It was always going to be an unusual but memorable moment as Italy's parliament reconvened after the recent inconclusive elections, with members of the maverick party founded by comedian Beppo Grillo taking their places for the first time.

And so it is proving. Southern Europe editor John Hooper writes:Not since the dawn of the Italian Republic after the Second World War, when ex-Communist partisans arrived in force, has there been an opening of parliament anything like today’s.The representatives of the Five Star Movement (M5S) unexpectedly respected the rule that male Italian lawmakers must wear ties (though, in line with the M5S’s enivronmentalist principles, many chose a black one bearing the words “No Coal”). But from the moment that the movement’s deputies entered the Chamber, it was clear they were going to be awkward to deal with.Instead of taking up a position on the left or right of the semi-circle in which the members of the lower house sit, the M5S’s deputies (who prefer to be called “citizens”) ranged themselves around the back.“Neither right nor left, but above (and beyond),” chirped one of their number, Tiziana Ciprini, on her Facebook page.The whole episode reflected the view that the movement’s co-founder, the comedian, Beppe Grillo, put to me in an interview last month: that the M5S cannot be fitted into conventional political categories.It is one of things that worries many Italians about the M5S. Most of the so-called grillini are passionately committed to progressive causes (they eschew the mineral water that is everywhere available in parliament in favour of tap water, for example).  But denying the existence of left and right is a classic sign of populism. And Mussolini did it all the time.

A deepening recession in the 17-nation eurozone sent shares lower on Thursday amid evidence that the problems of the single currency's crisis-hit periphery were spreading northwards to affect monetary union's core economies of Germany and France.

Despite an easing of financial tensions in the second half of the year, gross domestic product in the members of the monetary union dropped by 0.6% in the final three months of 2012, a heftier decline than the markets had been expecting.

An across-the-board fall in output that affected both large and small economies meant that the eurozone economy failed to register an increase in activity in a single quarter of 2012, with a flat first three months of the year followed by three successive drops in output. The combination of weakening activity and high budget deficits prompted a warning from the credit rating agency Standard & Poor that Spain, France, Italy and Portugal were at risk of a downgrade in 2013.

Although Britain also registered a fall in output in the final three of 2013 and is one quarter of contraction away from triple-dip recession, Moritz Kraemer, managing director of European sovereign ratings at S&P said it was not a foregone conclusion that the UK would be stripped of its coveted AAA rating.

Eurostat, the EU's statistics office, said seven eurozone countries – Greece, Spain, Italy, Cyprus, the Netherlands, Portugal and Finland – were already officially in recession after suffering two or more successive quarters of falling output.

The poor performance of the eurozone's two biggest economies meant the drop in GDP in the fourth quarter was worse than the 0.1% fall in the third quarter. Consensus among analysts polled by Reuters had been for a 0.4% drop.

Germany's main stock market index, the DAX, fell by 1% yesterday, with shares in Paris, Milan and Madrid also losing ground. The euro dropped against the dollar and the yen on the foreign exchanges amid speculation that the European Central Bank will cut interest rates in a response to the fall in output.

The US grew by 2.2% in 2012 and Japan by 1.9%, while GDP in the eurozone contracted by 0.5%.

So what are we expecting from this summit? The leaders divide into two camps - the fiscally conservative northern countries and those in the south and east that stand to benefit from more money for infrastructure and agriculture. It is believed that in the build up to the summit some consensus was reached around a budget of €950m - which would be a reduction on the last seven-year spending cycle. This will please the northern bloc. But it is also believed that in a concession to the south, the bulk of the spending, around 40%, would still go on agriculture and related farm subsidies. Indeed, two of the biggest recipients of farm spending - France and Italy - have hinted they could block the budget unless their appropriations are maintained. It is far from clear that the leaders will reach an agreement this time round, though if talks collapse its possible no resolution will be reached until late 2014.,,,Angela Merkel seems pessimistic on the prospect of resolution at this summit. I can't say whether we will be successful, the positions are still far apart. For Germany I can say that we will do everything for such an agreement to materialize because it is very important in a time of economic uncertainty and high unemployment to have a plan. We have to be careful with the way we spend but also show solidarity between net contributors and recipients. Whether we will have a joint vote or whether we will get into a situation where we will have annual tranches in the future I can't say today. It would be desirable to have a joint result but we have to wait and work hard, and that's what I will do....Well now... Why do central bankers and Treasurers from around the world invariably insult our collective intelligence with bland assurances that the euro/US dollar/sterling is in good shape/has weathered the storm/will gradually recover when it is so blindingly obvious that these statements are untrue? Not only are these statements patently false but the people who make them are almost invariably implicated in the processes that created or exacerbated these problems in the first place. If they do it to try to convince the bond and currency markets, then they are doubly stupid because markets are operated by real people putting real money on the line that generally have a low tolerance for bullshit.... Dragi thinks we are the fools that his tin pot immoral and primitive theory of the justification of unaccountable rule by selfish self enrichers defines us as. We are ignorant little people to whom he can feed any lie he likes. He thinks we shall swallow it as if thinking Tizer were little more than a tasty form of the latest exotic continental Lager. He and his kind shall soon be spat out with the same force as a proper beer drinker would Tizer if anyone were so foolish to attempt such a wildly insulting trick. With apologies to Tizer for coming anywhere close to such unpleasant people, if only, by way of metaphor.

"Citigroup said it now expects Spain's economy to contract by 2.2pc this year and another 2pc in 2014, pushing unemployment to 28pc.The effects of the slump will overpower any gains from fiscal austerity. The bank said public debt will surge from 88pc to 110pc of GDP in just two years." "Premier Mariano Rajoy has so far resisted a full rescue from the EU bail-out fund (ESM), fearing a political backlash and loss of sovereignty. Yet the ECB cannot purchase Spanish debt until Madrid pulls the trigger and signs a "memorandum"." "Julian Callow from Barclays said the ECB’s Mario Draghi is “itching” to buy Club Med bonds, seeing this as a way of targeting monetary stimulus on the countries in trouble - without an causing inflationary spillover in Germany - but he is paralyses until Madrid relents." Ah, when it all collapses the EU socializes private debt and gets to appoint another country's leader. Now I see what the strategy is. Meanwhile, Ireland has now a debt to GDP ratio of 120% and rising are now predictably making noises such as, forgive us our debt or else the best boy in the class is going native! Put "precautionary" loans in place as we will not be able to exit the bailout without a second bailout i.e. "precautionary loans" or if you prefer a "bailout extension" call it what you like, just make sure the money is there for us! The government are back in talks to extend their sweet heart deal Croke Park deal with the 23 public sector unions that represent government workers, so no surprises. They will be requiring additional funding to finance the Labor trade union government nexus. Labor are in coalition. As for Spain they will get their bailout from the ESM with a vicious MOU attached. They will underestimate (deliberately) how much they require, the further austerity will cause even greater unemployment and they will be on the road to Greece and the EU will be on the road to either break up or an admission that democracy has been overthrown and that you cannot rule a democratic EU. The whole project has been derailed because it was never possible to unite countries of such diverse cultures and work ethics. France wants to be socialist, therefore it needs Germany which is capitalist to pay up! Greece does not collect taxes so it wants them collected elsewhere and passed on to them otherwise they might have to pull out and it might be a systemic risk, Cyprus needs a bailout they too could be "systemic" and what about all that Russian money? Sure Russia might give a dig out? It is a tower of Babel ... I wonder whether most people in more stable Northern European countries realize just what exposure they are going to have to these bailouts via the ESM (for that is what the EU are now touting as the Spanish rescue vehicle)The ESM can make a capital call any time it likes on it's EZ members at 7 days notice and it's officers are immune from prosecution in any EU jurisdiction.. and it's records inviolable. So all those EZ member states that thought they were relatively safe are going to end up providing whatever funds a bunch of people with no accountability whatsoever demand of them. Budgetary independence and fiscal prudence gone in a flash and they never even noticed....Well, the next round of protests/riots ought to be interesting. Maybe Draghi, LaGarde, Merkel, Barroso, Van Rumpy and Rajoy could sit down with the hungry masses to explain how the worst is behind them.

A point of view ....however biased ... I hope is wrong

After the coming bankruptcy of the United States, the battle for freedom from the international banksters will begin in earnest. The fact that the founding fathers of the fledgling United States were wise enough to insist in the constitution that the people would need to bear arms, that for me that will be the saviour of us all. For had they not understood as a result of their own fighting with the international banksters what a threat to individual liberty they actually are, they would not have left the populace of the US as prepared as they have in order to to deal with its now throroughly
corrupted government. Now, we have all seen in recent weeks how there is a concerted effort taking place in order to disarm the populace of the US. With the powers that be dressing it up as something that would be good for all Americans, when they themselves send their own children to school under the protection of armed guards.The truth is, the united states government is now nothing more than another branch of Wall Street, with as many bankers being in it as there are in the biggest of banks. Obama is literally surrounded by bankers, they scrutinize his every move. They write his speeches for him, he merely reads them out. Often not understanding much of what he is actually talking about. And of course, it now matters not for which side you cast your vote, as in essence both sides are merely the other side of the same coin. I thank god that many of those who were previously sheep now recognize what I have written here, after having watched how the banksters have received such preferential treatment as they have from our governments over recent years. Soon the US will have been bankrupted by the international banksters and then its corrupted government will turn upon its own people in an attempt to save itself from their wrath. A wrath which will be well deserved, for their crimes against the people are many. So to the founding fathers I say "well done good Sirs, your foresight may well have saved your nation". For without your efforts your people would not have the means in order to defend themselves from tyranny. I wish all honest, hard working people the best of luck in the coming battles for freedom....

America has gone INSANE....gun issues and violence and arguments over ''rights'' to own and keep military assault weapons holding more than 10 clips? ...arguments over universal healthcare (obamacare)and now this fiscal cliff, with a govt being held hostage over rad tea partiers?! obama asking the most wealthy to pay more taxes, to carry their fair share (with majority of rational americans agreeing with him)? and instead you have the rad republicans/tea partiers dissing obama's suggestion of anyone over $250k to pay more taxes and instead wanting that income threshold increased to $750+k. before doing so... like wtf? you can't make this stuff up....any 1st world, democracy respecting country would have no issues with these ''divisive'' themes.but no, not the ''good ole' USA''....you couldn't find better ironic insanity in a novel.
the entire world shakes her head at disbelief....that any american citizen can truly, sanely, honestly believe their |(broken) homeland is still ''the greatest country in the world'' needs their meds increased...and soon....instead America has become a modern version of Gibbons " Rise and fall of the Roman empire.''

Greek finance minister: Bankruptcy is still a risk - Greece's finance minister has slightly deflated the sense of optimism as we ease into the Christmas break, by warning that the country faces another very difficult year.

Yannis Stournaras has cautioned against getting carried away by recent progress, pointing that things could unravel next year "if the political system finds the situation too difficult to handle".

He made the comments in an interview with the Financial Times, published just a day after Greece's credit rating was upgraded.

Stournaras is not all doom and despair, arguing that 2013 will be crucial:

We can make it next year if we can stick to the programme agreed with the EU and IMF.

But only if the Greek people accept the job cuts and austerity measures that were contained in the 2013 budget. Stournaras warns that this is far from guaranteed:

What we have done so far is necessary but not sufficient to achieve a permanent solution for Greece...The issue now is implementation.

As such, there's a 'possible risk' of Greece leaving the euro, he added, despite Athens having now received its latest aid tranche.

With bond yields falling sharply, and yesterday's general strike passing off peacefully, Greece has reached a calmer state. But it's going to be a grim winter for many Greeks - and Stournaras is clearly concerned that he may struggle to hit his deficit targets and improve the competitiveness of the battered Greek economy.

As he put it:

We still face the possible risk of bankruptcy.

But get through 2013, and the future will be brighter, he added.

The police are becoming frequent guests at Deutsche Bank headquarters in Frankfurt. For the second time in a week, authorities raided the bank in connection with an ongoing investigation, this time looking for evidence of witness collusion relating to court testimony in a high-profile case pitting Deutsche Bank against the family of the deceased German media magnate Leo Kirch.

The raid took place on Wednesday, but only became public early on Thursday afternoon, partially because it was not nearly as disruptive as a raid conducted a week ago Wednesday, when authorities showed up with 500 armed police and secured the bank's lobby. Nevertheless, the new search and seizure operation underlines yet again the dark cloud of suspicion that hangs over Deutsche Bank despite its stated desire to turn over a new leaf.

Police confiscated documentation and data on Wednesday, but did not make any arrests, according to a spokesperson for the public prosecutor's office in Frankfurt. The visit marks the second such raid in connection to the Kirch proceedings, the first having taken place in November of 2011.

At its heart, the Kirch case is a civil suit. The family accuses former Deutsche Bank supervisory board head Rolf Breuer of hastening the demise of Leo Kirch's media conglomerate by voicing doubts in an interview about the company's creditworthiness. Last Friday, a court in Munich decided in favor of the Kirch family and indicated damages Deutsche Bank would be forced to pay would be somewhere between €120 million and €1.5 billion.

Latest Low Point

But prosecutors also believe that several senior bank executives and board members, including Breuer, former CEO Josef Ackermann and two others, may have illegally coordinated their testimony prior to initial hearings in that case. They deny the charge. Officials on Wednesday were looking for information that could provide clues as to whether the quartet had indeed acted illegally.

Wednesday's raid marks just the latest low point in a 2012 full of them. The investigation relating to the emissions certificates directly implicates current co-CEO Jürgen Fitschens and it led to five arrests last week, though all suspects have since been released from pre-trial detention. Still, it could prove a difficult corner for the bank to wriggle out of. Fitschens is said to have signed a questionable tax declaration for the year 2009 which included refund claims on fraudulently traded emissions certificates. The investigation has been ongoing since 2010, but authorities seem to believe that Deutsche Bank's criminal intent was greater than the financial institution is willing to admit.

The bank, Germany's largest, also stands accused of having played a role in the LIBOR scandal, which saw prominent international banks collude to manipulate the key international lending rate. On Wednesday, the Swiss bank UBS was fined $1.5 billion for its role in the ploy by US, British and Swiss regulators. Furthermore, a former bank employee has also accused Deutsche Bank of having cooked its books during the peak of the financial crisis in order to avoid being forced to accept a government bailout. There are several additional legal proceedings pending as well.

According to the Süddeutsche Zeitung, in a story which will appear in the paper's Friday edition, this week's raid is linked to last week's. In a pre-publication press release, the Munich daily reported that investigators confiscated information last week that was also linked to the Kirch case and decided to come back for more. It is unclear for how long the investigation will last.(source...der spiegel)

There are several reasons for the euro crisis but bailing out banks is one of the major reasons, followed by large scale tax evasion by corporations.The EU is trying to regulate banks and is also taking measures against tax havens. Richard Murphy's (tax research UK)figures may be disputed but it must run into hundreds of billions.
The Right are already talking about 'loss of sovereignty' by nation states. How much sovereignty does a nation state have (esp. a small one) in a globalised world? The sovereignty went when we bought into the present system whereby the 'markets' dominate political decision making.  In 1966 when we had an economic crisis we had five levers to control the economy.

1 we could control the exchange rate-that ended with the end of the Bretton Woods agreement in the early 70s
2 we could impose tariff controls as a temporary measure. The WTO would not allow that now.
3 we had capital controls. Abolished by the Thatcher govt.
4 Interest rate was set by the chancellor-no longer -that was Labour
5 we could vary taxes upwards, Now we are told it would drive away foreign investment and rich people. 

 

The scarcely regulated banking system trashed the world's economy and austerity policies are making it worse. The motive of the banks is obvious-they don't want to lose out. They over extended themselves and could not survive without state help. Much of the bail out of Southern Europe is not to pay for essential services for the people, but to pay off the banks. There is an issue of overspending by the govts. but it is not the main cause. Revenues collapsed in the wake of credit crunch. More were diverted to tax havens-partly due to inefficient government control. We, the people, have little power over the likes of Goldman Sachs but we can vote for politicians who can construct a pan European policy to control the banks and go after revenues which are being diverted. I agree that govts. should try to live within their income but not in the worse recession for sixty years.We need investment and it seems only the state is able to do so while the corporations sit on their money.  I would go further and suggest that the power to create money should not remain with the private banking system but I doubt if there is enough support for this-at present.  The fact is that taxpayers' money is not being diverted to bailouts. The banks are issuing money and it is being guaranteed by national governments. If the Eu can implement some of these reforms, there is a chance we could get out of the mess. Is there another plan which would involve less suffering?

A political and economic system in which underachievers forcibly redistribute their mediocrity to the rest of society

E.U = Socialism: A political and economic system in which underachievers forcibly redistribute their mediocrity to the rest of society...or is it ???....Liberal bloggers always point to socialist Europe as a shining example of how wonderful life can be? Oliver Stone is coming out with a documentary about how Hitler and Stalin were just misunderstood. I read daily about how Europe is in economic free fall and see the same in the tea leaves for America. So death and destruction are goals to admire now??? God help us! Oh yeah, god is dead according to these nihilist lunatics. Oh yeah, I can't say lunatic anymore now that Congress has voted to ban that word. I'll stick with God help us.

Life is actually much better for European working class than in the US. US workers are more and more like obedient little slaves, working two jobs just to earn enough for living. 10-12 hour days and maybe two weeks holiday per year. Then they eat shit food which basically poisons them over the decades slowly but surely, causing high cholesterol, hypertension, diabetes and all sorts of other sicknesses. When they got sick, their health insurance is a form of financial torture, designed to find ways to not to pay. Public education is quite crappy and social safety nets are mostly missing.

The creation of the EU and the common currency was never anything more than a thinly veiled campaign to force European nations into a monolithic Socialist union and help the new Soviet Union (EEC) acquire the production and energetic capacities of Europe, while Germany gets to "administer" the EU states. Economists around the globe warned of the consequences and kept on warning over the last 15 -20 years. The voters in Europe ignored the harsh facts and instead chose bread and circus... and now they reap the benefits of their stupidity and greed. The Forth Reich is ruling Europe since the "independent union nations" budgets have to be approved by the Bundestag before being implemented !!! Deucland uber ales !!!

In a dramatic about-turn, German Finance Minister Wolfgang Schaeuble ditched his earlier objections that had led him to clash openly with his French counterpart, Pierre Moscovici, last week over the ECB's role in banking supervision.
With time running out to meet a year-end deadline, both sides managed to settle their differences and Germany won concessions to temper the authority of the ECB's Governing Council over the new supervisor.
Agreement on bank surveillance is a crucial first step towards a broader "banking union," or common euro zone approach to dealing with failing banks that in recent years dragged down countries such as Ireland and Spain.
The next pillar of a banking union would be the creation of a central system to close troubled banks.
The decision also sends a strong signal to investors that the euro zone's 17 members, from powerful Germany to stricken Greece, can pull together to tackle the bloc's problems. 

The leader of Italy's anti-establishment Five Star Movement political party, the second most popular by opinion polls, has added his voice to the anti-austerity rhetoric that will likely dominate the country's upcoming election campaigns. Beppe Grillo, an Italian comic, echoed Silvio Berlusconi's scathing criticism of the current prime minister Mario Monti's policies as 'German-centric' when he told US broadcaster CNBC that Mr Monti is a mere "bankruptcy curator" who "needs to disappear". He said:

The ECB puts out money that is meant to help our banks,but they do not use it to finance our businesses, but they give it to them to buy back their debt, to help French and German banks. That was Monti's work. The CNBC interview came on the same day Mr Grillo expelled two prominent party members who had voiced criticisms over his leadership style, branding it dictatorial. His expulsion of the pair unleashed at outpouring of criticism from the party's young supporter base, who compared him to famous dictators including Benito Mussolini and Joseph Stalin.