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Tuesday, January 17, 2012

Farage: We Don't Want a Global Superpower EU, Mr President Schulz

Israel on edge over Iran

25 Volcanoes Showing Abnormal Activity

Padang, West Sumatra. Twenty-five volcanoes in Indonesia are now showing abnormal activity or have been put on alert or watch status, presidential special aide Andi Arief said here on Saturday.

“According to official data, 25 volcanoes are now under alert or watch status and they must be given priority with regard to disaster mitigation planning at district or city levels,” he said at a workshop on journalists’ role in disaster management.

He said in West Sumatra there were two volcanoes that need to be closely watched, namely Mount Marapi and Mount Talang, as they are still under alert status.

Mount Marapi is located in Agam and Tanahdatar districts and rises 2891 meters above sea level, and Mount Talang (2597 meters above sea level) in Solok district was located around 40 kilometers from the provincial capital Padang.

Apart from the two volcanoes, the government and regional disaster management agencies were also giving priority attention to Mount Papandayan in West Java, Mount Karangetan and Lokon in North Sulawesi, Mount Ijen in East Java, Mount Gamalama in North Maluku, Mount Krakatau in Banten and Lampung and Mount Lewoloto in East Nusa Tenggara.

He said “it is not impossible that volcanoes that are now still normal could change to become abnormal due to earthquakes that have happened to trigger magma in the mountains to increase their activity, and therefore alertness and readiness of the people must continue to be maintained.”

Andi said earthquakes below five on the Richter Scale could trigger magma in the volcanoes to rise and so people must not only be alert over big but also small tremors.

The 4.4 magnitude earthquake like the one in Singkawang, West Kalimantan, is one of the examples, where people had never predicted before that it could happen there, he said.

“The small magnitude quake is now being studied by researchers with regard to minimizing the damage in case an eruption happens in the country as there are a lot of volcanoes in Indonesia,” he said.


France: Iran violating arms embargo with Syria shipments

Iran has repeatedly violated a UN arms embargo with exports to protest-hit Syria, the French foreign ministry said on Monday, citing a UN group of experts.

"The UN panel of experts on Iran has identified and informed the Security Council of several violations of the embargo on arms to or from Iran set up by... the United Nations Security Council," said spokesperson Romain Nadal. "These arms deliveries are illegal and deeply shocking because they benefit a regime that has chosen a kind of repression that the UN rights council has repeatedly said constitutes 'crimes against humanity'," he said.


Israel Websites Hit Again in Cyber Attack

Computer hackers disrupted the websites of Israel's stock exchange and the national airline El Al, the latest attacks in what Israeli officials describe as “cyber-terrorism.”

The cyber attacks began 10 days ago when a hacker claiming to be from Saudi Arabia posted the numbers and personal details of more than 20,000 Israeli credit card holders online. He said the aim is to harm Israel and he called on fellow hackers to follow suit.

Yoni Shemesh, the head computer technician at the Tel Aviv Stock Exchange, said the facility was on high alert for cyber attacks because of perceived threats from Arab and pro-Palestinian hackers.

Shemesh told Israel Radio that the website which provides data online was disrupted, but that the hackers were not able to penetrate the stock exchange itself and trading was not affected.

Eventhough Israel is one of the most advanced high-tech countries in the world, the attacks have exposed a vulnerability to cyber-warfare. Technology Minister Daniel Hershkowitz says it is a dangerous situation and Israel is taking steps to deal with it.

“Everyone has to prepare for such attacks, and indeed the State of Israel has established a special cyber organization to prepare for such things,” he said.

Israel fears that hackers could target strategic sites such as water, telephone and electricity facilities or the international airport, posing a serious threat to national security.


Kiwi company recognises face value

A kiwi construction and civil infrastructure firm has implemented new facial recognition technology to solve a messy problem in its staff management routines.

The company, Total Infrastructure Limited (TIL), was keen to implement a solution to record staff clocking in and out, in order to keep track of attendance and manage wage costs. However, biometric devices that use finger scanning rely on a clean fingerprint, something that isn’t always possible in the dirty workshop environment.

The FaceClock system is able to scan each employee’s face in just a moment, verifying their identity almost instantly by matching it up at more than sixty main points. It is immune to weather extremes so can be used in hot, humid or cold conditions, and can be linked to door access for security environments.

The New Zealand distributor of the technology, Time Target, says it is used around the world across multiple industries, with clients including Microsoft, Nokia, Compaq, Toshiba and Sony Ericsson.

Information from FaceClock can be used in rostering and award software, and sent to payroll to eliminate staff data entry errors.


Keiser Report: Economics of Suicide

Bob Chapman on the best countries to run to

They Are Actually Going To Let Greece Default!

I wish that I had an "aha moment" to share with you today, but instead all I have is an "ack moment" to share.  As I was analyzing all of the info coming out of Europe in recent days, I came to the following realization: "Ack! They are actually going to let Greece default!"  The only question is whether it is going to be an orderly default or a disorderly default.  Of course the EU (led by Germany) could save Greece financially if it wanted to.  But Germany has decided against that course of action.  Many in the German government are sick and tired of pouring bailouts into Greece and then watching Greek politicians fail to fully implement the austerity measures that were agreed upon.  At this point a lot of German politicians are talking as if a Greek default is a foregone conclusion.   For example, Michael Fuchs, the deputy leader of Angela Merkel's political party, recently made the following statement: "I don't think that Greece, in its current condition, can be saved."  But that is not entirely accurate.  Greece could be saved, but the Germans don't want to make the deep financial sacrifices necessary to save Greece.  So instead they are going to let Greece default.
Many prominent voices in the financial world that have been watching all of this play out are now openly declaring the Greece is about to default.  Moritz Kraemer, the head of S&P's European sovereign ratings unit, made the following statement on Bloomberg Television on Monday: "Greece will default very shortly. Whether there will be a solution at the end of the current rocky negotiations I cannot say."
You might want to go back and read that again.
One of the top officials at one of the top credit rating agencies in the world publicly declared on television that "Greece will default very shortly."
That should chill you to your bones.
If the EU allows Greece to default, that would be a signal to investors that the EU would allow Italy, Spain and Portugal to all default someday too.
Confidence in the bonds of those countries would disintegrate and bond yields would go through the roof.
Right now, confidence in government debt is one of the things holding up the fragile global financial system.  Governments must be able to borrow gigantic piles of very cheap money for the system to keep going, and once confidence is gone it is going to be incredibly difficult to rebuild it.
That is why a Greek default (whether orderly or disorderly) is so dangerous.  Investors all over the world would be wondering who is next.
At the end of last week, negotiations between the Greek government and private holders of Greek debt broke down.  Negotiations are scheduled to resume Wednesday, and there is a lot riding on them.
The Greek government desperately needs private bondholders to agree to accept a "voluntary haircut" of 50% or more.  Not that such a "haircut" will enable the Greek government to avoid a default.  It would just enable them to kick the can down the road a little farther.
But if Greece is able to get a 50% haircut from private investors, then why shouldn't Italy, Spain, Portugal and Ireland all get one?
Once you start playing the haircut game, it is hard to stop it and it rapidly erodes confidence in the financial system.
This point was beautifully made in a recent article by John Mauldin....
So our problem country goes to its lenders and says, "We think you should share our pain. We are only going to pay you back 50% of what we owe you, and you must let us pay a 4% interest rate and pay you over a longer period. We think we can do that. Oh, and give us some more money in the meantime. And if you refuse, we won't pay you anything and you will all have a banking crisis. Thanks for everything."
The difficult is that if our problem country A gets to cut its debt by 50%, what about problem countries B, C, and D? Do they get the same deal? Why would voters in one country expect any less, if you agree to such terms for the first country?
But if Greece is able to negotiate an "orderly default" with private bondholders, that would be a lot better than a "disorderly default".  A disorderly default would cause mass panic throughout the entire global financial system.
One key moment is coming up in March.  In March, 14 billion euros of Greek debt is scheduled to come due.  If Greece does not receive the next scheduled bailout payment, Greece would default at that time.
But the EU, the ECB and the IMF are not sure they want to give Greece any more money.  There are a whole host of austerity measures that the Greek government agreed to that they have not implemented.
Since the Greeks have not fully honored their side of the deal, the "troika" is considering cutting off financial aid.  The following comes from the New York Times....
Officials from the so-called troika of foreign lenders to Greece — the European Central Bank, European Union and International Monetary Fund — have come to believe that the country has neither the ability nor the will to carry out the broad economic reforms it has promised in exchange for aid, people familiar with the talks say, and they say they are even prepared to withhold the next installment of aid in March.
But the austerity measures that Greece has implemented so far have pushed the Greek economy into a full-blown depression.  Greece is experiencing a complete and total economic collapse at this point.  The following comes from the New York Times....
Greece’s dire economic condition can hardly be overstated. After two years of tax increases and wage cuts, Greek civil servants have seen their income shrink by 40 percent since 2010, and private-sector workers have suffered as well. More than $75 billion has left the country as people move their savings abroad. Some 68,000 businesses closed in 2010, and another 53,000 — out of 300,000 still active — are said to be close to bankruptcy, according to a report issued in the fall by the Greek Co-Federation of Chambers of Commerce.
“It’s an implosion — it’s an endless sequence of implosions from bad to worse, to worse, to worse,” said Yanis Varoufakis, an economics professor at the University of Athens and commentator on the Greek economy. “There’s nothing to stop the Greek economy losing 60 percent of its G.D.P., given the path it is at.”
But Greece is not the only one in Europe with major economic problems.  The unemployment rate for those under the age of 25 in the EU is an astounding 22.7%.  And as I have written about previously, there are a whole host of signs that Europe is on the verge of a major recession.
Greece is just the canary in the coal mine.  The truth is that the entire European financial system is in danger of collapsing.
Today, it was announced that S&P has downgraded the European Financial Stability Facility.  It is pretty sad when even the European bailout fund is getting downgraded.
Of course most of you know what happened on Friday by now.  Very shortly after U.S. financial markets closed, S&P downgraded the credit ratings of nine different European nations.
Only four eurozone nations (Germany, Luxembourg, Finland, and the Netherlands) still have a AAA credit rating from S&P.
But even more importantly, the nightmarish decline of the euro is showing no signs of stopping.
Right now, the EUR/USD is down to 1.2650.  It is hard to believe how fast the EUR/USD has fallen, but if a major financial crisis erupts in Europe it is probably going to go down a whole lot more.
So what happens next?
Well, if there is a Greek default all hell will break loose in Europe.
But even if Greece does not default, the coming recession in Europe is going to put an incredible amount of strain on the eurozone.
Many have been speculating that Greece or Italy could be the first to leave the euro, but actually it may be the strongest members that exit first.
The number of prominent voices inside Germany that are calling for Germany to leave the euro continues to increase.
In addition, public opinion in Germany is rapidly turning against the euro.  One recent poll found that only 47 percent of Germans were glad that Germany joined the euro, and only 36 percent of Germans want "a more federal Europe".
As this crisis continues to unfold, there will probably be even more "ack moments".  European leaders have mismanaged this crisis very badly from the start, and there is no reason to believe that they are suddenly going to become much wiser.
Once again, it is important to emphasize the role that confidence plays in our financial system.  The entire global financial system runs on credit.  Banks and investors lend out money because they have confidence that they will be paid back.  When you take that confidence away, the system does not work.
Let us hope that the folks over in Europe understand this, because right now we are steamrolling toward a credit crunch that could potentially make 2008 look tame by comparison.

The Economic Collapse

Sarkozy warns of 'unprecedented crisis'

AFP - French President Nicolas Sarkozy warned Monday that Europe faces an "unprecedented crisis" but urged calm in the face of Standard & Poor's multiple eurozone credit rating downgrades.

Sarkozy issued the warning in Madrid where he was the first foreign leader to meet with Spain's new conservative prime minister, Mariano Rajoy, since his swearing-in December 21.

"We are confronted by an unprecedented crisis that forces us to cut spending, lower our deficits but also to find the path to new growth by resolving our competitiveness problems," Sarkozy said.

Standard & Poor's cut the credit rating of nine debt-laden European countries Friday, including stripping France of its top-notch AAA rating and slashing Spain's rating by two notches.

Moody's Investors Service soothed some of the pain Monday, confirming France's AAA rating while continuing to review whether it will maintain its "stable" outlook.

"Fundamentally it changes nothing," said Sarkozy, who is facing an uphill battle for re-election in April.

"We have to reduce our deficits, cut spending, improve our countries' competitiveness to rediscover growth," he said, calling on people "not to panic" and to "react to these decisions by keeping our cool".

"I don't plan to take into account what this or that person says," the French leader said, nevertheless describing the agencies' ratings as "interesting elements".

Spain's leader, holding his first news conference since he took power, agreed.

"In the end, the most decisive thing is that each country follow its own path," Rajoy said.

The new right-leaning Spanish government has announced 8.9 billion euros ($11 billion) in budget cuts, tax increases to bring in 6.28 billion euros and an anti-tax fraud battle to recoup another 8.17 billion euros.

Rajoy said at the weekend that Spain, which declared a towering 21.5-percent unemployment rate in the third quarter of 2011, now had an "astronomical" figure of 5.4 million jobless.

The Spanish leader gave his support to a French-backed scheme to impose a tax on financial transactions.

Sarkozy has said that France should not wait for other European countries to support the tax on financial market deals, a scheme dubbed a "Robin Hood tax" or "Tobin tax," after Nobel Prize-winning economist James Tobin.

"Spain will support this tax," Rajoy said, describing it as Sarkozy's "war horse" to help beat the crisis.

Sarkozy was in Spain to be honoured for helping to battle the armed Basque separatist group ETA.

King Juan Carlos made Sarkozy a Knight of the Golden Fleece in recognition of his cooperation, saying he had been a constant ally in a ceremony in the Royal Palace.

"In your relations with Spain, you have always contributed in a constant, effective and generous manner to the fight against terrorism, always making the victims the aim and end of your solidarity," the king said.

Spain credits Sarkozy with giving crucial aid in the fight against ETA, both as president and previously when he was French interior minister from 2002-2004 and 2005-2007.

Only on Saturday, French police arrested three suspected ETA members near Auxerre in eastern France.

ETA announced on October 20 last year the end of more than 40 years of shootings and bombings that killed 829 people. Its operations have been hammered by Spanish police working closely with France.

Spain's highest chivalric honour, the Order of the Golden Fleece was created in 1430 by Philip III, Duke of Burgundy.

France 24

Russian Missile Forces Hold High Alert Drills

Russia’s Strategic Missile Forces are holding a series of exercises to practice putting road-mobile missile systems on high alert, SMF spokesman Col. Vadim Koval said.
The exercises involve Topol (SS-25 Sikle), Topol-M (SS-27 Sickle B) and Yars (RS-24) mobile systems stationed in central Russia and Siberia.
“SMF units armed with Topol, Topol-M and Yars road-mobile missile systems will practice patrolling, camouflaging and launch preparation procedures during high alert drills from January 16 to February 3,” Koval told reporters on Monday.
The SMF are planning to hold over 100 tactical drills in the first half of 2012.
As of January 2012, the SMF operated at least 162 mobile Topol systems, 18 mobile Topol-M and 15 mobile Yars systems.

RIA Novosti

Central bank independence at risk from financial crisis, warns UBS

The European Central Bank faces the most severe problems, warn UBS analysts, who said the ECB's increasing exposure to struggling eurozone lenders risked putting it in a position whereby it might require its own capital boosted in future.

In recent months, the ECB has significantly relaxed the collateral requirements on banks that borrow from it, leading to fears that new losses in the banking system could quickly eat into its capital base.

"It is possible that a series of eurozone sovereign or banking defaults could simultaneously erode the capital position of the ECB and those of some of its shareholding national central banks," said the analysts.

A report from Credit Suisse analysts last week highlighted the growing disparity in the relative size of the ECB compared to the Bank of England and the US Federal Reserve.

The BoE and the Fed have both undertaken massive quantitative easing programmes that have greatly expanded the size of their balance sheets from less than 10pc of domestic GDP to just under 20pc.

However, the ECB's financial support programme for eurozone banks has seen its balance sheet balloon since November to close to 30pc of its members' combined GDP.

While UBS admits that the possibility of the ECB being unable to act as a provider of liquidity to the financial system is remote, the possibility that a small number of stronger eurozone countries could be called upon to provide more financial support for the central bank is real.

"In the event that losses wipe out too much of their capital, the chief risk becomes the intrusion of politics into central banking. It might even bring about the end of independent central banks," warned the UBS report.

Unlike the BoE and the Fed, the ECB is not explicitly backed by its shareholders, which comprise the European Union's 27 national central banks.

"The history of the eurozone crisis has not offered many reassuring examples about the speed and effectiveness of eurozone political decision-making," said UBS.

The BoE has been clear in ruling out new measures to support Britian's major banks and has continued to impose much tougher collateral requirements on lenders than the ECB.

Last month, eurozone banks borrowed €489bn (£405bn) under the ECB's new three-year lending programme. Credit Suisse is forecasting that bank borrowing using the scheme could more than double to more than €1 trillion in February when lenders are offered a second chance to access the programme.

Analysts at Citigroup have pointed out that ECB moves to allow banks to use loan portfolios as collateral to borrow from it could create a potential collateral pool worth about $11.7bn (£7.7bn).

The decision by US ratings agency Standard & Poor's to downgrade several of the eurozone's largest members on Friday will not impact the valuation applied by the ECB to sovereign bonds used by banks to borrow from the central bank.

Citigroup analysts said the S&P downgrade of countries, including France, Austria, Spain and Italy, would not lead to haircuts on the value of their sovereign bonds used as collateral by lenders to access ECB funds.

However, Citigroup warned that should the countries ratings suffer a further downgrade by another of the world's three major ratings agencies it would lead to haircuts, forcing banks to post more collateral with the ECB.

The Telegraph