Former Hitler Youth Whistleblower Warns Of America's Nazi Future

'Israeli drone spying on Turkey almost shot down'

An Israeli drone flying over Turkey was nearly intercepted by Turkish aerial defense forces, an Istanbul-based media outlet reported on Tuesday.

Two F-16 fighter jets were called-up to the area, but failed to locate the drone.

"The Israeli 'Heron' drone was detected spying on military headquarters in Turkey's southern Hatay province," the report stated, adding that "the aircraft hovered over the Turkish forces in order to capture images of missile batteries and radar equipment."




'Officer noticed bright light.' (Photo: AFP)

A Turkish officer, who reportedly noticed a bright light in the sky, asked a senior sergeant to confirm the identity of the object. When they received confirmation, the soldiers abandoned their post for fear of an attack.

Meanwhile, the report claimed the Turkish radar continued to monitor the unmanned aerial vehicle, while the Turkish army waited for authorization to shoot it down.

The report stated that "by the time the order was given, the drone had already left the area."

The IDF Spokesperson's Unit refused to comment on the Turkish report.

Ynet

20 Tons Of Dead Fish Wash Up On Norway Beaches

January 2, 2012 – NORWAY – The inhabitants of Troms could hardly believe their eyes on the morning of New Year’s Eve, a very large amount, an estimated 10 to 20 tons of dead herring washed up on the beach, writes Northern Lights. Tromsø city is the ninth largest urban area in Norway by population. 

The city is warmer than most other places located on the same latitude, due to the warming effect of the Gulf Stream which originates at the tip of Florida. Various theories abound for the incident but no one knows for sure what’s happened in the popular hiking area in Nordreisa municipality. However, various theories have been tossed around, explains Jan-Petter Jorgensen (44), who stumbled upon the mass death in sight on the beach with his dog Molly. 

People say that something similar happened in the 80′s, and there is speculation among others on the river which flows into the ocean behind a promontory on the site, may have had something to do with it. Maybe the fish have been caught in a deprived oxygen environment, and then died of fresh water? Jorgensen estimates each individual fish to be of 100-150 grams, and that the total might be about up to 20 tons. Now he’s worried about what might happen if no one comes and removing carcasses. 

Dagbladet

In a attempt to avoid war Russia says Iran has no long-range missiles

Iran has no long-range missiles, a Russian defence official said Tuesday in Moscow's first response to a series of tests conducted by Tehran near the vital Strait of Hormuz oil supply route.

"Iran does not have the technology to create intermediate or long-range inter-continental ballistic missiles," defence ministry spokesman Vadim Koval told the Interfax news agency.

"And it will not get such missiles any time soon," he added.

Iran reported testing three missiles close to the Gulf oil-transit waterway on Monday amid preparations by Western powers to impose more economic sanctions over Tehran's nuclear drive.

Two of the missiles can fly a maximum 200 kilometres (120 miles), generally considered short-range weapons, although the Iranian media and a navy spokesman described one of them as "long-range".

The other, a Nasr anti-ship missile, had a shorter range of 35 kilometres.

Russia has relatively close ties with Iran and built its first nuclear power station in the southern city of Bushehr. Moscow has also delivered the nuclear fuel for the reactor.

Moscow has echoed Western concerns about the nature of the Iranian nuclear programme but has stopped short of publicly accusing Tehran of seeking atomic weapons and always said that the standoff should be solved by diplomacy.


Space War

France insists Iran developing nuclear arms

• 

France insisted Tuesday that Iran is developing nuclear bombs and urged Europe to follow the US lead by slapping an embargo on its oil exports and freezing its central bank assets by next month.

The call came as Iran's military warned one of the US navy's biggest aircraft carriers to keep away from the Gulf, in an escalating showdown over Tehran's nuclear drive that could pitch into armed confrontation.

French Foreign Minister Alain Juppe said that despite Tehran's insistence that its nuclear programme was exclusively for peaceful purposes, he was convinced "Iran is pursuing the development of its nuclear arms."

"I have no doubt about it... The last report by the International Atomic Energy Agency is quite explicit on this point," he told French network i-Tele.

"This is why France, without closing the path of negotiation and dialogue with Iran, wants stricter sanctions," he added.

Juppe said French President Nicolas Sarkozy has proposed freezing the assets of Iran's central bank and an embargo on exports of Iranian oil, a move being considered by the European Union.

"The American Congress has backed this idea and President (Barack) Obama has just signed it into law and we hope that the Europeans, by January 30, will take equivalent measures to show our determination," he said.

Obama on Saturday signed into law tough new sanctions targeting Iran's central bank and financial sector, in a move that could intensify the brewing Gulf showdown.

The measures are in addition to four sets of United Nations sanctions imposed over Iran's nuclear activities, and the European Union is expected to announce further sanctions of its own at the end of January.

But reports say the 27-nation bloc has not reached consensus on Iran, with Germany -- according to France's Le Monde newspaper -- reluctant to directly target the Iranian central bank.

Greece, which gets about a third of its oil from Iran, has reservations about hitting Tehran's oil sector. A Greek diplomatic source told AFP that an embargo would complicate supplies in these times of "economic crisis".

In London, British Prime Minister David Cameron's spokesman said: "This issue about a ban on oil and gas imports is something that we will be looking at and it will be discussed ... at a meeting at the end of January.

In 2010, EU customers accounted for 18 percent of Iran's oil exports, with most of the rest going to Asia.

Tehran, which insists its nuclear programme is exclusively for energy production and medical isotopes, last Sunday said its scientists had made the country's first nuclear fuel rod from indigenous uranium.

Iran and the EU each said Tuesday they were waiting on the other to take steps on resuming long-stalled negotiations over Tehran's nuclear programme.

Iranian foreign ministry spokesman Ramin Mehmanparast said "we are waiting for a date and venue of the next meeting to be declared" by EU foreign policy chief Catherine Ashton, who sent a letter in October proposing renewed talks.

But a spokesman for Ashton immediately shot back, telling AFP in Brussels that Iran "must first respond to the letter and then we'll take it from there."

The negotiations were being held with the five permanent members of the UN Security Council -- Britain, China, France, Russia and the United States, plus non-permanent member Germany.

Tensions have risen in recent days after Iran test-fired a series of missiles near the key Gulf oil supply route of the Strait of Hormuz.

Iran's military on Tuesday warned the American aircraft carrier USS John C. Stennis to keep away from the Gulf, in a defiant message that came just after Iran completed 10 days of naval manoeuvres at the entrance to the Gulf.

The manoeuvres were designed to show it could close the strategic oil shipping channel in the Strait of Hormuz if it felt threatened.

Although international pressure has already hit Iran's economy by scaring off foreign investors, Mehmanparast said a sudden dive in the Iranian currency at the weekend, after Obama put the new US measures into effect, had nothing to do with sanctions.

The currency, the rial, appeared to stabilise on Tuesday after losing 12 percent on Monday.

Space War

Iran warns US carrier not to return to Persian Gulf

In another heated escalation over the strategic Strait of Hormuz, Iran Tuesday, Jan. 3, threatened to take action if the US aircraft carrier which "moved to the Sea of Oman because of our drill returns to the Persian Gulf." Army chief Lt. Gen. Ataolla Salehi said:" Iran will not repeat this warning."
He referred to the USS Stennis as "the enemy's carrier," which "I recommend and emphasize… not return to the Persian Gulf." He avoided naming the US vessel or the details of action Iran might take if it returned.
DEBKAfile's military sources report that the Stennis transited the Strait of Hormus Wednesday, Dec. 28 and entered the Sea of Oman where Iran was staging a naval drill. Washington was demonstrating freedom of navigation in the international strait through which one-fifth of the worlds exported oil is shipped and underlining Iran's inability to close it to merchant shipping and US warships.
Iran said that its surveillance aircraft and warships tracked and filmed the US carrier's movements in and around Hormuz which it claims to fully control.

Saturday, Dec. 31, Iran announced a long-range missile test-fire would take place over the strait, thereby causing a five-hour stoppage of shipping traffic. Later, an Iranian general said the missile test was delayed. DEBKAfile's Iranian and military sources reported that this was a trick to prove Iran capable of closing the Strait of Hormuz in defiance of strong warnings from Washington.

Monday, Jan. 2, the Iranian navy marked the last day of its Hormuz drill by testing shore-to-sea Qader and Nour missiles. The Qader is described by the Iranians as a cruise missile capable of destroying large American air carriers with a single hit.
Tuesday, this claim proved to be the prologue in advance of Iran's virtual closure of the Strait of Hormuz against the return of the USS Stennis into the Persian Gulf and appropriation of its "right" to open and close the waterway at will.

It is hard to see the Obama administration caving in to Tehran's ultimate challenge to the freedom of this vital international waterway. The Stennis or some other American naval vessel must soon be sent through the Strait of Hormuz to test Iran's assumption of control.
Gen. Salehi said: "We are not seeking to act irrationally, but are ready to confront any threat." Another Iranian commander said that Iran's Revolutionary Guards are preparing another military exercise in the Persian Gulf. He did not offer a date.

Our military sources add that two more American warships, the USS Bataan and USS Makin Island, are cruising in the area. They are small Marine Corps amphibian craft carrying jets and helicopters. The big air craft carrier USS Carl Vinson, deployed in the Pacific from the third week of December, is on standby to advance to waters opposite Iran in an emergency.

Debkafile

'Syrian opposition may soon topple Assad'

There are growing signs that the Syrian opposition is stabilizing and will succeed in the coming months in toppling President Bashar Assad’s regime, a top IDF officer predicted on Tuesday.

According to the officer, the IDF has learned of the defection of thousands of Syrian soldiers, including dozens of officers, among them a number of high-ranking colonels.

The officer’s prediction came a day after Defense Minister Ehud Barak told the Knesset that Assad was expected to fall in the coming weeks.

The officer said that the IDF was increasingly concerned with the possible fallout from Assad’s downfall and particularly the possibility that Syria’s chemical arsenal would fall into terrorist hands.

There are also concerns that clashes could break out along Israel’s border with Syria in the Golan Heights. The IDF has detected an increase in the number of Syrian troops patrolling the border and recently decided to deploy a battalion nearby to contain a potential isolatedattack.

The IDF is also concerned with the presence of global jihad elements in Syria, which it suspects were behind the twin suicide bombings in Damascus last week which killed 44 people.

“It is unclear what role these elements are playing in Syria and their presence is concerning,” the officer said.

Turning to Iran, the IDF believes that Iran will make a decision in the coming years to manufacture a nuclear device.

Currently, Iran is assessed to be on the threshold, which means that it has mastered all of the technology required for a nuclear weapon as well as the fuel cycle process.

“All that is needed now is for the Iranians to make a decision to make the bomb and we predict with high probability that it will happen in the coming years,” the officer said.

The Iranians recently opened the Fordo facility built under a mountain near the city of Qom and are moving centrifuges there which they plan to use to enrich uranium to 20 percent levels, moving closer to the 90% levels required for a nuclear weapon. In addition, the facility can be used to store between 1 and 2 tons of enriched uranium.

“Once they go to the breakout stage [begin enrichment of military-grade uranium Y. K.], it will take between one year to a year-and-a-half to manufacture a nuclear device,” the officer said.

Jerusalem Post

JPMorgan sued for $95 million over mortgage securities

(Reuters) - JPMorgan Chase & Co has been sued for $95 million by the trustee for securities marketed in 2005 by the former Bear Stearns Cos over alleged misrepresentations regarding the underlying mortgage loans.

US Bank NA wants to force JPMorgan to buy back the mortgage loans because of alleged breaches of representations and warranties regarding the Bear Stearns Asset Backed Securities Trust 2005-4, for which it serves as trustee.

It also accused the largest U.S. bank by assets of refusing to provide the underlying loan files, as the trust documents require, so it can investigate the extent of the alleged breaches.

The unit of US Bancorp said it made its request at the direction of a majority certificate holder in the trust. US Bank also sued Bear Stearns and its former EMC Mortgage Corp unit. JPMorgan bought Bear Stearns in 2008.

JPMorgan spokeswoman Jennifer Zuccarelli declined to comment.

The lawsuit was filed on Friday in the New York State Supreme Court in Manhattan, and publicly docketed on Tuesday.

It is one of many lawsuits seeking to hold banks responsible for investor losses over mortgages that may have been toxic, defective or improperly underwritten.

JPMorgan Chief Executive Jamie Dimon last month told investors that the bank has been sued over $54.9 billion of private-label securitizations, excluding the former Washington Mutual Inc, and expects that number to rise.

"We think the disclosures are clear, risks were plain and set forth," he said. "Investors, mostly sophisticated, they understood and accepted it."

US Closes 2011 With Record $15.22 Trillion In Debt, Officially At 100.3% Debt/GDP, $14 Billion From Breaching Debt Ceiling

While not news to Zero Hedge readers who knew about the final debt settlement of US debt about 10 days ahead of schedule, it is now official: according to the US Treasury, America has closed the books on 2011 with debt at an all time record$15,222,940,045,451.09. And, as was observed here first in all of the press, US debt to GDP is now officially over 100%, or 100.3% to be specific, a fact which the US government decided to delay exposing until the very end of the calendar year. We wonder, rhetorically, just how prominent of a talking point this historic event will be in any upcoming GOP primary debates. And yes, technically this number is greater than the debt ceiling but it excludes various accounting gimmicks. When accounting for those, the US has a debt ceiling buffer of... $14 billion, or one third the size of a typical bond auction.

Germany's unemployment rate at record low in December

German unemployment fell to its lowest rate in December since 1991, according to the German Federal Labour Agency.

The adjusted jobless rate fell to 6.8% from 6.9% in November, the Federal Labour Office said.

This marked a new record low since figures for unified Germany were first published.

The seasonally-adjusted total for the number of people out of work in Germany fell 22,000 to 2.88 million in December.

The agency said the number of people out of work averaged 2.976 million over the course of last year.

News of the figures saw the German Dax stock exchange rise almost 1% by noon on Tuesday.


This was equal to an average jobless rate of 7.1 % - down from 7.7% in 2010.

Leading economists expect Germany's economic growth to slow in 2012, however, in line with other major eurozone economies, which may put a squeeze on wages and jobs.

But, as the BBC's Berlin correspondent Stephen Evans points out, unemployment at a record low for the last two decades is something most countries would envy, and a sign of the way Germany has rebuilt itself since the Wall came down.Strong exports

"Germany's manufacturing and export-driven economy finished the year strongly - piling on another 22,000 jobs in December," said Anthony Cheung of market analysts RANsquawk.

"Behind the strong performance lie some adept moves by Germany's exporters.

"As their eurozone markets weakened, they have been very good at moving their focus elsewhere.

"German carmakers have more than compensated by dramatically growing sales to developing markets."

By contrast, Spain said on Tuesday the number of people claiming unemployment benefits stood at a 15-year high at the end of 2011.

The Spanish claimant count is now 4.42 million, with December seeing the fifth straight monthly rise.

BBC

World’s biggest economies face $7.6-trillion debt

Governments of the world’s leading economies have more than US$7.6-trillion of debt maturing this year, with most facing a rise in borrowing costs.

Led by Japan’s US$3-trillion and the U.S.’s US$2.8-trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from US$7.4-trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show.

Investors may demand higher compensation to lend to countries that struggle to finance increasing debt burdens as the global economy slows, surveys show. The International Monetary Fund cut its forecast for growth this year to 4% from a prior estimate of 4.5% as Europe’s debt crisis spreads, the U.S. struggles to reduce a budget deficit exceeding US$1-trillion and China’s property market cools.

“The weight of supply may be a concern,” Stuart Thomson, a money manager in Glasgow at Ignis Asset Management Ltd., which oversees US$121-billion, said in a Dec. 28 telephone interview. “Rather than the start of the year being the problem, it’s the middle part of the year that becomes the problem. That’s when we see the slowdown in the global economy having its biggest impact.”

Competition for Buyers

The amount needing to be refinanced rises to more than US$8-trillion when interest payments are included. Coming after a year in which Standard & Poor’s cut the U.S.’s rating to AA+ from AAA and put 15 European nations on notice for possible downgrades, the competition to find buyers is heating up.

“It is a big number and obviously because many governments are still in a deficit situation the debt continues to accumulate and that’s one of the biggest problems,” Elwin de Groot, an economist at Rabobank Nederland in Utrecht, Netherlands, part of the world’s biggest agricultural lender, said in an interview on Dec. 27.

While most of the world’s biggest debtors had little trouble financing their debt load in 2011, with Bank of America Merrill Lynch’s Global Sovereign Broad Market Plus Index gaining 6.1%, the most since 2008, that may change.

Italy auctioned 7-billion euros (US$9.1-billion) of debt on Dec. 29, less than the 8.5-billion euros targeted. With an economy sinking into its fourth recession since 2001, Prime Minister Mario Monti’s government must refinance about US$428-billion of securities coming due this year, the third-most, with another US$70-billion in interest payments, data compiled by Bloomberg show.

Rising Costs

Borrowing costs for G7 nations will rise as much as 39% in 2011, based on forecasts of 10-year government bond yields by economists and strategists surveyed by Bloomberg in separate surveys. China’s 10-year yields may remain little changed, while India’s are projected to fall to 8.02% from about 8.39%. The survey doesn’t include estimates for Russia and Brazil.

After Italy, France has the most amount of debt coming due, at US$367-billion, followed by Germany at US$285-billion. Canada has US$221-billion, while Brazil has US$169-billion, the U.K. has US$165-billion, China has US$121-billion and India US$57-billion. Russia has the least maturing, or US$13-billion.

Rising borrowing costs forced Greece, Portugal and Ireland to seek bailouts from the European Union and IMF. Italy’s 10-year yields exceeded 7% last month, a level that preceded the request for aid from those three nations.

Bad Combination

“The buyer base for peripheral Europe has obviously shrunk at the same time that the supply coming to the market is increasing, which is not a good combination,” said Michael Riddell, a London-based fund manager at M&G Investments, which oversees about US$323-billion.

The two biggest debtors, Japan and the U.S., have shown little trouble attracting demand.

Japan benefits by having a surplus in its current account, which is the broadest measure of trade and means that the nation doesn’t need to rely on foreign investors to finance its budget deficits. The U.S. benefits from the dollar’s role as the world’s primary reserve currency.

Japan’s 10-year bond yields, at less than 1%, are the second-lowest in the world, after Switzerland, even though its debt is about twice the size of its economy.

The U.S. attracted US$3.04 for each dollar of the US$2.135-trillion in notes and bonds sold last year, the most since the government began releasing the data in 1992. The U.S. drew an all-time high bid-to-cover ratio of 9.07 for US$30-billion of four-week bills it auctioned on Dec. 20 even though they pay zero percent interest.

Tougher Year

With yields on 10-year Treasuries below 2%, an increasing number of investors see little chance for U.S. bonds to repeat last year’s gains of 9.79%. The U.S pays an average interest rate of about 2.18% on its outstanding debt, down from 2.51% in 2009, Bloomberg data show.

‘Given how well they have done, we don’t think they’re any longer a very good hedge,” Eric Pellicciaro, head of global rates investment at New York-based BlackRock Inc., which manages US$1.14-trillion in fixed-income assets, said in a Dec. 16 telephone interview.

The median estimate of 70 economists and strategists is for Treasury 10-year note yields to rise to 2.60 percent by year-end from 1.94% at 10:03 a.m. London time. In Japan, the forecast for the nation’s benchmark note yield is 1.35%, while it’s expected to rise to 2.50% in Germany, from 1.93% Tuesday.

Central Banks

Central banks are bolstering demand by either keeping interest rates at record lows or reducing them, and by purchasing bonds through a policy know as quantitative easing.

The Federal Reserve has said it will keep its target rate for overnight loans between banks between zero and 0.25% through mid-2013, and is now selling US$400-billion of its short-term Treasuries and reinvesting the proceeds into longer-term government debt in a program traders dubbed Operation Twist.

The Bank of Japan has kept its key rate at or below 0.5% since 1995, and expanded the asset-purchase program last year to 20 trillion yen (US$260-billion). The Bank of England kept its main rate at a record low 0.5% last month, and left its asset-buying target at 275 billion pounds (US$426-billion).

The European Central Bank reduced its main refinancing rate twice last quarter, to 1% from 1.5%. It followed those moves by allotting 489-billion euros of three-year loans to euro-region lenders. That exceeded the median estimate of 293-billion euros in a Bloomberg News survey of economists. The central bank will offer a second three-year loan on Feb. 28.

‘Flush With Liquidity’

The money from the ECB may be used by banks to buy government bonds, according to Fabrizio Fiorini, the chief investment officer at Aletti Gestielle SGR SpA in Milan.

“The market is now flush with liquidity after measures taken by central banks, particularly the ECB, and that’s great news for risky assets,” Fiorini said in a telephone interview on Dec. 20. “The market will have no problem taking down supply from countries like Spain and Italy in the first quarter. In fact, they should be able to raise money at lower borrowing costs than what we saw in recent months.”

Italy’s sale last week included 2.5-billion euros of 5% bond due in March 2022, which yielded 6.98%. That was down from 7.56% at an auction Nov. 29. It also sold 9-billion euros of bills on Dec. 28 at a rate of 3.251%, compared with 6.504% at the previous auction on Nov. 25.

‘Phony War’

Investors should be most worried about the period after the ECB’s second three-year longer-term refinancing operation scheduled in February, according to Ignis’s Thomson.

“The amount of liquidity that has been supplied by central banks, with more to come from the ECB in February, suggests the first couple of months will be a sort of phony war as far as the supply is concerned,” Thomson said.

The ECB has bought about 212-billion euros of government bonds since starting a program in May 2010 to contain borrowing costs for Greece, Portugal and Ireland. It began buying Spanish and Italian debt in August, according to people familiar with the trades, who declined to be identified because they weren’t authorized to speak publicly about the transactions.

“There’s a lot of talk that the ECB might have to give more direct support to the governments,” Frances Hudson, who helps manage about US$242-billion as a global strategist at Standard Life Investments in Edinburgh, said in a Dec. 22 telephone interview.

Financial Post

Barclays 'risks backlash' unless tax affairs simplified

Bruce Packard, an analyst at Seymour Pierce, said Barclays risks "a fierce customer backlash" if it does not reduce its exposure to offshore tax havens or limit legitimate tax avoidance, and focus instead on service.

In an attempt to restore trust in the industry, Britain's banks "have changed their marketing to appear friendlier", Mr Packard said. But he warned that in Barclays' case the marketing may be "inconsistent with the reality" and that although the bank "has stuck to the letter of the law ... we can't help thinking the brand is being tarnished".

His comments follow the revelation that Barclays has stockpiled billions of pounds of "losses" to reduce future tax bills, despite not having made a loss at group level for over a decade. They also come shortly after the pledge by Bob Diamond, Barclays' chief executive, for "banks to be better citizens".

In 2010, Barclays generated £591m of so-called "deferred tax assets" by making about £2bn of losses in subsidiaries in the UK, US and Spain, despite reporting £6bn of pre-tax profits at group level. The bank has declined to disclose where the losses were incurred, though they are likely to have been in parts of its investment bank and foreign loan book.

The lender also reduced its corporate tax bill in 2010 by £365m to £1.52bn by using warehoused tax assets.

Although the practice is not uncommon, the scale at Barclays is striking. The European Banking Authority has estimated Barclays had €4bn (£3.3bn) of deferred tax assets last year, compared with €5bn at Royal Bank of Scotland, and €7.3bn at Lloyds Banking Group. But while RBS and Lloyds suffered record-breaking losses, Barclays always reported a profit.

The lender has run into controversy before over its tax affairs. Two years ago a whistleblower leaked documents which purported to show Barclays was using a network of subsidiaries in the Cayman Islands and Luxembourg to reduce its tax bill.

Earlier this year, Mr Diamond was forced to reveal the bank operated nearly 300 subsidiaries in tax havens and had paid just £113m of UK corporation tax in 2009.

Mr Packard said: "At Seymour Pierce we are rather sceptical of companies that operate in offshore tax havens, believing companies generate shareholder returns by performing services or making products their customers value, rather than through complicated financial structures."

Barclays stressed that it has signed up to the UK code of practice on tax, is entirely transparent with HM Revenue & Customs, and pays "all the tax due in all the countries we operate".

The Telegraph

Eurozone crisis: German unemployment hits as Greece warns over euro exit

Bad news for one of Europe's weaker economies - Spain's unemployment level has hit a new record high.

In a sign of the challenge facing the new Spanish government, the number of people registered as 'out of work' hit 4.42 million at the end of December. That's the highest level since they first started collecting the figures in 1996, and will push the unemployment rate further above 22%.

Spain's labour ministry blamed the country's weakening economy for the increase:

The figures for the number of registered unemployed for the month of December confirm the deterioration of the economic situation during the second half of the year.

This is the second blow to hit Spain in four days – last Friday, it was announced that the Spanish deficit for 2011 will be larger than the official target of 6% of GDP, and could hit 8%.

Mariano Rajoy's new administration also unveiled €8.9bn of spending cuts and €6bn of tax rises designed to cut the deficit – but the plan is unlikely to help with Spain's huge unemployment crisis.

Pressure is building again today in Greece, the most troubled member of the eurozone.

Government spokesman Pantelis Kapsis warned this morning that Greece could be forced out of the eurozone unless it can agree the details of its second rescue package, worth €130bn. Kapsis told Skai TV that:

The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro...The situation will be much worse.

That €130bn package was agreed in principle last October, at an EU summit in Brussels. Nearly 10 weeks later, the Greek government still hasn't agreed its side of the deal – yet more austerity cutbacks, and a debt-swap deal with its creditors.

Kapsis warned that "The next three to fourth months are the most crucial."

People walk past a ramshackle shop in central Athens. Photograph: Orestis Panagiotou/EPA

The immediate priority is to hammer out a deal with Greece's debt-holders. The original plan was for a 50% haircut, but IMF officials are now indicating that this may not be enough to repair Greece's finances.

National Bank of Greece president Vassilis Rapanos has also warned that Greeks must either lower their standard of living, or quit the euro and turn the clock back by decades

Rapanos told an audience at the Athens Stock Exchange that the first quarter of 2012 will be decisive for the country, as he conducted the traditional cutting of the New Year cake.

The Guardian