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Tuesday, December 13, 2011

US units exiting Iraq deployed in Jordan ready for Syrian attack

US 1st Brigade departs Iraq

As the US completes its final withdrawal from Iraq, American special forces troops have been diverted to positions in Jordan opposite a Syrian tank concentration building up across the kingdom's northern border, DEBKAfile's military and intelligence sources report.

As of last Thursday, as of last Thursday Dec. 8, military convoys, air transports and helicopters have been lifting US troops across the border from Iraq. They have been deployed in position to ward off a possible Syrian invasion in the light of President Bashar Assad's warning that he would set the entire Middle East on fire if the pressure on his regime to step down persisted.

Syria's other neighbors have taken precautions against this contingency but this is the first time US boots have hit the ground directly opposite Assad's army.

The incoming US contingents are disclosed by our sources as having been housed at the King Hussein Air Base of al-Mafraq, 10 kilometers from the Syrian border. US troops were sighted Monday, Dec. 12, building surveillance towers and army posts in the Jordanian villages of Albaej, Zubaydiah and al-Nahdah al-Houshah as well as near the Sarham dam of the Yarmoukh River which runs down the international border between Syria and Jordan.

Three months ago, the Syrian ruler cautioned Jordan's King Abdullah II to stop granting asylum to Syrian military deserters and allowing his country to serve as a conduit for pumping arms to the opposition.

The king was not deterred by this threat. Seen from Damascus, Jordan would be easier to take on militarily that either Turkey or Israel. Saturday, Dec. 12, Jordanian surveillance units confirmed that Syrian armored units were gathering opposite the Jordanian town of Bura Al Hariri.

Iraqi sources report that the American units came from the big Iraqi Ain al-Assad air base in the western province of Al Anbar opposite the Jordanian border. This base is in the process of evacuation as the US military drawdown in Iraq approaches completion. Most of the troops are flown to US bases in the Persian Gulf and Europe.

Iraqi Prime Minister Nouri al-Maliki, when he met US President Barack Obama at the White House Monday, approved the transfer of American contingents from Iraq to Jordan across their common border. Obama was therefore able to state after their talks: "We share the view that when the Syrian people are being killed or are unable to express themselves that's a problem. There's no disagreement there."

By this comment, the White House sought to stress that the Baghdad government is not letting Tehran twist its arms on the Syrian question.

Jewish prophecy suggests Messiah may be coming soon

Jewish prophecy suggests Messiah may be coming soon

A medieval Jewish prophecy regarding the coming of Israel's Messiah appears to correspond to the current situation in the Middle East, Israel National News reported at the weekend.

A piece of rabbinic literature known as the Yalkut Shimoni touches on many future scenarios both for the nation of Israel and for the world. In its section on the biblical Book of Isaiah and the prophecies contained therein, a rabbi cited by the Yalkut Shimoni states:

"In the year in which the Messiah-King appears, all the nations of the world are provoking each other. The King of Persia provokes an Arab king and the Arab king turns to Aram for advice."

That description closely mirrors Iran's defiant nuclear program and the tension it is creating with Arab states, particularly Saudi Arabia. But what happens next? According to the Yalkut Shimoni:

"The King of Persia goes back and destroys the entire world. And all the nations of the world are in panic and distress and they fall upon their faces and are seized with pains like those of a woman giving birth..."

A recent report by the International Atomic Energy Agency (IAEA) confirmed that Iran is working on nuclear weapons and that it could probably field such weapons in no more than a year's time. That means diplomatic efforts have failed, and barring a dangerous preemptive strike by Israel and/or America, Iran will obtain nuclear weapons.

Many in the West are now focusing their efforts on downplaying the dangers of a nuclear Iran. They argue that just as the Soviet Union did not use its nuclear weapons against the West, so, too, will Iran show restraint. But such commentaries fail to take into account the deeply ingrained religious ideology of those who rule Iran, who see themselves as the instruments of Allah in ushering in a new golden age for Islam.

What does all this mean for Israel, assuming the Yalkut Shimoni is accurate? The text reads:

"...and Israel are in panic and distress and asking 'where shall we go? Where shall we go?,' and He says to them 'my sons, do not fear; all that I have done, I have done only for you. Why are you afraid? Do not fear, your time of redemption has come, and the final redemption is not like the first redemption, because the first redemption was followed by sorrow and servitude under other kingdoms, but the final redemption is not followed by sorrow and servitude under other kingdoms."

Israel is indeed already showing signs of that panic and distress. Over the past month, Israel has been engaged in tense public debate over whether or not to strike Iran's nuclear facilities, and newspaper spreads have detailed what could happen to the Jewish state both if it attacks and if it does not. Meanwhile, Israel's Home Front Command has been practicing for a massive unconventional missile barrage on Tel Aviv.

It is not known who exactly compiled the Yalkut Shimoni, but the oldest surviving copy dates to around 1310 AD. Many of the rabbis quoted in the Yalkut Shimoni lived far earlier, during the Talmudic era in the first and second centuries AD.

Israel Today Magazine

Iran must chose between a bomb or survival: Israel

A senior Israeli cabinet minister on Monday said Iran must be forced to face an existential question over its nuclear drive: choose between getting an atomic bomb, or survival.

"We believe that in order to stop the Iranian military nuclear project, the regime in Tehran should face a dilemma -- whether to have a bomb or to survive," Strategic Affairs Minister Moshe Yaalon told reporters in Jerusalem.

Yaalon said however it was for the international community, rather than Israel, to apply what he called an "achievable" policy.

"We prefer that the international community led by the United States will bring about this dilemma in order to convince the regime to give up its military nuclear programme," he said, stressing the need for political isolation and economic sanctions aimed at the banking and oil sectors.

Israel and much of the international community fear that Iran's nuclear programme masks a drive for a weapons capability.

Tehran denies any such ambition and says the programme is for peaceful civilian energy and medical purposes only.

"Our policy is very clear -- by one way or another, the military nuclear project in Iran should be stopped," Yaalon said, indicating it "might be 12 months, might be 24 months" until Iran was able to reach a military nuclear capability.

Israel has pushed Washington and the European Union for tough sanctions against Tehran, but has repeatedly warned it would not allow Iran to obtain nuclear weapons.

Yaalon, a member of Israeli Prime Minister Benjamin Netanyahu's inner circle of eight ministers, also reiterated the line that while a military option was still on the table, as "the last resort."

He declined to comment on what was behind a deadly explosion at a Iranian military base near Tehran last month, which a top Israeli intelligence official reportedly said was a site where ground-to-ground missiles were being developed.

"They had some blow to the missiles project in the last incident in which a missile site absorbed a significant blow -- especially regarding long-range missiles," Yaalon said.

Media reports have suggested the blast was part of a covert effort by the United States, Israel and other states to disable Iran's nuclear and missile programmes.

Last month, the UN's International Atomic Energy Agency said it had "credible" information Iran was carrying out "activities relevant to the development of a nuclear explosive device."


'Iran to reverse-engineer, mass produce US drone'

Iran will reverse-engineer the US drone it captured on December 4, Iran's Press TV quoted a senior Iranian official as saying Sunday.

Parviz Sorouri, member of the Majlis Committee on National Security and Foreign Policy, said that his country will "mass produce" the drones in the near future. He also said that the Iranian version would be "of higher quality" than the original RQ-170 Sentinel, according to the Press TV report.

Iran: Price of crude would double if oil exports blocked

Souriri added that decryption of the drone was in its final stages and that soon Iran would be in posession of confidential US information.

The advanced US drone was reportedly flying a mission over western Afghanistan when it entered Iranian airspace and was intercepted.

“After it entered the eastern parts of the country, this aircraft fell into the trap of our armed forces and was downed in Iran with minimum damage,” said Revolutionary Guards Commander Ali Hajizadehhe upon the drone's capture December 4.

“With God’s help, we were able to bring down one of America’s most advanced planes... with minimal damage,” he told the semi-official FARS news agency.

Sourouri also claimed that Iran had developed advanced capabilities in countering electronic warfare, stating that that these contributed to the identification and distruption of the US electronic system.

Last Thursday Iran’s state television published pictures and a video of a drone the Iranian military claimed it had shot down with an American flag hanging from it.

The RQ-170 Sentinel, built by Lockheed Martin, was first employed by the US Air Force in December 2009. It has a full-motion video sensor that was used this year by US intelligence to monitor al-Qaida leader Osama bin Laden’s compound in Pakistan ahead of the raid that killed him.

Jerusalem Post

Abbas raises Palestinian flag at UNESCO

The Palestinian flag was raised at the United Nations Educational, Scientific and Cultural Organization (UNESCO) in Paris Tuesday, in a ceremony attended by Palestinian leader Mahmoud Abbas.

The Palestinian leader was also to hold talks with French President Nicolas Sarkozy.

The flag-raising ceremony at the UN Educational, Scientific and Cultural Organization takes place at noon local time. Abbas was scheduled to give a press conference afterwards.

UNESCO members voting by an overwhelming majority to admit Palestine as the agency's 195th member state on October 31.

The previous month Abbas had applied for full UN membership. That application is still pending at the UN Security Council.

The UNESCO vote triggered a funding crisis at the organization.

The United States, which opposed Palestinian membership, suspended its UNESCO funding, saying its laws barred it from funding a UN agency that made a Palestinian state a full member. Israel also suspended its contributions.


Belgium attack ,Gunman kills three, then himself, citizens running from scene

Netanyahu calls urgent meeting after rightists attack IDF base

Prime Minister Benjamin Netanyahu called an emergency discussion with Israeli defense officials on Tuesday, following an attack by right-wing activists on an IDF base in the West Bank.

"The situation is intolerable," Netanyahu said at the opening of the discussion. "We must take care of these rioters with a firm hand. We will not tolerate a situation in which IDF officers and soldiers are attacked and distracted from protecting Israeli citizens."

Early Tuesday morning, some 50 settlers and right-wing activistsentered a West Bank military base and threw rocks, burned tires, and vandalized military vehicles. An IDF officer was lightly wounded as a result of the rock-throwing.

In addition to the attack on the IDF base, right-wing activists blocked a main West Bank road and threw stones at passing Palestinian vehicles and IDF soldiers in the area.

Around 100 right-wing activists and settlers came to the area of the base before 50 of them entered the base, according to the IDF spokesman.

The youths were repelled by security forces. No arrests were made.

Netanyahu and Defense Minister Ehud Barak harshly condemned the attack, with Barak saying the actions carried "an air of self-made terrorism."

Netanyahu instructed Israeli security forces to act decisively against right-wing activists and Barak said he is determined to put a stop to such actions and instructed IDF forces to use all means necessary to find the perpetrators.

Moreover, prominent settler leaders as well as right-wing lawmakers also denounced the attack.

Yesha Council chairman Danny Dayan said the attack was an "inappropriate, shameful, and ungrateful" act and called on the perpetrators to turn themselves in.

Rightist group Im Tirtzu also condemned the attack and called to punish those responsible. "We call for the investigation and severe punishment of those people who adopted the ways of Arab terrorists and activists from the extreme left," a statement said.

Vice Prime Minister Moshe Ya’alon described Tuesday night’s events as “terrorism.”

“The violent acts last night in Judea and Samaria are acts of terror,” he said.

Meanwhile, MK Yaakov Katz, chairman of the National Union, also condemned the attack, saying “anyone who harms the IDF, its soldiers and officers, is not related to settlers, but in fact wants to harm them.”


Tweets, emails and other electronic communications can be considered "government documents" and must be preserved. The National Archives handles official government materials, while the Library of Congress' mandate is to deal with anything that may have long-term historical interest.

"We're basically in the same situation as the National Archives, only on a much larger scale," said Bill Lefurgy, digital initiatives program manager at the Library of Congress national digital information infrastructure and preservation program. "We tend to have a much larger perspective in terms of what we collect." He joined the Federal Drive Tuesday morning to talk about the library's digital mission. with Tom Temin and Amy Morris

But how much digital information are we talking about? How about all of the tweets from Twitter's archives?

"We have an agreement with Twitter where they have a bunch of servers with their historic archive of tweets, everything that was sent out and declared to be public," Lefurgy said. The archives don't contain tweets that users have protected, but everything else — billions and billions of tweets — are there."

Using new technical processes it has developed, Twitter is moving a large quantity of electronic data from one electronic source to another. "They've had to do some pretty nifty experimentation and invention to develop the tools and a process to be able to move all of that data over to us," Lefurgy said.

The Library of Congress has long been the repository of important, historical documents and the Twitter library, as a whole, is something historic in itself.
Black listed News

On the Titanic towards Economic and Democratic Disaster - Nigel Farage

Commerzbank Reportedly in Aid Talks With Government

Commerzbank and the German government have been in intense talks for several days over possible state aid for Germany's second-biggest lender, several people familiar with the matter told Reuters on Monday.

The aim is to reach an agreement in principle by the Christmas holidays, they said.


Little optimism for U.S. banks

NEW YORK — Even experienced Wall Street contrarians are eyeing the beaten-down U.S. financial sector warily. The sector is down 20% this year, by far the worst performer in the S&P 500.

The weakness has been so pervasive that the S&P, which is down 1.8% in 2011, would be up 3.3% on the year if financials were excluded, according to Standard & Poor’s Equity Research.

Most market participants agree these stocks are set for a rebound over the long term. They still appear too risky for short-term traders.

Arguably, this is when intrepid bargain hunters who buy into investor fear would be snapping up the beaten-down sector. But the problems dogging banks all year — from the debt crisis in Europe to the bleak outlook for profits — do not appear to be abating.

“Our job is to buy low and sell high. With financials, I’m still questioning, ’What is low?’” said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York.

The aversion to financials is great. Assets in bank-focused funds have dropped by 40% in the last six months, and the group is the only one of 10 S&P sectors trading at less than the value of the assets on their books.

Market participants cite various reasons for financials to decline further, including regulations, weakness in the housing sector and fears linked to Europe’s escalating debt crisis.

“Valuations are attractive, but there has to be a catalyst to move prices higher and I just don’t see that,” said Peter Coleman, director of research at JMP Securities in San Francisco.


In the last six months through the week ended Dec. 7, the assets under management (AUM) in the U.S. financial/banking funds sector have dropped a net US$8-billion, or nearly 40%, according to Thomson Reuters’ Lipper U.S. Fund Flows database.

Assets in the sector hit a peak in February 2011 of nearly US$23-billion in AUM. Since then, it’s been mostly outflows.

Investors have remained skittish due to worries about Europe. The predominant investing strategy this year has been to trade on macro events, specifically the eurozone debt crisis.

Whenever the outlook for Europe worsens, the banks are punished, particularly brokerages such as Morgan Stanley and Jefferies & Co, on fears of exposure to Europe. It has contributed to high volatility in the sector.

“The things that made these stocks cheap are still around. It’s still a risky business and you have no idea how bad business can get until they really get bad,” said Manley.

That’s contributed to making banks more undervalued than any other sector based on anticipated growth.

By StarMine’s current estimates, the financials are priced at 57% of their intrinsic value, compared with 72% for the S&P. Intrinsic value is where StarMine believes a stock should trade based on likely growth over the next decade.

“If you have a three to five year timeline you’ll look back at today’s prices and wish you bought in, but I don’t see anything to move them higher over the next 12 months and I just can’t ignore the headwinds,” said Coleman.

This is the reason the market capitalization of the bank sector is less than the value of the assets on their books. The combined market cap of the sector is US$1.68-trillion, compared with book value of US$1.95-trillion, according to StarMine.


Even the options market does not suggest optimism for the future. Last week open interest on the Select Sector Financial SPDR fund, which tracks the S&P financial sector, reached its highest since the financial crisis.

Put options outpaced call options by a ratio of 1.7, according to Interactive Brokers. Normally, the ratio is between 1 to 1.2.

When Bank of America shares fell to a fresh two-year low of US$5.03 last week, instead of betting on a rebound, option traders moved to hedge themselves against more declines.

“There’s a group of high-quality banks that have bottomed, but Bank of America isn’t one of them,” said Marty Mosby, large-cap bank analyst at Guggenheim Partners in Memphis, Tennessee.

Mosby listed Wells Fargo, US Bancorp and Bank of New York Mellon among those where “we haven’t yet reached an inflection point where their strong fundamentals will drag prices up in a risk-averse market.”

Among individual names, the put-to-call open interest ratio on Goldman Sachs GS.N was 1.11 while Citigroup’s ratio was 0.62.

“I think what you would find looking at trades on specific names is that there are traders positioning for a range of scenarios from recovery to disaster,” said Caitlin Duffy, equity options analyst at Interactive Brokers.

Even some of those who speak positively about the banks are staying cautious. BNY Mellon’s wealth management core portfolio recently moved to a slight “overweight” position on the group due to the bad news already priced into the sector.

“As a group, banks are fairly valued, however it’s understandable that we’re going to be cautious about moving to a large overweight at this time,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.

“This could turn out to be an outstanding entry point, but it depends on your risk appetite … there could be more risk than potential reward.”
Financial Post

Just a test, but Verizon's 'civil emergency' text message spells fear, confusion around N.J.


The unfamiliar noise from Jaclyn Boruch's cell phone startled her. She reflexively grabbed it. What she saw next scared her.

In bold red letters were the words "CMAS Alert" followed by "Civil Emergency in this area until 1:24 PM EST Take Shelter Now U.S. Govern."

The emergency alert message took up her entire screen. It locked her Android phone for several minutes.

"I didn’t know if it was something happening in the ocean, some happening on land or coming out of the sky. I had no idea so that’s why it was so frightening," said Boruch, 22, marketing director at the Boys and Girls Clubs of Monmouth County in Asbury Park.

The message, according to Verizon Wireless, was just a test. But the test caused panic and thousands of phone calls to various 911 dispatchers around Monmouth, Ocean and Middlesex counties.

It also sparked the State Police to launch an investigation until Verizon Wireless confirmed the alert, which went out at 12:27 p.m. was a test, according to spokesman Sgt. Brian Polite.

About two hours after the mass alert went out, Verizon apologized to its customers.

"This test message was not clearly identified as a test," Verizon spokesman David Samberg said in an e-mailed statement. "We apologize for any inconvenience or concern this message may have caused."

Ernest Fiest, Monroe Township’s emergency management officer, said Verizon told him the "CMAS Alert" was inadvertently transmitted as part of an internal test of the company’s communication system.

CMAS refers to the Commercial Mobile Alert System, a public safety initiative that involves FEMA, the Federal Communications Commission and subscribed wireless phone carriers.


'Bankers & bosses drive EU down Great Depression road'

Currency Wars: Restricting Gold and Silver Sales in France

A few people have asked me about the recent story concerning France banning cash sales of gold and silver. The story originated here but was picked up by quite a few other sites last week. I was waiting to get some additional information before I posted it as well.

This is different from the reports of limits specifically on gold and silver sales in Austria.

"According to the bank representatives and manager we spoke with, Austrian banks have now been ordered to restrict the sale of gold and silver bullion purchases and are limiting personal acquisitions of precious metals to 15,000€ (approximately $20,700 USD) at a time, or 11 ounces of gold at today’s prices."

Here is a link to the French law that has caused this latest discussion.

Tightening the Noose: France Bans Cash Sales of Gold/Silver over $600
By Mac Slavo
September 23rd, 2011

"...It looks like this trend of restricting the peoples’ ability to acquire assets of real monetary value is expanding. If a recent report from France is accurate, and based on the French governments official web site it looks like it is, then as of September 1, 2011, anyone attempting to sell or purchase ferrous or non-ferrous metals, which includes gold and silver, will be required to pay for their purchase via a credit card or bank wire transfer if it exceeds 450€ (~ $600 USD)...

...According to independent reports the law was passed to curb the illegal sale of stolen metals like copper, steel, etc. Given the rampant rise in thefts of these metals from telephone poles, construction sites and businesses here in the United States, we can certainly see this as a reasonable assessment for why the French passed this law.

However, the fact that no exception was made for gold and silver simply cannot be ignored. The new law effectively makes it illegal to purchase even a single Troy ounce of gold or around 18 ounces of silver in cash."

So I asked an aficionado of the metals in France what the straight story is on this, and here is the reply:

This law is basically saying that retail “metal” transaction OF ANY AMOUNT cannot be paid in cash. It further says that there is a limit to how much metals can be transacted via retail up to a limit set by decree (not yet specified).

Any retail transaction above 450EUR must be paid via bank transfer (ACH). This is encompassing all goods and services, not just metals.

I called a gold coin & bar dealer whom I know in Paris.

They told me that their legal counsel is awaiting for the final interpretation of this new law sometimes this week.

In the mean time, they still sell gold to retail customers and accept cash payments without requiring an ID for transactions up to 3000 EUR per day per person.

She warned me that it may change any time.

And so there you have it. If you wish to buy gold and silver unobtrusively in France you may wish to do so now. Otherwise be prepared to start using bank transfers including credit cards for all transactions in any metal, and all large transactions for anything it seems.

It is hard to accurately judge official motives in this sort of action. It *could be* to restrict activity in stolen copper as some have said. It may very well limit demand for the 500EUR note. lol.

But it could also be to limit the incentive for a run on the banks by making cash less useful to hold. It also helps to channel more transactions through the fee-taking banks, which is a tax on the real economy.

And it might very well be designed to restrict a run on the metals if the western currencies are devalued. I have heard elsewhere that this is tied to the revaluation of gold relative to other currencies which will be included in the new composition of the SDR. I have also heard that one or two countries will include gold in their official reserves and tie it to their currency at some official rate that is substantially higher than the current spot prices, setting up an interesting change in market structure.

In other words, this law has the flavor of currency controls to prevent a bank run in preparation for a devaluation. And given the current nature of their trade deficit, I think it is a bit naive to assume that the US will stand idly by and not participate in this coordinated devaluation as well. Even that stalwart of hard assets Switzerland had to give way and weaken its currency to preserve its exports.

Restricting and manipulating short term prices can only go so far. At some point it appears they must also try to regulate and restrict access by private individuals if there is a market dislocation and a change in status quo. I fully expect that all exchange defaults will be force settled in cash at an official rate. And the retail bullion inventory would likely disappear from the shelves overnight except at the most outrageous prices.

With Asia moving to more widely encourage private ownership of gold and silver, the international dynamics may become most interesting.

This reminds me somewhat of restrictions and laws regarding foreign currency in Moscow and other eastern European countries in the 1990's. There was a state dictated exchange rate, and all currency was to be done in an official exchange office.

The practical effect was that no one wanted roubles except grudgingly, and most non-official transactions were made at street rates in hard currencies like Swiss francs, Deutsche marks, or Dollars. And there were official shortages of many staples as the markets moved 'underground.'

My, how times have changed. But they will never learn.

24h gold

Euro zone fiscal pact fails to restore confidence

(Reuters) - A European summit deal to strengthen budget discipline in the euro zone failed to restore financial market confidence on Monday, forcing the European Central Bank to step in again gingerly.

The euro fell, stocks slid and borrowing costs for Italy and Spain rose as investors weighed the outcome of last week's summit that split the European Union, with Britain blocking treaty change and forcing euro zone countries to negotiate a fiscal accord outside the Union.

Friday's initial market rally quickly petered out due to legal uncertainty surrounding the new pact and the absence of an unlimited financial backstop for the single currency.

French President Nicolas Sarkozy said the legal basis of a new accord to enforce debt and deficit rules in the 17-nation euro area with quasi-automatic sanctions and intrusive powers to reject national budgets would be worked out before Christmas.

"In the next fortnight, we will put together the legal content of our agreement. The aim is to have a treaty by March," Sarkozy told newspaper Le Monde in an interview.

An EU diplomat said the first draft of the new treaty would be ready by early next week. Sarkozy said the aim was to have it ratified by all member states except Britain by June.

"You have to understand this is the birth of a different Europe - the Europe of the euro zone, in which the watchwords will be the convergence of economies, budget rules and fiscal policy," the French leader said.

Traders said the ECB intervened to buy short-term Italian debt after yields on Italian and Spanish debt spiked.

The central bank revealed on Monday it had slashed bond purchases in the week before the EU summit as it raised pressure on the bloc's leaders to act. It bought just 635 million euros in bonds in the week to December 9 compared to 3.66 billion the previous week.

ECB sources told Reuters on Friday purchases would remain limited, with no prospect of a "big bazooka" to shock markets.

Italian 5-year bond yields shot up above 7 percent, widely seen as a danger level while 10-year yields spiked above 6.8 percent and Spanish 10-year yields topped 6 percent.

Investors' appetite for short-term paper drove Italian one-year borrowing costs down just below 6 percent at an auction but yields remain uncomfortably high.


The major ratings agencies could make matters worse.

Sarkozy prepared French voters for a possible downgrade of the country's AAA credit rating but insisted he could cut the deficit without cutting salaries and pensions.

Moody's Investors Service said it intends to review the ratings of all 27 members of the European Union in the first quarter of 2012 after EU leaders offered "few new measures" to resolve the crisis at their summit on Friday.

Fitch Ratings said the summit failed to provide a "comprehensive" solution to the crisis, thus increasing short-term pressure on euro zone sovereign ratings.

Standard & Poor's, which warned last week of a possible downgrade of 15 euro zone countries shortly after the summit, still has to announce its decision.

But its chief European economist, Jean-Michel Six, told a business conference in Tel Aviv: "Time is running out and action is needed on both sides of the equation, on the fiscal and monetary side."

If some of the euro zone's AAA-rated members are downgraded, it would call into question the solidity of the euro zone's rescue fund, which would likely suffer a similar fate. Its permanent successor will not come on stream until mid-2012 at the earliest.

"We have a nice agreement: a fiscal compact, commitments to keep fiscal deficits down. But, actually, does any of this solve the euro crisis? No it doesn't," said Victoria Cadman, economist at Investec in London. "We still sit here searching for the big bazooka solution."

The euro area faces the next potential crunch point in mid-January when Italy, which has a debt mountain of 1.9 billion euros or 120 percent of its annual output, has to start issuing tens of billions of euros in bonds towards a 2012 total of 340 billion euros needed to roll over maturing debt.

Latvia's Biggest Bank Tries To Fight Off Deposit Run


RIGA, Latvia (AP) -- Latvia's largest bank scrambled Monday to head off a run among depositors who were gripped by rumors of the bank's imminent ruin.

Weekend rumors that Swedbank was facing legal and liquidity problems in Estonia and Sweden sent thousands of Latvians to bank machines on Sunday, with some lines reaching as many as 50 people.

Latvians are particularly sensitive to speculation about banks' health. Latvijas Krajbanka, the country's 10th largest bank, was nationalized last month after regulators discovered evidence of massive fraud allegedly carried out by the bank's former owner, Russian businessman Vladimir Antonov. Depositors were deprived of access to their funds for days.

And three years ago the country's second largest bank, Parex Bank, entered technical default and had to be taken over by the government, which in turn forced Latvia to appeal to international creditors and the European Union for a euro7.5 billion ($10.5 billion) bailout.

Prime Minister Valdis Dombrovskis told journalists that the rumors were spread maliciously with the intent to harm Latvia's banking system, the Baltic News Service reported. Interior Minister Rihards Kozlovskis said that police have opened a criminal investigation.

The rumors were contained to Latvia and did not spread to neighboring Estonia and Lithuania, which also have affiliates of the Swedish-controlled Swedbank.

Maris Mancinskis, Swedbank's Latvian chief, slammed the rumors as "absurd" and said in a statement that the bank was functioning normally and that all deposit holders would have full access to their money via bank machines and branch offices.

Mancinskis told LNT television that the rumors started last week and proliferated over the weekend, culminating in Sunday's rush to bank machines.

Kristine Jakubovska, a spokeswoman for Swedbank, said that depositors had withdrawn 24 million lats ($48 million) by Monday morning, or about 1.5 percent of all deposits in the bank, according to data of the Latvian Commercial Bank Association at the end of September.

Swedbank passed the European Banking Authority's most recent stress test, the results of which were announced in July.

The Latvian branch of Swedbank had assets of 3.8 billion lats ($7.4 billion) as of Sept. 30, or nearly one-fifth of the country's banking assets.

Yahoo News