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Tuesday, September 13, 2011

Atheist Ministers video

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Power up: Bushehr nuke plant boosts Iran

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Bank of America plans to cut about 30,000 jobs


Bank of America is to cut 30,000 jobs over the next few years as part of a cost-cutting programme.
The cuts represent about 10% of the company's workforce.
Bank of America wants to save about $5bn (£3.2bn) a year as it slims down the bank that was hit hard by the sub-prime mortgage crisis.
The cuts came on the day that President Barack Obama sent his $447bn jobs bill to Congress - his attempt to reduce the level of unemployment.
Bank of America is calling the cost-cutting programme Project New BAC, named after the code for its shares on the stock market.
It has also been selling off assets; last month it sold half of its 10% stake in China Construction Bank.
The shares initially rose, then fell back again amid disappointment at the lack of detail given about the cost-cutting plans. Late in the session they recovered to close up by 1.3%.
Last week, it was reported that Bank of America would be cutting 40,000 jobs and present a detailed turnaround plan.
The shares have lost about half their value this year as fears grow that it may have to issue more shares to meet new global capital requirements.
There was a brief recovery last month when it was announced that billionaire investor Warren Buffett had invested $5bn in the bank, but the shares have now fallen below the levels before that investment was made.


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Gold wars...paper strikes back

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Italian Yields Surge as Papandreou Struggles With Greece Default Concern



Italian bond yields surged at an auction today and Greek Prime Minister George Papandreou failed to reassure investors that his country can avert default as the euro region’s debt crisis worsened.

Italy sold 12-month bills today to yield 4.153 percent, up from 2.959 percent a month ago as demand fell. The yield on Greece’s two-year note surpassed 60 percent for the first time after the government said it would raise property taxes to meet the 2011 deficit goal in its European Union-led rescue.

Papandreou is struggling to convince investors that Europe’s most-indebted country can avoid a default that threatens to roil the euro region. That’s undermining European leaders’ efforts to stop contagion from spreading to Spain and Italy as splits emerge in the German government about how best to handle Greece.

“We have got to the stage when markets have lost an enormous amount of faith with the euro project as a whole,” said Marc Ostwald, strategist at Monument Securities Ltd. in London.

Papandreou’s pledges to meet the deficit target was undermined by data released today showing the central government’s budget gap widened 22 percent in the first eight months as austerity measures deepened a three-year recession. The government now expects the economy to shrink more than 5 percent this year, more than the 3.8 percent forecast by the European Commission.
Safe Haven

Rising concern about a Greek default prompted stock investors to dump shares of banks, the biggest holders of Greek debt, and buyers of fixed income to take refuge in the safest European bonds. The euro slipped to its lowest level against the yen since 2001. Investors are valuing European banks at levels not seen since the depth of the credit crunch that followed the collapse of Lehman Brothers Holdings Inc. and yields on Europe’s AAA-rated countries fell to record lows today.

BNP Paribas SA, Societe Generale SA and Credit Agricole SA plunged more than 9 percent today after two people with knowledge of the matter said Moody’s Investors Service may cut their ratings. The yield on Germany’s 10-year government bond fell as low as 1.701 percent.
Post-Lehman Lows

A Bloomberg index shows 46 lenders trading at 0.56 times book value, the cheapest since the post-Lehman lows of March 2009, signaling investors estimate their net assets are worth less than the companies claim and are demanding discounts for perceived risks.

The inability of European leaders to shore up Greece has allowed contagion to spread to Italyand pushed the yield on its 10-year government bonds to a euro-era record of 6.4 percent on Aug. 5, spurring the European Central Bank to buy the debt of the euro area’s third-largest economy. The Frankfurt-based ECB said today it settled 14 billion euros ($19 billion) of bond purchases in the week through Sept. 9, up from 13.3 billion euros in the previous week.

In return for ECB action, Prime Minister Silvio Berlusconi was forced to deliver a 54 billion euro ($73 billion) austerity package that aimed to eliminate the budget deficit in 2013 and begin to reduce the region’s second-biggest debt. The yield on the country’s 10-year bond rose 10 basis points to 5.51 percent today.
Bond Auction

Demand for the country’s bills declined at the auction, one day before Italy sells four different bonds tomorrow to finance a 14.4 billion-euro maturity on Sept. 15. Investors demanded 1.53 times the 7.5 billion euros of one-year bills today, down from 1.94 times a month ago.

After the sale the yield difference between Italy’s benchmark 10-year bond and comparable German bunds widened 16 basis points to 379, approaching the record high close of 389 basis points on Aug. 4. The yield difference between Greek and German 10-year bonds rose to a record 21.4 percentage points. Credit-default swaps on Greece, Italy, Spain and France all advanced to records.

German officials are trying to brace their banks for a potential Greek default and debating how to shore them up in the event Greece misses budget-cutting goals and is unable to get a further loan payout, three coalition officials said Sept. 9.

“The contingency plans to shore up German banks in case of a Greek default are adding to negative sentiment,” said Philip Gisdakis, a strategist at UniCredit SpA in Munich.
No Exit

The European Commission isn’t working on scenarios for Greek default either, spokesmanAmadeu Altafaj told reporters in Brussels today. Papandreou called on Greeks to show skeptics that the country would not be forced from the single currency.

Angela Merkel’s government lurched into open conflict over tackling the debt crisis, as the German chancellor called for Greece to get more time and her coalition allies suggested it may need to default and leave the euro area.

“To stabilize the euro in the short term there can’t be any taboos,” Philipp Roesler, the vice chancellor and economy minister who heads Merkel’s Free Democratic coalition partner, said in an op-ed published in Die Welt newspaper today and e- mailed by his party.

The cost of insuring European sovereign and bank debt rose to records today. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments soared 17 basis points to 353 at 2 p.m. in London. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 17 basis points to 317, according to JPMorgan Chase & Co.
Attacking ‘Vampires’

“The markets just won’t put up with this for much longer, so either this will push Greek to default, and the euro zone hasn’t done much from stopping that, or they will go like vampires and attack the next one,” said Ostwald.

French banks, among the biggest holders in Europe of Greek debt, came under pressure today with shares of Societe Generale (GLE) falling to the lowest since 1995. Bank of France Governor Christian Noyer said French banks are capable of facing any Greek situation and don’t have liquidity or solvency problems.

Moody’s placed the three French banks’ ratings on review in June, citing “the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels.” Cuts are likely as the review period concludes, said the people who declined to be identified because the matter is confidential.

Bloomberg

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20 Signs Of Imminent Financial Collapse In Europe



Are we on the verge of a massive financial collapse in Europe?  Rumors of an imminent default by Greece are flying around all over the place and Greek government officials are openly admitting that they are running out of money.  Without more bailout funds it is absolutely certain that Greece will soon default on their debts.  But German officials are threatening to hold up more bailout payments until the Greeks "do what they agreed to do".  The attitude in Germany is that the Greeks must now pay the price for going into so much debt.  Officials in the Greek government are becoming frustrated because the more austerity measures they implement, the more their economy shrinks.  As the economy shrinks, so do tax payments and the budget deficit gets even larger.  Meanwhile, hordes of very angry Greek citizens are violently protesting in the streets.  If Germany allows Greece to default, that is going to start financial dominoes tumbling around the globe and it is going to be a signal to the financial markets that there is a very real possibility that Portugal, Italy and Spain will be allowed to default as well.  Needless to say, all hell would break loose at that point.
So why is Greece so important?
Well, there are two reasons why Greece is so important.
Number one, major banks all over Europe are heavily invested in Greek debt.  Since many of those banks are also very highly leveraged, if they are forced to take huge losses on Greek debt it could wipe many of them out.
Secondly, if Greece defaults, it tells the markets that Portugal, Italy and Spain would likely not be rescued either.  It would suddenly become much, much more expensive for those countries to borrow money, which would make their already huge debt problems far worse.
If Italy or Spain were to go down, it would wipe out major banks all over the globe.
Recently, Paul Krugman of the New York Times summarized the scale of the problem the world financial system is now facing....
Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat.
Most Americans don't spend a lot of time thinking about the financial condition of Europe.
But they should.
Right now, the U.S. economy is really struggling to stay out of another recession.  If Europe has a financial meltdown, there is no way that the United States is going to be able to avoid another huge economic downturn.
If you think that things are bad now, just wait.  After the next major financial crisis what we are going through right now is going to look like a Sunday picnic.
The following are 20 signs of imminent financial collapse in Europe....
#1 The yield on 2 year Greek bonds is now over 60 percent.  The yield on 1 year Greek bonds is now over 110 percent.  Basically, world financial markets now fully expect that Greece will default.
#2 European bank stocks are getting absolutely killed once again today.  We have seen this happen time after time in the last few weeks.  What we are now witnessing is a clear trend.  Just like back in 2008, major banking stocks are leading the way down the financial toilet.
#3 The German government is now making preparations to bail out major German banks when Greece defaults.  Reportedly, the German government is telling banks and financial institutions to be prepared for a 50 percent "haircut" on Greek debt obligations.
#4 With thousands upon thousands of angry citizens protesting in the streets, the Greek government seems hesitant to fully implement the austerity measures that are being required of them.  But if Greece does not do what they are being told to do, Germany may withhold further aid.  German Finance Minister Wolfgang Schaeuble says that Greece is now "on a knife’s edge".
#5 Germany is increasingly taking a hard line with Greece, and the Greeks are feeling very pushed around by the Germans at this point.  Ambrose Evans-Pritchard made this point very eloquently in a recent article for the Telegraph....
Germany’s EU commissioner G√ľnther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been "Unconditional Capitulation", and "Terrorization of Greeks", and even “Fourth Reich”.
#6 Everyone knows that Greece simply cannot last much longer without continued bailouts.  John Mauldin explained why this is so in a recent article....
It is elementary school arithmetic. The Greek debt-to-GDP is currently at 140%. It will be close to 180% by year’s end (assuming someone gives them the money). The deficit is north of 15%. They simply cannot afford to make the interest payments. True market (not Eurozone-subsidized) interest rates on Greek short-term debt are close to 100%, as I read the press. Their long-term debt simply cannot be refinanced without Eurozone bailouts.
#7 The austerity measures that have already been implemented are causing the Greek economy to shrink rapidly.  Greek Finance Minister Evangelos Venizelos has announced that the Greek government is now projecting that the economy will shrink by 5.3% in 2011.
#8 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.
#9 Major banks in the U.S., in Japan and in Europe have a tremendous amount of exposure to Greek debt.  If they are forced to take major losses on Greek debt, quite a few major banks that are very highly leveraged could suddenly be in danger of being wiped out.
#10 If Greece goes down, Portugal could very well be next.  Ambrose Evans-Pritchard of the Telegraph explains it this way....
Yet to push Greece over the edge risks instant contagion to Portugal, which has higher levels of total debt, and an equally bad current account deficit near 9pc of GDP, and is just as unable to comply with Germany's austerity dictates in the long run. From there the chain-reaction into EMU's soft-core would be fast and furious.
#11 The yield on 2 year Portuguese bonds is now over 15 percent.  A year ago the yield on those bonds was about 4 percent.
#12 Portugal, Ireland and Italy now also have debt to GDP ratios that are well above 100%.
#13 Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about3 trillion euros combined.
#14 Major banks in the "healthy" areas of Europe could soon see their credit ratings downgraded.  For example, there are persistent rumors that Moody's is about to downgrade the credit ratings of several major French banks.
#15 Most major European banks are leveraged to the hilt and are massively exposed to sovereign debt.  Before it fell in 2008, Lehman Brothers was leveraged 31 to 1.  Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.
#16 The ECB is not going to be able to buy up debt from troubled eurozone members indefinitely.  The European Central Bank is already holding somewhere in the neighborhood of 444 billion euros of debt from the governments of Greece, Italy, Portugal, Ireland and Spain.  On Friday, Jurgen Stark of Germany resigned from the European Central Bank in protest over these reckless bond purchases.
#17 According to London-based think tank Open Europe, the European Central Bank is now massively overleveraged....
"Should the ECB see its assets fall by just 4.23pc in value . . . its entire capital base would be wiped out."
#18 The recent decision issued by the German Constitutional Court seems to have ruled out the establishment of any "permanent" bailout mechanism for the eurozone.  Just consider the following language from the decision....
"No permanent treaty mechanisms shall be established that leads to liability for the decisions of other states, especially if they entail incalculable consequences"
#19 Economist Nouriel Roubini is warning that without "massive stimulus" by the governments of the western world we are going to see a major financial collapse and we will find ourselves plunging into a depression....
“In the short term, we need to do massive stimulus; otherwise, there's going to be another Great Depression”
#20 German Economy Minister Philipp Roesler is warning that "an orderly default" for Greece is not "off the table"....
''To stabilize the euro, we must not take anything off the table in the short run. That includes, as a worst-case scenario, an orderly default for Greece if the necessary instruments for it are available.''
Right now, Greece is caught in a death spiral.  The more austerity measures they implement, the more their economy slows down.  The more their economy slows down, the more their tax revenues go down.  The more their tax revenues go down, the worse their debt problems become.
Greece could end up leaving the euro, but that would make their economic problems far, far worse and it would be very damaging to the rest of the eurozone as well.
Quite a few politicians in Europe are touting a "United States of Europe" as the ultimate solution to these problems, but right now the citizens of the eurozone are overwhelming against deeper economic integration.
Plus, giving the EU even more power would mean an even greater loss of national sovereignty for the people of Europe.
That would not be a good thing.
So what we are stuck with right now is the status quo.  But the current state of affairs cannot last much longer.  Germany is getting sick and tired of giving out bailouts and nations such as Greece are getting sick and tired of the austerity measures that are being forced upon them.
At some point, something is going to snap.  When that happens, world financial markets are going to respond with a mixture of panic and fear.  Credit markets will freeze up because nobody will be able to tell who is stable and who is about to collapse.  Dominoes will start to fall and quite a few major financial institutions will be wiped out.  Governments around the world will have to figure out who they want to bail out and who they don't want to bail out.
It will be a giant mess.
For decades, the governments of the western world have been warned that they were getting into way too much debt.
For decades, the major banks and the big financial institutions were warned that they were becoming way too leveraged and were taking far too many risks.
Well, nobody listened.
So now we get to watch a global financial nightmare play out in slow motion.
Grab some popcorn and get ready.  It is going to be quite a show.

Economic Collapse
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Italian government 'in bond buying talks with China'

Prime Minister Silvio Berlusconi
China's largest sovereign wealth fund is considering buying Italian assets, according to a report in the Financial Times.
China Investment Corporation (CIC) and Italian officials have held meetings in the last month, the report said.
CIC is wholly owned by the Chinese government and has an estimated $400bn (£250bn) in assets.
The report comes at a time when the cost of borrowing for the Italian government has reached record highs.
"When you introduce a large buyer like China, it brings down the interest rate," Mark Young of Fitch Ratings told the BBC.
"They can then fund their economic growth more easily," he added.
Strategic stakes?
The FT reported that Lou Jiwei, the chairman of China Investment Corporation, had met Italian finance minister Giulio Tremonti and other officials in Rome last week.
It added that Italian officials had visited Beijing the week before, and negotiations had also taken place in August.

Start Quote

It is a natural consequence of creditor and debtor nations, one supporting the other”
Mark YoungFitch Ratings
As well as buying bonds, the FT said the talks also covered investments in "strategic" Italian companies.
According to the newspaper, Italian officials said further negotiations were expected to take place soon.
The report caused US stocks to rebound in late afternoon trading on Monday, cutting their earlier losses.
However, on Tuesday Asian markets had a mixed opening because many analysts questioned whether a purchase of Italian assets by China would do anything to resolve Europe's debt problems.
They said there was still a danger the crisis would spread, not least because Greece was still at risk of defaulting on its debt holdings.
"Europe is not just lurching from one crisis to another. It is lurching into a new one before the previous one is solved," said Makoto Noji of SMBC Nikko Securities.
Creditor vs debtor
Italy has a national debt of 120% of gross domestic product (GDP) and accounts for 23% of all eurozone sovereign debt.
According to the International Monetary Fund, it will need to raise funds equalling as much as 20% of its GDP in 2012 to refinance its debt.
On the other hand, China has been sitting on huge piles of cash, with foreign exchange reserves in excess of $3tn.
Analysts said given its deep pockets, it wasn't a surprise that countries were seeking China's help.
"It is a natural consequence of creditor and debtor nations, one supporting the other," Fitch ratings' Mr Young said.

BBC
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