Rare Northern Pacific Storm takes shape as it aims Southern California

(TheWeatherSpace.com) - Upper level winds will take the center of a storm system over the Southern California area on Thursday and Friday, giving the area some wild and unique weather in any region of the country.This pattern is a once a decade type pattern with the potential of strong Santa Ana Winds combined with precipitation, including low snow levels. The last time this happened was November 2004 and many across Southern California would rememeber it, especially east of Los Angeles.


I went ahead and did a video forecast for the event, but to summarize what the video shows ... a plot map (imaged above) was used instead of tracking the center of the storm on other models. I decided to try a method I use for hurricane tracks in the long range, this being a cutoff low and of the unpredictable variety. 

The storm system will come in on Thursday and Friday. So far on the TWS' Southern California Weather Authority site there is a Special Weather Statement and Santa Ana Wind Watch.

NOAA's models bring a drier solution to the area, but I cannot let go of the tracking method I use for long range just yet. Until this goes too far east then this storm is still very much in play for Southern California.

Factors with system will go as followed ...

Track 1 - 2004 type pattern in-which strong upper level vorticity and temperature advection produced rapid convection and thunderstorms across the Southern California area, excluding Ventura County and points north and west of there. This was combined with a Santa Ana Wind event in-which thunderstorms + santa ana winds and low snow levels hit the southland. This is a rare but very powerful scenario.

Track 2 - The storm takes on a 2005-6 pattern in-which the center of the dynamics missed to the east, over Desert Center (Riverside County Deserts) and gave the area light snow and isolated thunderstorms.

Track 3 - Hits the California and Arizona border, misses the Southland and only gives a very strong Santa Ana Wind Event.

All scenarios are possible, but the track I see is very close to either Track 1 and if there was an in-between 1 and 2. Regardless, this is enough to warrant snowfall in the forecast at 3,000 feet and possibly low, powerful santa ana winds, thunderstorms, and much cooler temperatures regionwide. 

Russia activates missile early warning radar system

Russia has turned on a new incoming missile early warning system in its westernmost region in response to US plans for a missile shield in Europe.

President Dmitry Medvedev ordered the system to be activated on a visit to the radar unit in Kaliningrad, a Baltic region bordering EU countries.

The unit is equipped with the new Voronezh-DM radar system.

Mr Medvedev has warned Russian missiles could be deployed on the EU's borders if the shield is installed.

Washington wants an anti-missile shield ready by 2020, arguing that it is necessary to provide protection from the potential missile threat posed by countries like Iran.

Under President George W Bush, the US had initially intended to locate major parts of the shield in Poland and the Czech Republic, but Russia objected vigorously.

When Barack Obama took office in the White House, he scaled back the original ambitions.

"Nato's missile defence system [is] designed to defend against threats from outside Europe - not designed to alter balance of deterrence," Nato chief Anders Fogh Rasmussen said in a recent tweet.'Our signal'

In a statement carried by Russian news agencies, Mr Medvedev said: "I expect that this step will be seen by our partners as the first signal of the readiness of our country to make an adequate response to the threats which the missile shield poses for our strategic nuclear forces."

Quoted by Interfax, he said: "If our signal is ignored... we will deploy other means of defence including the adoption of tough counter-measures and the deployment of a strike group."

Mr Medvedev has spoken of deploying Iskander missiles - modern versions of the mobile Scud surface-to-surface missile - in Kaliningrad.

On Tuesday, he said Russia was ready to listen to new anti-missile defence proposals from "Western partners" but assurances were not enough.

"Verbal statements, unfortunately, do not guarantee the defence of our interests," the Russian president said.

"If other steps are taken then, naturally, we are ready to listen to them but, in any case, verbal statements are not enough."'Europe and the Atlantic'

The radar system activated on Mr Medvedev's orders was installed this year at Pionerskoye, Kaliningrad, and is meant to replace older systems in Ukraine and Belarus, according to Russian news website lenta.ru.

With an operating range of 6,000km (3,730 miles), the Voronezh DM can cover "all of Europe and the Atlantic", according to the Russian military.

It is designed to detect space and aerodynamic targets, including ballistic and cruise missiles.

Iran's nuclear programme and its development of long-range missiles have alarmed Western states, despite Tehran's assurances it is not seeking weapons of mass destruction.

BBC

'Iran blast – near military academy'

Iranian website says explosion occurred on street adjacent to military school. Meanwhile, satellite images of site hit by blast two weeks ago reveals extensive damage. Analyst: Impossible to tell whether blast caused by sabotage

While Iranian officials continue to deny any reports on the blast in Isfahan, other sources started to shed light on the mysterious incident.

Iranian paper Farhang Ashti (Peace Culture) reported Monday that the explosion, which was initially reported by Iran's official news agency Fars, took place several streets away from the city's military academy, near the Shiraz Gate.

The report's credibility remained unclear.

Fars initially reported a loud blast at 2:40 pm local time, but removed the report shortly afterwards. Hours later, conflicting reports began to surface.

Iran's Mehr news agency mistakenly quoted the deputy governor of Isfahan province as saying that there was no report of a major explosion in the province – a quote given by him almost a year earlier, following a December 18, 2010 explosion in the city.

Ynet

Turkey says Russian missiles no threat, unless they are for offensive ends

Turkey has said it did not feel threatened by a Russian statement that Moscow could deploy missiles to target the US defense system in Europe, provided that these missiles are not for offensive purposes.

Russian President Dmitry Medvedev said on Wednesday that his country will deploy missiles to target the US missile shield, meant to protect NATO members in Europe, if Washington fails to assuage Moscow's concerns about its plans. NATO member Turkey has agreed to host a US radar system on its territory as part of the missile defense project while interceptor missiles are to be deployed in other NATO countries as well as at sea.

Turkish Foreign Minister Ahmet Davutoğlu, speaking to reporters while returning from a visit to Cairo to attend an Arab League meeting on Syria on Sunday, said the radar to be deployed in Turkey was for defensive purposes only. “If someone would attack Russia, it is their business. Our [radar] does not pose a threat against Russia. It is, in the end, for defensive, not offensive purposes,” he said.

The Russian missiles, Davutoğlu added, are “not a threat to us, as long as they are for offensive purposes.” The US X-Ray radar will be deployed at a base in Kürecik, Malatya, in eastern Turkey. Ankara has agreed to host the radar after lengthy negotiations with the United States and receiving assurances that no country will be named as a source of threat.

But the missile defense system is widely known to have been developed to counter missile threats from Iran, Turkey's southern neighbor.

Responding to Medvedev's remarks, Capt. John Kirby, a Pentagon spokesman, said: “I do think it's worth reiterating that the European missile defense system that we've been working very hard on with our allies and with Russia over the last few years is not aimed at Russia. It is ... designed to help deter and defeat the ballistic missile threat to Europe and to our allies from Iran.”

Iran, which the West suspects aims to develop nuclear missiles, said on Saturday that it will target NATO's missile defense installations in Turkey if the US or Israel attacks it. Davutoğlu did not comment on the Iranian threat. Tehran says NATO's early warning radar station in Turkey is meant to protect Israel against Iranian missile attacks if a war breaks out with the Jewish state.
Davutoğlu to visit Germany

Davutoğlu also announced plans to visit Germany, where police recently discovered 10 people, including eight Turks, were killed by a neo-Nazi group between 2000 and 2006.

The foreign minister will meet representatives from Germany's Turkish community in different German cities, as well as German officials, during his visit on Dec. 1-4. He said he might also discuss Germany's plans to pay compensation to families of Turkish victims of the neo-Nazi network. Critics say the amount of planned compensation, reportedly 10,000 euros for each victim, is too low.
No plans for Mideast hegemony

Meanwhile, Davutoğlu also responded to claims from Syrian President Bashar al-Assad that Turkey was trying to reinstate the Ottoman Empire, saying Turkey has no intention to impose its hegemony over the Middle East. But he did say that the Ottoman Empire represents the “history of the Arab people, as much as it represents the history of the Turks.”

Turkey, once a close ally of Assad, has stepped up its criticism of the Syrian regime's brutal crackdown on widespread protests. Assad slammed Turkish leaders, saying on Saturday that “some in Turkey are still clinging to the dream of reinstating the Ottoman Empire.”

The Turkish leaders, he added, “Know that this dream is impossible, so they are trying to exploit parties with a religious agenda to expand their influence on the Arab world.”

Assad opponents, on the other hand, are supportive of Turkey's policies. Indicating the sympathy for Turkey among the Syrian opposition, a group of Syrians chanted slogans in support of Turkey and Davutoğlu while the foreign minister's car left the hotel he stayed at in Cairo. Some were also seen kissing the Turkish flag on the car, in an apparent response to burning of the Turkish flag during an attack by Assad supporters on Turkish diplomatic missions in Syria earlier this month.

In his Saturday remarks, Assad called on his supporters not to vandalize any Turkish symbols, saying: “I ask you: Don't burn Turkish flags. The Turkish people are a proud nation.”

Today´s Zaman

Fitch warns of U.S. downgrade if no budget deal

Ratings agency Fitch gave the United States some good news and some bad news Monday.

The firm announced it was keeping the credit rating on U.S. sovereign debt at AAA, or its top rating, but revised its outlook on the country to negative, warning a downgrade could come in 2013 if an agreement on debt is not reached.

“The affirmation of the U.S. ‘AAA’ sovereign rating reflects still strong economic and credit fundamentals,” Fitch said in its release. The agency warned, however, that the failure of the so-called U.S. ‘supercommittee’ on debt has created a loss of confidence.

The supercommittee, officially referred to as the Congressional Joint Select Committee on Deficit Reduction, announced last week that it had failed to come to an agreement on US$1.2-trillion in budget cuts over the next 10 years. That means that automatic budget cuts of US$1-trillion are set to go into effect.

“The failure of the JSCDR underlines the challenge of securing broad-based consensus on how to reduce the out-sized federal budget deficit,” Fitch said.

The ratings agency added that if a medium-term debt agreement was reached following the 2012 elections, downgrade pressure on the U.S. debt rating may ease.

But Fitch warned that failure to reach a credible deficit reduction plan by 2013 would likely lead to a U.S. downgrade.

‘The Negative Outlook indicates a slightly greater than 50% chance of a downgrade over a two-year horizon.,” Fitch said. “Fitch will shortly publish its revised economic and fiscal projections for the U.S. and will conduct a further review of its sovereign ratings in 2012.”

Fitch does not expect a change in the negative outlook until at least 2013, following U.S. elections and the emergence of any new deficit reduction plans.

Either way, U.S. lawmakers are likely breathing a sign of relief that Fitch will not be changing the country’s AAA credit rating. A downgrade by rival ratings agency, Standard & Poor’s, in August of this year set off a market roller coaster. While that downgrade did not impact U.S. Treasurys as was expected, it nevertheless hurt investor confidence, as evidenced by steep declines in U.S. stock indices in the following days.

Economic Collapse

Schiff.....MF global mastermind corzine

Italian Job: Stealing 2,451.8 tons of gold with style

Germany’s eurozone backstop comes at high cost

Increasingly compelled to shoulder the burden of saving the eurozone, Germany has named the price its neighbour states must pay to be rescued.

German officials want to impose a system of economic surveillance on members of the currency bloc, who would be forced to surrender autonomous control of their domestic budgets to a regional authority.

Berlin aims to outline proposals for fiscal integration before a European Union summit on Dec. 9, increasingly seen by investors as the last chance to avert a collapse of the currency.

Once an unthinkable encroachment on sovereignty, the plan for a more centralized fiscal regime has now won the begrudging support of France, a country with a nationalist bent generally hostile to such an intrusion.

“Everyone has reconciled themselves to the fact that if you want to get Germany to cave in, you have got to surrender a lot of fiscal sovereignty,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.

To cave in would essentially see Germany become the guarantor of the eurozone through either the issuance of regional bonds, the aggressive intervention of the European Central Bank, or both.

First securing support for a fiscal union from all 17 members of the eurozone, however, could prove a monumental challenge.

“This is political dynamite,” Mr. Spiro said. “This is unprecedented stuff. It’s massively intrusive.”

Howling for some sort of decisive action out of the region’s seemingly endless emergency summit, global politicians, bankers and economists have grown exasperated at the perceived lack of urgency.

Last week’s German bond sale, which saw alarmingly limited demand for the once untainted securities, compounded concerns that the European bond market is broken and that contagion has begun to overtake the core of eurozone strength.

Global investors are growing reluctant to lend to eurozone sovereigns and are demanding an ever increasing risk premium to do so. Meanwhile, the flow of money between banks is slowing, repeating the kind of capital constraints that choked off credit after Lehman Brothers collapsed in 2008.

Amid what appears to be a new heightened phase for the crisis, Moody’s Investors Service cautioned on Monday that all government credit ratings in the region are at risk.

While patience clearly wears thin, the introduction of euro bonds or an extension of the ECB mandate would see Germany foot much of the bill and assume much of the risk for bailing out the region.

“Germany will essentially become the final backstop for the whole of the eurozone, and that does put a lot of pressure even on an economy the size of Germany’s,” said Raoul Ruparel, an economist at Open Europe, a think-tank based in London.

The solution markets seem to demand would have Germany put its own balance sheet and its credit rating on the line, he said. By guaranteeing the obligations of its neighbours, Germany would find its own creditworthiness sullied by the delinquency of others.

Officially, the role of the eurozone’s guarantor would not fall to Germany alone. But it would be by far the strongest backer of whatever regional authority takes on the task. After all, the eurozone’s next two biggest economies — France and Italy — struggle with their own debt burdens and exposure to contagion, let alone the obligations of other countries.

But Germany is insisting on stricter budgetary rules and penalties for missing deficit targets. “If they see themselves as the ultimate guarantor, they’re going to want to have a large say over where their money goes,” Mr. Ruparel said.

Fiscal division is considered the inherent weakness of the currency union and is blamed for the imbalances that led to unsustainable sovereign debt accumulation in the first place.

“This is precisely where a crisis serves its purpose,” said Andrew Busch, global currency and public policy strategist with BMO Capital Markets. Under normal economic circumstances fiscal reform would not be possible; member states wouldn’t stand for the interference.

“We can only achieve a political union if we have a crisis,” Germany’s Finance Minister Wolfgang Schauble said recently.

French support for centralized budgetary rules, however, does not signify a change of heart, according to Mr. Spiro.

France, which has consistently called for the ECB to apply its considerable financial resources to stabilizing markets, sees fiscal union as a means to end.

“I think (ECB President Mario) Draghi is just waiting for some kind of formal announcement that there is going to be a fiscal union, and when he gets the OK from Germany, the ECB will unleash its firepower,” Mr. Spiro said.

Additionally, proposing changes to the eurozone’s treaty could produce an excruciating months-long saga involving 17 separate parliaments.

However, reports have speculated on ways to bypass the treaty process to arrive at some sort of fast-tracked agreement, possibly involving a reduced number of eurozone governments. “They’ve got a million lawyers working on this day in and day out,” Mr. Spiro said.

To be determined, however, is whether the crisis is yet bad enough to justify Germany’s fiscal plan. “I don’t think we’re quite there yet,” Mr. Ruparel said, “but obviously things are getting very bad.”

Financial Post

S&P may cut France outlook within 10 days - report

• 

(Reuters) - Credit rating agency Standard & Poor's could change its outlook on France's triple-A credit rating to negative within the next 10 days, a French newspaper reported Monday, citing sources, the latest signal that France's top-tier status is at risk.

An S&P spokesperson in Paris said the agency did not comment on rumours. A spokesman in Melbourne earlier also declined to comment on the report, which if true would signal a heightened risk of a downgrade in the weeks ahead.

"It could happen within a week, perhaps 10 days," La Tribune quoted a diplomatic source as saying of a change to the outlook.

The economic and financial daily said S&P -- which cut Belgium's credit rating to double-A from double-A-plus Friday -- had planned to make its announcement on France the same day but postponed it for unknown reasons.

The euro briefly dipped on the report, which coincided with news that credit rating agency Moody's could downgrade the subordinated debt of a swathe of euro zone banks.

French Finance Minister Francois Baroin said the focus should not be solely on France and that while the euro zone debt crisis was serious, France was "clear-sighted" on it.

"Everyone is concerned, not just France. It's all the euro zone countries," he told France Info radio, asked about the La Tribune report.

"France is not an island or economically cut off from the world. It depends on different parts of the euro zone for a large part of its economic activity and that's why we are, to a large extent, clear-sighted on the crisis."

Tuesday morning before the opening bell, futures for French blue-chip index CAC 40 were down 0.2 percent, underperforming futures for Euro STOXX 50 and for Germany's DAX, up 0.1 percent.

France's ratings outlook is stable with S&P, but months of talk that a downgrade by one or more of the rating agencies could be on the cards is rattling the French government, which would face a surge in borrowing costs under a downgrade.

President Nicolas Sarkozy, who faces a tough re-election battle in April, has said he will do everything in his power to defend France's cherished triple-A badge.

On November 10, Standard & Poor's mistakenly announced it had cut the nation's rating, frightening investors already anxious over Europe's worsening debt crisis.

Last week, Fitch Ratings said France's debt and deficit levels remained consistent with a triple-A rating but the euro zone's No. 2 economy would have limited room to absorb new shocks to its public finances without endangering that status.

Japan economy faces 'severe situation,' warns BOJ chief

NAGOYA —

Bank of Japan governor Masaaki Shirakawa warned Monday that the country would continue to face a “severe situation” as Europe’s debt crisis and a strong yen weigh on its post-quake economic recovery.

“Japan’s economy is likely to continue to face a severe situation for the time being, especially with respect to exports,” he said in a speech to business leaders in the central city of Nagoya.

Japan fell into a trade deficit in October, reversing a year-earlier surplus, with record flooding in Thailand pounding the operations of Japanese automakers and electronics firms that have plants in the country.

Toyota and others withdrew earnings forecasts as they assess the scale of disruption, which came as Japanese firms were near to restoring output to normal levels at home after the March earthquake and tsunami shattered component supply chains.

Japan’s economy has “recovered faster than expected” following the natural disasters and a subsequent nuclear crisis, Shirakawa said, but added Europe’s fiscal woes and a strong currency would continue to dent Japanese exports.

“Japan’s economy is expected to be impacted by the adverse effects of these negative events for the time being,” he said.

“The slightly more long-term perspective is that Japan’s economy will eventually return to a sustainable growth path with price stability.”

Europe’s sovereign debt crisis was the biggest risk factor in any recovery and has been a key factor behind Japan’s surging yen, he said, as investors look for a safe-haven currency.

The yen’s rise to post-World War II highs against the dollar has prompted the central bank to intervene in foreign exchange markets to bring down the unit’s surging value, which erodes exporters’ profits and makes Japanese goods less competitive.

Earlier this month, Japan’s central bank left its key interest rate unchanged at between zero and 0.1%, while in October it announced further easing measures to help safeguard a fragile economic recovery.

The bank said it would boost its asset buying program by 5 trillion yen to 55 trillion yen, with the extra money earmarked for the purchase of Japanese government bonds.

By pouring liquidity into the market, the BOJ hopes to improve flows to help encourage investment and boost business.
Japan Today

Gerald Celente: The Prestitutes are Out to Pillage All Accounts

31 Banks The Fed Is Watching Like A Hawk

The Federal Reserve’s bank stress test are getting a little more onerous and will affect more banks than they did under the last round of tests.

In the latest round of stress tests which are due in January, 31 of the largest lenders will be subject to some harsh hypothetical scenarios. Last time around just 19 banks were subject to the Fed’s scrutiny. The 12 new additions to the have $50 billion or more in assets and include some foreign subsidiaries.

Among the newcomers are Citizens Financial Group, a subsidiary of the Royal Bank of Scotland Group, and RBC USA whose parent company is the Royal Bank of Canada. The 31 banks on the list have Tier 1 common risk-based ratios ranging from 6.89% at M&T Bank Corp., according to the company’s third-quarter earnings release, to 15.96% at State Street Corp, SNL Financial reports.

There are a couple of big names missing from the list however including Toronto-Dominion Bank’s U.S. unit isn’t on the list though it has $199.5 billion in assets. SNL notes that BancWest Corp., a unit of BNP Paribas SA, was left off the list though it has $77.13 billion in assets; as was Taunus Corp., a unit of Deutsche Bank AG, with approximately $380.65 billion in assets.

The reason for their absence, according to SNL is that the capital plan rules do not apply to any bank holding company subsidiary of a foreign banking organization that is relying on certain earlier regulations. These exemptions last until July 21, 2015.

The Fed’s stress tests includes macroeconomic and financial market scenarios that firms must use, including U.S. unemployment rates as high as 13.05% and real GDP contraction nearing 8%. The big six banks, Bank of America., JPMorgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs will be required to estimate potential losses stemming from a hypothetical global market shock including the worst case scenarios stemming from the Euro-debt crisis.

Sabeth Siddique, a director at Deloitte & Touche LLP and former assistant director of banking supervision and regulation at the Fed,told SNL Financial that the scenarios are more severe than in the last rounds of stress testing. “I think that is in part a testament to the continued difficult environment that we’re experiencing both globally and domestically,” he said.
The six firms are the usual suspects: Bank of America,Citigroup, Goldman Sachs Group,  JPMorgan Chase, Morgan Stanley and Wells Fargo.

Capital plans are due to the Fed by January 9, 2012. The other banks required to submit plans are: Ally Financial, American Express, Bank of New York Mellon, BB&T, Capital One Financial, Fifth Third Bancorp, Keycorp, MetLife, Morgan Stanley, PNC Financial Services, Regions Financial, State Street, SunTrust Banks and U.S. Bancorp.

In 2011, the Fed proved that its reviews of bank capital proposals are anything but a formality in the current environment, throwing up stop signs to planneddividend increases by Bank of America and, in October, MetLife, which prompted the insurer to suggest it could ditch its bank holding status. (See“Fed Shoots Down MetLife Dividend Hike.”)

Moody's says may cut EU banks' subordinated ratings

(Reuters) - Ratings agency Moody's said on Tuesday it could downgrade the subordinated debt of 87 banks across 15 European Union nations on concerns that governments would be too cash-strapped to bail out holders of riskier bank debt in times of stress.

Moody's said the greatest number of ratings to be reviewed were in Spain, Italy, Austria andFrance.

The review could lead to an average potential downgrade of subordinated debt by two notches, and junior subordinated debt and Tier 3 debt by one notch, it added.

Holders of subordinated debt are further back in the queue than owners of senior debt when it comes to a claim on a bank's assets, thus making it a riskier class of debt.

"Moody's believes that systemic support for subordinated debt in Europe is becoming ever more unpredictable, due to a combination of anticipated changes in policy and financial constraints," the agency said in a report.

Moody's noted there had been recent instances where losses had been imposed on subordinated debt holders without any significant contagion to other liability classes.

"Consequently, there would need to be very clear reasons for Moody's to consider retaining an assumption of support in subordinated debt ratings," it warned.

Nations affected by review were listed as Austria (nine banks), Belgium (three), Cyprus (two), Finland (three), France (seven), Italy (17), Luxembourg (three), Netherlands (six), Norway (five), Poland (one), Portugal (two), Slovenia (two), Spain (21), Sweden (four) and Switzerland (two).

Moody's also warned that the risk to ratings on subordinated debt could extend outside the borders of the European Union.

Europe's shrinking money supply flashes slump warning

The three main gauges – M1, M2, and M3 – have each begun to decline in absolute terms after slowing sharply over the Autumn.

The broad M3 measure tracked closely by the European Central Bank as an early warning indicator shrank last month by €59bn to €9.78 trillion, a sign that Europe's long-feared credit squeeze is underway as banks retrench to meet tougher capital requirements.

"This is very worrying," said Tim Congdon from International Monetary Research. "What it shows is that the implosion of the banking system on the periphery is now outweighing any growth left in the core. We are seeing the destruction of money and it is a clear warning of serious trouble over the next six months."

"This is the first sign of an emerging credit crunch," said James Nixon from Societe Generale. Banks cut their balance sheets by €79bn in October, while mortage lending saw the biggest drop since December 2008.

Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.


While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. "This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery," said Mr Ward.

The shrinking money supply comes as banks step up the pace of deleveraging. As feared, lenders are slashing loan books and selling assets to meet 9pc core Tier 1 capital targets imposed by the EU rather than raising fresh capital in a hostile market. "Forcing banks to recapitalise in a hurry is a major blunder," said Mr Congdon.

Societe Generale said bond issuance by European banks has come to a standstill, dropping to €11bn since the end of June. Lenders face a funding gap of €180bn so far this year as they fail to roll over debt coming due. Deutsche Bank expects deleveraging to reach €2 trillion over the next 18 months alone.

The grim monetary data came as Moody's warned that Euroland's crisis is metastasising, with risks of a chain of sovereign bankruptcies unless Europe "acts quickly" to stop the rot. "The probability of multiple defaults by euro area countries is no longer negligible."

The agency said defaults would threaten to break up the euro itself. "Any multi-exit scenario would have negative repercussions for the credit standing of all euro area and EU sovereigns."

The wording is a reminder that Britain would be engulfed by the maelstrom through a nexus of banking and trade ties, however hard it tries to build a firewall.

Moody's warned that the crisis has already dragged on so long that it will have "very negative rating implications" for European states even if the euro holds together. The agency does not expect any decisive action by the EU until the region is hit by a "series of shocks" that first make matters even worse.

It is unclear which states are first in the firing line for a downgrade but France, Britain, and Austria may all struggle to hold on to their AAA ratings, especially if Europe slides into a deep recession that pushes debt dynamics closer to the edge.

The OECD club of rich states exhorted the ECB on Monday to take radical measures to contain the crisis. "The ECB should buy bonds and set a limit to yields, or a floor to bond value," said chief economist Pier Carlo Padoan.

The group said the bank should prepare to take "radical, non-standard measures" if necessary, and called for the EFSF rescue fund to be given "large enough firepower" to halt contagion.

"Europe's leaders have been behind the curve. Everyone should be clear that the euro is at stake and everyone should do what is needed to avoid the worst," he said.

THE TELEGRAPH

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22 Reasons Why We Could See An Economic Collapse In Europe In 2012

Will 2012 be the year that we see an economic collapse in Europe?  Before you dismiss the title of this article as "alarmist", read the facts listed in the rest of this article first.  Over the past several months, there has been an astonishing loss of confidence in the European financial system.  Right now, virtually nobody wants to loan money to financially troubled nations in the EU and virtually nobody wants to lend money to major European banks.  Remember, one of the primary reasons for the financial crisis of 2008 was a major credit crunch that happened here in the United States.  This burgeoning credit crunch in Europe is just one element of a "perfect storm" that is rapidly coming together as we get ready to go into 2012.  The signs of trouble are everywhere.  All over Europe, governments are implementing austerity measures and dramatically cutting back on spending.  European banks are substantially cutting back on lending as they seek to meet new capital requirements that are being imposed upon them.  Meanwhile, bond yields are going through the roof all over Europe as investors lose confidence and demand much higher returns for investing in European debt.  It has become clear that without a miracle happening, quite a few European nations and a significant number of European banks are not going to be able to get the funding that they need from the market in 2012.  The only thing that is going to avert a complete and total financial meltdown in Europe is dramatic action, but right now European leaders are so busy squabbling with each other that a bold plan seems out of the question.

The following are 22 reasons why we could see an economic collapse in Europe in 2012....

#1 Germany could rescue the rest of Europe, but that would take an unprecedented financial commitment, and the German people do not have the stomach for that.  It has been estimated that it would cost Germany 7 percentof GDP over several years in order to sufficiently bail out the other financially troubled EU nations.  Such an amount would far surpass the incredibly oppressive reparations that Germany was forced to pay out in the aftermath of World War I.

A host of recent surveys has shown that the German people are steadfastly against bailing out the rest of Europe.  For example, according to one recent poll 57 percent of the German people are against the creation of eurobonds.

At this point, German politicians are firmly opposed to any measure that would place an inordinate burden on German taxpayers, so unless this changes that means that Europe is not going to be saved from within.

#2 The United States could rescue Europe, but the Obama administration knows that it would be really tough to sell that to the American people during an election season.  The following is what White House Press Secretary Jay Carneysaid today about the potential for a bailout of Europe by the United States....

"This is something they need to solve and they have the capacity to solve, both financial capacity and political will"

Carney also said that the Obama administration does not plan to commit any "additional resources" to rescuing Europe....

"We do not in any way believe that additional resources are required from the United States and from American taxpayers."

#3 Right now, banks all over Europe are in deleveraging mode as they attempt to meet new capital-adequacy requirements by next June.

According to renowned financial journalist Ambrose Evans-Pritchard, European banks need to reduce the amount of lending on their books by about 7 trillion dollars in order to get down to safe levels....

Europe’s banks face a $7 trillion lending contraction to bring their balance sheets in line with the US and Japan, threatening to trap the region in a credit crunch and chronic depression for a decade.

So what does that mean?

It means that European banks are going to be getting really, really stingy with loans.

That means that it is going to become really hard to buy a home or expand a business in Europe, and that means that the economy of Europe is going to slow down substantially.

#4 European banks are overloaded with "toxic assets" that they are desperate to get rid of.  Just like we saw with U.S. banks back in 2008, major European banks are busy trying to unload mountains of worthless assets that have a book value of trillions of euros, but virtually nobody wants to buy them.

#5 Government austerity programs are now being implemented all over Europe.  But government austerity programs can have very negative economic effects.  For example, we have already seen what government austerity has done to Greece. 100,000 businesses have closed and a third of the population is now living in poverty.

But now governments all over Europe have decided that austerity is the way to go.  The following comes from a recent article in the Economist....

France’s budget plans are close to being agreed on; further cuts are likely but will be delayed until after the elections in spring. Italy has yet to vote through a much-revised package of cuts. Spain’s incoming government has promised further spending cuts, especially in regional outlays, in order to meet deficit targets agreed with Brussels.

#6 The amount of debt owed by some of these European nations is so large that it is difficult to comprehend.  For example, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

So what will massive government austerity do to troubled nations such as Spain, Portugal, Ireland and Italy?  Ambrose Evans-Pritchard is very concernedabout what even more joblessness will mean for many of those countries....

Even today, the jobless rate for youth is near 10pc in Japan. It is already 46pc in Spain, 43pc in Greece, 32pc in Ireland, and 27pc in Italy. We will discover over time what yet more debt deleveraging will do to these societies.

#7 Europe was able to bail out Greece and Ireland, but there is no way that Italy will be able to be rescued if they require a full-blown bailout.

Unfortunately, Italy is in the midst of a massive financial meltdown as you read this.  The yield on two year Italian bonds is now about double what it was for most of the summer.  There is no way that is sustainable.

It would be hard to overstate how much of a crisis Italy represents.  The following is how former hedge fund manager Bruce Krasting recently described the current situation....

At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy.

Krasting believes that either Italy gets a gigantic mountain of cash from somewhere or they will default within six months and that will mean the start of a global depression....

I think the Italian story is make or break. Either this gets fixed or Italy defaults in less than six months. The default option is not really an option that policy makers would consider. If Italy can’t make it, then there will be a very big crashing sound. It would end up taking out most of the global lenders, a fair number of countries would follow into Italy’s vortex. In my opinion a default by Italy is certain to bring a global depression; one that would take many years to crawl out of.

#8 An Italian default may be closer than most people think.  As the Telegraphrecently reported, just to refinance existing debt, the Italian government must sell more than 30 billion euros worth of new bonds by the end of January....

Italy’s new government will have to sell more than EURO 30 billion of new bonds by the end of January to refinance its debts. Analysts say there is no guarantee that investors will buy all of those bonds, which could force Italy to default.

The Italian government yesterday said that in talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy, Prime Minister Mario Monti had agreed that an Italian collapse “would inevitably be the end of the euro.”

#9 European nations other than just the "PIIGS" are getting into an increasing amount of trouble.  For example, S&P recently slashed the credit rating of Belgium to AA.

#10 Credit downgrades are coming fast and furious all over Europe now.  At this point it seems like we see a new downgrade almost every single week.  Some nations have been downgraded several times.  For instance, Fitch has downgraded the credit rating of Portugal again.  At this point it is being projected that Portuguese GDP will shrink by about 3 percent in 2012.

#11 The financial collapse of Hungary didn't make many headlines in the United States, but it should have.  Moody's has cut the credit rating of Hungarian debt to junk status, and Hungary has now submitted a formal request to the EU and the IMF for a bailout.

#12 Even faith in German debt seems to be wavering. Last week, Germany had "one of its worst bond auctions ever".

#13 German banks are also starting to show signs of weakness.  The other day, Moody's downgraded the ratings of 10 major German banks.

#14 As the Telegraph recently reported, the British government is now making plans based on the assumption that a collapse of the euro is only "just a matter of time"....

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

#15 The EFSF was supposed to help bring some stability to the situation, but the truth is that the EFSF is already a bad joke.  It has been reported that the EFSF has already been forced to buy up huge numbers of its own bonds.

#16 Unfortunately, it looks like a run on the banks has already begun in Europe.  The following comes from a recent article in The Economist....

"We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium," an analyst at Citi Group wrote in a recent report. "This is a worrying development."

#17 Confidence in European banks has been absolutely shattered and virtually nobody wants to lend them money right now.

The following is a short excerpt from a recent CNBC article....

Money-market funds in the United States have quite dramatically slammed shut their lending windows to European banks. According to the Economist, Fitch estimates U.S. money market funds have withdrawn 42 percent of their money from European banks in general.

And for France that number is even higher — 69 percent. European money-market funds are also getting in on the act.

#18 There are dozens of major European banks that are in danger of failing.  The reality is that 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.

#19 According to the New York Times, the economy of the EU is already projected to shrink slightly next year, and this doesn't even take into account what is going to happen in the event of a total financial collapse.

#20 There are already signs that the European economy is seriously slowing down.  Industrial orders in the eurozone declined by 6.4 percent during September.  That was the largest decline that we have seen since the midst of the financial crisis in 2008.

#21 Panic and fear are everywhere in Europe right now.  The European Commission’s index of consumer confidence has declined for five months in a row.

#22 European leaders are really busy fighting with each other and a true consensus on how to solve the current problems seems way off at the moment.  The following is how the Express recently described rising tensions between German and British leaders....

The German Chancellor rejected outright Mr Cameron’s opposition to a new EU-wide financial tax that would have a devastating impact on the City of London.

And she refused to be persuaded by his call for the European Central Bank to support the euro. Money markets took a dip after their failure to agree.

Are you starting to get the picture?

The European financial system is in a massive amount of trouble, and when it melts down the entire globe is going to be shaken.

But it isn't just me that is saying this.  As I mentioned in a previous article, there are huge numbers of respected economists all over the globe that are now saying that Europe is on the verge of collapse.

For example, just check out what Credit Suisse is saying about the situation in Europe....

"We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks."

Many European leaders are promoting much deeper integration and a "European superstate" as the answer to these problems, but it would take years to implement changes that drastic, and Europe does not have that kind of time.

If Europe experiences a massive economic collapse and a prolonged depression, it may seem like "the end of the world" to some people, but things will eventually stabilize.

A lot of people out there seem to think that the global economy is going to go from its present state to "Mad Max" in a matter of weeks.  Well, that is just not going to happen.  The coming troubles in Europe will just be another "wave" in the ongoing economic collapse of the western world.  There will be other "waves" after that.

Of course this current sovereign debt crisis could be entirely averted if the countries of the western world would just shut down their central banks and start issuing debt-free money.

The truth is that there is no reason why any sovereign nation on earth ever has to go a penny into debt to anyone.  If a nation is truly sovereign, then the government has the right to issue all of the debt-free money that it wants.  Yes, inflation would always be a potential danger in such a system (just as it is under central banking), but debt-free money would mean that government debt problems would be a thing of the past.

Unfortunately, most of the countries of the world operate under a system where more government debt is created when more currency is created.  The inevitable result of such a system is what we are witnessing now.  At this point, nearly the entire western world is drowning in debt.

There are alternatives to our current system.  But nobody in the mainstream media ever talks about them.

So instead of focusing on truly creative ways to deal with our current problems, we are all going to experience the bitter pain of the coming economic collapse instead.