erecting this big protection umbrella."

European officials at the summit may try to persuade holders of Greek bonds to accept a 50 percent cut in their value to help restore Greece to fiscal health. Merkel may be apprehensive of crushing confidence in euro-region bonds before a comprehensive set of tools is agreed to bolster the region's bailout fund.

Voluntary Agreement

Germany wants a voluntary agreement with banks by an Oct. 26 summit, the second of two leaders' meetings in four days, a Merkel aide told reporters in Berlin yesterday. Banks agreed on a 21 percent writedown on their Greek holdings in the summer but now face a deeper loss amid signs Greece's economic and fiscal health has deteriorated.

Merkel and French President Nicolas Sarkozy spoke by phone today to discuss the euro crisis, according to a spokesman for Sarkozy. They are scheduled to meet tonight with other European leaders in Brussels, then at a summit tomorrow and at an Oct. 26 meeting to complete a plan to address the debt contagion.

Germany's accumulated debt has risen to 83 percent of gross domestic product this year from about 68 percent at the start of the international banking crisis in 2008, Merkel said, underlining an endemic problem in the euro region. "We must all consolidate spending to cut debt," she said.

To contact the reporter on this story: Brian Parkin in Braunschweig, Germany at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my Money Making Machine

(BN) Hours of EU Talks Yield ‘Limited’ Progress on Banks’ Role in Greek Crisis

Bloomberg News, sent from my iPad.

EU Talks Yield 'Limited' Progress on Banks' Role in Greek Crisis

Oct. 22 (Bloomberg) -- A 10-hour meeting in Brussels failed to yield a blueprint for banks' role in a revamped Greek rescue as European finance ministers haggled over what they called a "credible firewall" against fallout from deeper writedowns.

The ministers' meeting broke up at about 7 p.m. after reaching agreement that European banks may need about 100 billion euros ($139 billion) in capital after marking their sovereign-debt holdings to market values, according to a person familiar with the discussions. This amount is needed to reach a core tier 1 capital level of 9 percent based on a European Banking Authority test, said the person, who declined to be identified because discussions are private.

The struggle to get an accord on bank capital was just one piece of solving the two-year-old financial crisis. Governments also are pushing for deeper writedowns on banks' holdings of Greek debt, a step the investors are resisting.

"Discussions are making progress, albeit limited," Charles Dallara, managing director of the Institute of International Finance, the umbrella group for 450 of the world's biggest financial companies, said in a statement late today.

The negotiations were part of a six-day stretch of talks aimed at stopping contagion spreading to Spain and Italy as the turmoil pushes Greece closer to default, roils global markets and dents confidence in the survival of the 17-nation currency. Finance ministers now yield the conference tables after two days of talks to leaders, who meet tomorrow and on Oct. 26.

Pace of Talks

Negotiations among finance ministers from the 27-member European Union, including U.K. Chancellor of the Exchequer George Osborne, were repeatedly extended and the plenary discussion eventually broke off into small groups focused on particular issues after 4 p.m. Brussels time.

"We've had a 10-hour meeting, but we have made real progress and we have come to important decisions on strengthening European banks," Osborne said. "That is just one part of the package and obviously there's more work to do."

Vittorio Grilli, the top bureaucrat in Italy's Finance Ministry, was given the mission by euro-area finance ministers to negotiate deeper writedowns for Greek bondholders, Austria's Maria Fekter said. She declined to give details of the mandate for Grilli, head of the EU's Economic and Finance Committee and director general of the Italian Treasury.

Under the terms of a July 21 accord, the banks would take losses of 21 percent on their holdings of the nation's debt.

Plans now being considered involve an exchange with a 50 percent reduction in net present value, or upfront bond exchanges into either AAA rated bonds from the European Financial Stability Facility or new 30-year Greek government debt, according to people familiar with the matter. Upfront exchanges could involve a 50 percent discount off face value.

"We remain open to explore options on a voluntary approach built on a realistic outlook for the Greek economy and restoration of Greece's market access," Dallara said.

To contact the reporters on this story: Mark Deen in Brussels at markdeen@bloomberg.net Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my Money Making Machine

Bernanke's Latest 'Hints' Should Infuriate 280 Million Americans

Bernanke's Latest 'Hints' Should Infuriate 280 Million Americans:

Bruce Krasting, My Take On Financial Events

I find myself this morning hoping for the failure of the Federal Reserve.

This implies that I’m also hoping for a collapse in the equity markets and a severe recession.

Coupled with that, I want to see that the massive increase in money supply and the endless interventions of the Fed bring us a round of much higher inflation.

I want the Fed to fail so miserably that they are marginalized for the next twenty years. I want Bernanke fired. I want the Fed disgraced.

I’m not rooting for this to happen because I’m short assets. I’m not hoping for more pain for Americans. I don’t want to see a collapse in the economy.

And I certainly do not want to see more inflation. But I’m convinced that the only hope for the country is to shut this Fed down. For that to happen there must first be a collapse.

This morning we once again have the mouthpiece of Bernanke, Jon Hilsenrath at the WSJ, telling us what is coming next from the Fed. This is disgusting in so many ways.

Hilsenrath got a call from Benny yesterday. This time Ben Boy tipped his hand. A new LSAP (Large Scale Asset Purchase) plan is in the works. This time it will be directed at the Agency MBS (mortgage-backed securities market (a la QE #1).

What killed me is this quote from the WSJ:

"Fed officials believe their past purchase programs helped to lift stock markets, by driving investors from low-risk investments toward riskier investments."

So we’re back to that old argument. Ben wants the S&P higher. He wants savers to do the heavy lifting by taking more and more equity risk. We have seen this plan again and again the past three years. It hasn’t worked. It won’t work this time either.

I’ll get what I want (chaos), but it will take some time. The new LSAP can’t happen till at least December. But sometime in the 1st Q it will be coming. In the past, articles like the one today in the WSJ lead to expectations of new Fed actions. This put a bid under equities. But as soon as the new monetary stimulus is announced the markets sell on the news. This time will be no different.

Core inflation is running at 2%. This is a level that Bernanke has repeatedly said he would respect when it came to more monetary gas. That he has initiated operation twist in the face of this inflation was the first evidence that he was abandoning his promise. In my book, Bernanke has flat out loud lied to the public on this. He should be fired for that.

CPI-U is a closer measure of actual inflation. That number is steaming along at 3.9%. We now have a situation where basic inflation is running at 8Xs the rate of short-term inflation. That ratio has never existed before in history.

Money supply is exploding over the past half year. Up over 30% (See Zero Hedge story). Inflation is the only possible outcome.

I’m not insensitive to the plight of the unemployed in America. There are some 20 million people who are either out of work or underemployed. I wish that something could be pulled out a hat and make that problem go away.

But there is no magic solution. It’s time that Bernanke start to look at the other 280 million citizens that are paying the price for his actions. Ben is robbing savers. He is killing seniors who need predictable income (and should not be investing in risky equities). He is stealing from all of us with his push for more and more inflation as a cure to our problems.

I’m not happy with my position. I wish that I did not feel so strongly about this. But I’m convinced that the only thing that can actually help us out economically is that the Fed is completely marginalized. To have that happen there must be some big pain. Pain is exactly what we are going to get with Bernanke’s insane policies.

This post originally appeared at 'My Take On Financial Events'

Read more: http://brucekrasting.blogspot.com/2011/10/bernanke-ive-abandoned-dual-mandate.html#ixzz1bTdrkYa1

'via Blog this'

Kitco Exclusive News

URL : http://www.kitco.com/reports/KitcoNews20111020JW_PM.html

(Kitco News) - Comex December gold futures ended the U.S. day session sharply lower Thursday and hit a fresh two-week low. Gold buyers have stepped to the sidelines ahead of this weekend's European Union leader meeting in Brussels. The uncertainty surrounding the latest efforts by European officials to solve the EU debt and financial crisis have limited buying interest in the precious metals this week. A firmer U.S. dollar index as the trading session progressed Thursday also worked to pressure the precious metals markets. December gold last traded down $34.10 at $1,612.90 an ounce. Spot gold last traded down $30.60 an ounce at $1,612.50. December Comex silver last traded down $0.987 at $30.29 an ounce.

The gold market started out Thursday's trade with heavy Asian selling overnight and the market then stabilized at lower price levels in European trading. However, at mid-morning U.S. trading the yellow metal slumped further when the U.S. dollar index moved above unchanged and to its daily high.

Despite being perceived by many as a safe-haven asset, gold has recently failed to get upside traction from the uncertainty regarding the EU debt and financial crisis. That could change at any moment, due to the recent fickle day-to-day trading nature of gold. The market place is awaiting the weekend EU leaders summit in Brussels. While it's presently not clear what or if anything significant will come out of that meeting, the latest news reports at least say France's Sarkozy and Germany's Merkel will meet face to face during the weekend.

It's likely that if the EU crisis escalates—either by stepped-up violence in Greece or by inability of leaders to come up with substantive measures for dealing with the crisis—that the U.S. dollar would see fresh safe-haven demand. An escalation in the EU debt crisis in the coming days could also prompt fresh safe-haven demand for gold even if the U.S. dollar index also rallies, and even if gold has not recently rallied on the EU crisis up to this point.

Reports say physical demand for gold from India's festival season has been lackluster so far, but is expected to pick up.

The London P.M. gold fixing was $1,620.00 versus the previous P.M. fixing of $1,652.50.

Technically, December gold futures prices closed nearer the session low Thursday and hit a fresh two-week low. Gold bulls have faded this week. Bears now have the slight near-term technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at $1,705.40. Bears' next near-term downside price objective is closing prices below psychological support at $1,600.00. First resistance is seen at $1,625.00 and then at Thursday's high of $1,646.50. First support is seen at Thursday's low of $1,604.70 and then at $1,600.00. Wyckoff's Market Rating: 4.5.

December silver futures prices closed nearer the session low Thursday. Silver bears now have the slight near-term technical advantage. Silver bulls' next upside price objective is producing a close above strong technical resistance at $33.585 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of $28.435. First resistance is seen at $31.00 and then at Thursday's high of $31.375. Next support is seen at Thursday's low of $29.935 and then at $29.50. Wyckoff's Market Rating: 4.5.

December N.Y. copper closed down 1,880 points 306.90 cents Thursday. Prices closed nearer the session low and hit another fresh two-week low. Copper bears have the solid overall near-term technical advantage and gained more power Thursday as a 2.5-month-old downtrend is in place on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 350.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 299.40 cents. First resistance is seen at 310.00 cents and then at 315.00 cents. First support is seen at Thursday's low of 303.10 cents and then at 299.40 cents. Wyckoff's Market Rating: 1.5.

Follow me on Twitter! If you want daily, or nightly, up-to-the-second market analysis on gold and silver price action, then follow me on Twitter. It's free, too. My account is @jimwyckoff .

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

Sent from my Money Making Machine

(BN) EU Leaders Said to Consider Combining Rescue Funds to Deploy $1.3 Trillion

Bloomberg News, sent from my iPad.

EU Said to Weigh Combining Rescue Funds to Deploy $1.3 Trillion

Oct. 20 (Bloomberg) -- European governments may unleash as much as 940 billion euros ($1.3 trillion) to fight the debt crisis by combining the temporary and planned permanent rescue funds, two people familiar with the discussions said.

Negotiations over pairing the two funds accelerated this week after efforts to leverage the temporary fund ran into European Central Bank opposition and provoked a clash between Germany and France, said the people, who declined to be identified because a decision rests with political leaders.

The dual-use option is one way to break a deadlock that today prompted declines in weaker countries' bonds, European stocks and the euro and led the European Union to announce that an Oct. 23 summit will have to be followed by another three days later.

The 440 billion-euro European Financial Stability Facility has already spent or committed about 160 billion euros, including loans to Greece which will run for up to 30 years. It is slated to be replaced by the European Stability Mechanism, worth 500 billion euros, in mid-2013.

A consensus is emerging to start the permanent fund in mid-2012, the people said. During the transition between the two funds, euro-area governments originally agreed to cap the overall lending capacity at 500 billion euros, a figure deemed sufficient when Greece, Ireland and Portugal were the primary victims of the debt crisis.

Officials have discussed scrapping Article 34 of the ESM treaty, which sets the cap, the people said. A revised treaty is due to be signed by the end of November.

Faster startup of the ESM would also save money. It would cut the extra debt of donor countries by 38.5 billion euros, saving Germany 11.5 billion euros and France 8.6 billion euros, according to staff estimates reported by Bloomberg News on Sept. 24.

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/

Sent from my Money Making Machine