Another one bites the dust...Cyprus to ask for bailout from eurozone partners

Cyprus has told the European authorities that it intends to apply for financial assistance, the fifth eurozone member to do so.

It said it needs help to shore up its banks, which are heavily exposed to the Greek economy.

The announcement came on another day of nervousness about the single currency.

Shares in Italy, Spain and Greece fell sharply amid concerns that an EU summit this week will again fail to produce a deal to shore up the euro.

The Spanish prime minister called for Thursday's European Union summit to "dispel doubts" about the euro.

The Italian and Spanish indexes both closed about 4% down. The fall on Spain's Ibex index was exacerbated by a Reuters report that the Moody's credit rating agency is planning to downgrade Spain's banks.

Earlier Spain formally requested a bailout loan, expected to be for up to 100bn euros (£80.2bn, $125bn), for its banking sector.'Contagion'

In a short statement, the Cyprus government said the help would contain the risks to the Cypriot economy.

The BBC's chief economics correspondent Hugh Pym described Cyprus' problems as "classic contagion".

Cyprus' banks have lost large amounts on Greek government bonds. They are also facing big losses on loans made to businesses in Cyprus, which have been hard hit by the deep recession in neighbouring Greece, its biggest trading partner.

Earlier, Cyprus's credit rating was cut to junk status by the ratings agency Fitch, making it very hard for it to raise funds itself.

There was no further detail from the Cyprus government, but Fitch said the country, which has a population of one million, would need 4bn euros (£3.2bn) to support its banks, the equivalent of almost a quarter of its GDP, or economic output, last year.
BBC

NATO to hold emergency meet over Turkish jet shot down by Syria

NATO will hold emergency talks on Tuesday to discuss Syria’s downing of a Turkish jet fighter, but the alliance is not expected to take military action, even if it confirms Turkey’s claim that the unarmed plane was attacked in international airspace.

The incident has further raised regional tensions over the conflict in Syria, where some 40 people were reported killed Sunday in new clashes between rebels and government troops.

On Sunday, U.S. Secretary of State Hillary Rodham Clinton sharply criticized Syria for downing the Turkish plane, which Turkey’s Foreign Ministry called an “open and grave violation of international law” that would justify retaliation.



“The United States condemns this brazen and unacceptable act in the strongest possible terms,” Clinton said in Washington. “It is yet another reflection of the Syrian authorities’ callous disregard for international norms, human life, and peace and security.”

Clinton said Washington will maintain close contact with Turkish officials as they determine their response, including via the U.N. Security Council. “We will work with Turkey and other partners to hold the Assad regime accountable,” she said.

Turkish state media reported Sunday that the RF-4E reconnaissance plane’s wreckage was found in the Mediterranean Sea at a depth of 4,265 feet (1,300 meters), but officials did not confirm the report. The two pilots remained missing.

Turkish Foreign Minister Ahmet Davutoglu said the jet was on a training flight to test Turkey’s radar capabilities, not spying on Syria. He said the plane mistakenly strayed into Syrian airspace Friday, but was quickly warned to leave by Turkish authorities and was a mile (1.6 kms) inside international airspace when it was shot down.

Syria insisted Saturday that the shooting was “not an attack” and that the aircraft had violated its airspace. But Turkish authorities say Syria didn’t warn the Turkish plane or send its own jets to confront it.

At the request of Turkey, NATO’s governing body will meet Tuesday to discuss the incident, said Oana Lungescu, a NATO spokeswoman. The consultations were called under article 4 of NATO’s founding Washington Treaty.

“Under article 4, any ally can request consultations whenever, in the opinion of any of them, their territorial integrity, political independence or security is threatened,” Lungescu said. The North Atlantic Council – the ambassadors of the 28 NATO countries – will decide whether to respond, she said.

The last time article 4 was invoked was nine years ago – also by Turkey – after tensions with neighboring Iraq escalated. However, that case did not lead to the invocation of article 5, which declares that an attack against any single NATO country shall be considered as an attack against them all.

“No one should dare to test Turkey’s capabilities,” Davutoglu said Sunday.

Turkish Prime Minister Recep Tayyip Erdogan was expected to make a statement Tuesday and might announce some retaliatory steps.

In a telephone interview with Turkish TV news channel A Haber on Saturday, Syrian Foreign Ministry spokesman Jihad Makdissi said the downing was “not an attack.”"An unidentified object entered our air space and unfortunately as a result it was brought down. It was understood only later that it was a Turkish plane,” A Haber quoted Makdissi as saying. “There was no hostile act against Turkey whatsoever. It was just an act of defense for our sovereignty.”

Despite some opposition leaders’ calls for Western military intervention in Syria, the U.S. and allies have been hesitant to get involved in what could prove a protracted conflict, preferring the diplomatic route. Syrian allies Russia and China have shielded Syria from U.N. sanctions and stridently oppose any military intervention.

It’s unlikely the downing of the Turkish plane will change those calculations, despite Ankara’s appeal for the NATO meeting.

In October 1989, two Syrian MiG-21s violated Turkish air space and shot down a Turkish plane on a geographical survey mission, killing all five crew members. Syria at the time promised to severely punish the pilots, who disregarded Turkish orders not to enter Turkish airspace.

Dogu Ergil, a professor of political science at the Ankara University, told private NTV television that Turkey had repeatedly sent its jets across the Syrian border for several weeks to show its military muscle at the time.

The plane’s downing drew criticism from other countries pushing Syrian President Bashar Assad to end his crack down on an increasingly armed popular uprising. Opposition activists say the conflict has killed 14,000 people, mostly civilians, over the past 15 months.

British Foreign Secretary William Hague said Sunday he was “gravely concerned by the Syrian regime’s action in shooting down” the plane.

“This outrageous act underlines how far beyond accepted behavior the Syrian regime has put itself, and I condemn it wholeheartedly,” Hague said in a statement. “The Assad regime should not make the mistake of believing that it can act with impunity. It will be held to account for its behavior.”

Hague met last week with U.N. and Arab League special envoy Kofi Annan for talks on plans for an international summit, while British officials discussed the issue in Geneva on Saturday with members of Annan’s team. Hague noted Sunday that “the UK stands ready to pursue robust action at the United Nations Security Council.”

Italy’s foreign minister decried the shooting down of the plane as “a further, very grave and unacceptable action by the Assad regime.” In a written statement, Giulio Terzi promised that Italy will play an active role in the NATO meeting Tuesday.

Syrian activists reported violence in different parts of the country Sunday, saying nearly 40 people were killed.

The deadliest incident was in the northern town of Ariha, where a shell hit a home killing seven members of the same family, the Britain-based Syrian Observatory for Human Rights said. A video posted online showed the seven men’s bodies, some badly mutilated, including one who had part of his head blown off.

Activists also reported intense shelling and clashes between rebels and troops in the eastern city of Deir el-Zour and the central city of Homs. Later in the day, Syria’s state-run news agency SANA said gunmen kidnapped a pro-government Sunni cleric in the city of Deir el-Zour.

Earlier Sunday, activists said rebels captured a military base in the northern Syrian province of Aleppo, confiscating large amounts of ammunition. The Observatory said 16 government troops died in the attacks on the base near the rebel-held town of Daret Azzeh and nearby checkpoints early Sunday.

Area activist Mohammed Saeed said the rebels had removed hundreds of artillery shells from the base. Saeed added via Skype that troops retaliated with intense shelling on the area using helicopter gunships.

Syria’s state-run SANA news agency, meanwhile, said gunmen from Turkey clashed with Syrian border guards in Rabiah, a region in the coastal Latakia province. SANA said several infiltrators died in the late Saturday clash, while others reportedly returned to Turkey. It said several Syrian border guards were hurt, but didn’t specify how many.

Turkey denies sheltering armed Syrian rebels, although many Syrian refugees have fled to camps on the Turkish side of the border.


National Post

Gerald Celente on Capital Account

Germany tells Greece to stop asking for help and start cutting budgets

In unusually blunt remarks, German finance minister Wolfgang Schaeuble said: “The most important task facing new prime minister [Antonis] Samaras is to enact the programme agreed upon quickly and without further delay instead of asking how much more others can do for Greece.”

His comments highlight Germany’s growing impatience with the eurozone’s problem nations in what is shaping up to be another significant week for the single currency bloc.

A formal request from Spain for up to €100bn (£80bn) of emergency funding for its banks is expected on Monday, while the week ends with a two-day summit in Brussels where German chancellor Angela Merkel is again expected to dig in her heels over the eurobonds championed by France’s new president, Francois Hollande. Such bonds would mutualise the debts of the 17 eurozone nations, effectively leaving Germany on the hook for more spendthrift members.

Greece’s new three-party coalition government took charge on Thursday, vowing to renegotiate the terms of its latest €130bn bail-out. It wants a two-year extension to the 2014 deadline for it to cut its budget deficit to 2.1pc of GDP from 9.3pc in 2011. Such delay would, however, require up to €20bn more foreign funding.

Mr Schaeuble added: “Greece hasn’t tried enough so far, that has to be said quite clearly… no one on Earth who has followed this issue would think that Greece has fulfilled what it has promised.”

The Telegraph

Moody's To Junk Spanish Banking System In Hours

Nearly two weeks ago we penned "These Three Spanish Banks Will Be Downgraded Tomorrow" which showed which banks had a rating higher than the sovereign following Moody's long overdue Spanish downgrade, and thus were about to be downgraded by many notches. Today, after a ridiculously long delay whose only purpose was to buy time, Moody's is about to junk virtually the entire Spanish banking sector, as was widely expected.The downgrade is expected to happen within hours.

After cutting the rating of Baa3 and Spain to threaten to put Spanish debt at the level of junk bond no later than 30 days, has reviewed the notes of all banks. "We have reported a reduction of two or three notches (steps) to almost everyone. Do not look at individual financial statements of each entity. Do not discriminate, "added the sources.

And is that the sector is particularly annoying because automatically cut the rating of the bank once they do the same with the state. The statement, as indicated by financial sources will be announced after twelve hours have told the entities, ie, probably after 23:00 tonight.

The biggest problem is that many entities will enter into the very undesirable group of fallen angels. Typically, banks with a rating lower than the state and how it is now just one step from losing investment grade, most of the financial sector will receive a rating of junk bond. Possibly, only the big banks such as Santander, BBVA or get rid CaixaBank will fall to that level.

This is the third hit Spanish banks received in just over a month. Moody's has already cut the rating of several entities on 17 May. Downgraded the debt of 16 Spanish companies between one and three steps, also as a result of cutting Spanish debt rating a few days.

Of course, since no Spanish banks have access to the non-ECB mediated market, this move is largely symbolic but further cements the country's status as financial system pariah and the next Greece.

Zero Hedge

The most dangerous people on financial media

Putin arrives in Israel to discuss Iran, Syria

With the Muslim Brotherhood now in charge in Egypt and Syria in flames, Russian President Vladimir Putin makes his first visit to the volatile region on Monday since becoming president again in May, with a quick two-day journey to Israel and Jordan.

While Putin is scheduled to hold a lengthy meeting with Prime Minister Binyamin Netanyahu in the afternoon – a one-on-one discussion followed by a larger meeting with staff and other ministers – the bulk of the visit will be symbolic: the dedication of a monument to the Red Army for its victory over Nazi Germany, a state dinner with President Shimon Peres and a visit to Bethlehem.

The focus of the Netanyahu- Putin talks is expected to be on Iran and Syria, where the two countries have wide differences of opinion.

While Israel has said repeatedly that the talks between the world powers and Iran are going nowhere, and only giving Iran more time to move its nuclear program forward, the Russian position is to give the diplomatic process more time.

Foreign Minister Sergei Lavrov said last week on a Russian television network that in order to settle the Iranian issue, “it’s necessary to refrain from constant threats of using force, abandon scenarios aimed against Iran and stop dismissing the talks as failure.”

Regarding Syria, while Israeli leaders have condemned the bloodshed and called for Syrian President Bashar Assad’s ouster, Russia is providing him with political and military support.

Despite the differences, Defense Minister Ehud Barak said in an interview with The Washington Post last week that he thought the Russians could – “in an honest, frank discussion” – be convinced to cooperate on Syria. “They could have a major role in helping to solve the Syrian issue,” he said.

Also expected on the agenda are Sunday’s dramatic developments in Egypt where the Brotherhood’s Mohamed Morsy was declared the country’s new president, though Russia has little to no influence in Cairo.

Putin, who will be met at the airport in the morning by Foreign Minister Avigdor Liberman, will go directly to Netanya and dedicate – together with Peres – a memorial to the Red Army’s victory over Nazi Germany. Netanyahu, who was originally scheduled to attend the ceremony, has canceled because of his broken leg and will meet Putin in Jerusalem.

In addition to his close advisers, the prime minister has also invited Liberman, Public Diplomacy and Diaspora Affairs Minister Yuli Edelstein and Likud MK Ze’ev Elkin – all native Russian speakers – to an afternoon meeting with Putin.

In addition, Kadima chairman Shaul Mofaz, who met for some 30 minutes in Washington last week with US President Barack Obama, is scheduled to attend, as is the defense minister.

Following that meeting, Putin will meet Peres, who will then host the state dinner.

On Tuesday the Russian president will go to Bethlehem and dedicate a Russian cultural center, and from there to the Allenby Bridge and Jordan for a meeting with King Abdullah, before flying home.

Putin was accompanied by some 400 people, flying in on four different planes. The massive entourage includes Putin’s staff, a large number of businesspeople and around 60 journalists.

Meretz announced Monday that activists will hold a demonstration outside Netanyahu's residence in Jerusalem while he hosts the visiting Russian president. Meretz MK Zehava Gal-On is expected to be among the participants of the demonstration.

Former Meretz MK Mossi Raz, who initiated the protest, stated "Meretz calls on the prime minister not to meet with Putin until he stops providing assistance to [Syrian President Bashar] Assad to kill his own people."

He added: "Russia stands today as the main block preventing the international community from intervening in Syria. Putin, who sells weapons to Assad that are in turn used to massacre civilians, has blood on his hands. Meeting with him is a moral disgrace and a political blunder."
Jerusalem Post