Communist Chinese conglomerate buys AMC to form world’s largest cinema chain

Under the new U.S.-China deal, more IMAX or 3D films are being allowed into China

CNN | May 21, 2012

By Kevin Voigt

(CNN) — China’s Dalian Wanda Group and AMC Entertainment announced Monday a $2.6 billion deal to take over the U.S. theater group, forming the world’s largest cinema chain, according to a new release on the deal.

The move is the latest in a raft of deals between U.S. entertainment companies and Chinese firms, linking the world’s largest theater market with the world’s fastest growing.

“This acquisition will help make Wanda a truly global cinema owner, with theatres and technology that enhance the movie-going experience for audiences in the world’s two largest movie markets,” said Wang Jianlin, chairman and president of Wanda.

Wanda, a private company that previously operated solely in China, generates $16.7 billion in annual revenue from its commercial development and entertainment businesses, the company said. The group owns 86 theaters with 730 screens in China.

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“As the film and exhibition business continues its global expansion, the time has never been more opportune to welcome the enthusiastic support of our new owners,” said Gerry Lopez, chief executive officer and president of AMC.

AMC operates 346 multiplex theaters, largely in North America, with a total of 5,034 screens. Headquarters of AMC, a privately held company, will remain in the Kansas City area and day-to-day operations, including the process for film programming, will remain unchanged, the release said.

In a deal last February, China agreed to increase the quota of 20 foreign films per year — most of them from the U.S. — to add an additional 14 IMAX or 3D films each year, and nearly doubled the cut foreign film companies can take from Chinese box office to 25%.

In April, The Walt Disney Company China, Marvel Studios and DMG Entertainment of Beijing announced a production deal in which “Iron Man 3″ will be co-produced in China. That follows the February announced that a $330 million joint venture between DreamWorks Animation, China Media Capital (CMC) and two other Chinese companies to establish a China-focused family entertainment company, Oriental DreamWorks.

Last month came revelations, first reported by Reuters, that the Securities and Exchange Commission sent inquiries to 20th Century Fox, Disney and DreamWorks about whether Hollywood studios were paying bribes to get a foothold in the China theater market.

Middle Class Systematically Wiped Out By Globalization, Inflation and Taxation

25 Signs That Middle Class Families Are Being Wiped Out

businessinsider.com | Apr 17, 2012

by Michael Snyder

The middle class in America is being systematically wiped out, and most people don’t even realize what is happening.

Every single year, millions more Americans fall out of the middle class and become dependent on the government. The United States once had the largest and most vibrant middle class in the history of the world, but now the middle class is rapidly shrinking and government dependence is at an all-time high. 

So why is this happening? Well, America is becoming a poorer nation at the same time that wealth is becoming extremely concentrated at the very top. At this point, our economic system is designed to funnel as much money and power to the federal government and to the big corporations as possible. Individuals and small businesses have a really hard time thriving in this environment.

New data show grim picture of poverty

To most big corporations these days, workers are viewed as financial liabilities. Most corporations want to reduce their payrolls as much as possible. You see, the truth is that most corporations want to be just like Apple. If you can believe it, Apple makes $400,000 in profit per employee. Big corporations don’t care that you need to pay the mortgage and provide for your family. Their goal is to make as much money as possible. And most of the control freaks that run our bloated federal government don’t care much about middle class families either.

To many politicians and federal bureaucrats, middle class families are “useless eaters” that are constantly damaging the environment with their “excessive” lifestyles. In this day and age, neither the federal government nor the big corporations really have much use for middle class Americans, and that is really, really bad news for the the future of the middle class family in America.

There are three key factors that are constantly chipping away at the middle class….

-Globalization

-Inflation

-Taxes

Labor has become a global commodity, and American workers are often 10 to 20 times as expensive as workers on the other side of the world are.  Middle class jobs (such as manufacturing, etc.) have been leaving this country at an astounding pace.  Competition for the jobs that remain has become extremely fierce, and this has driven wages down.  The following is from a recent article in the New York Times….

But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

As paychecks have stagnated, the cost of living has continued to escalate. Middle class families are finding that their paychecks simply do not go nearly as far as they did before. This is creating a tremendous amount of financial stress in households all over America.

Meanwhile, our politicians are taxing the middle class like crazy.  Most people only focus on federal and state income taxes, but that is only a small part of the story.  As I detailed the other day, our politicians are taxing us in literally dozens of different ways and it is almost always the middle class that ends up getting hit the hardest.

If America wants to be great again, it is going to need a thriving middle class.  But right now the federal government and the big corporations are gobbling up all of the power and all of the money and the middle class is shrinking rapidly.

If current trends continue, eventually there will not be much of a middle class left.

The following are 25 signs that middle class families have been targeted for extinction….

#1 Over the past several decades, millions upon millions of middle class Americans have been systematically turned into government dependents.  Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

#2 Unemployment is at epidemic levels and the vast majority of the new jobs that have been “created” in recent years have been low paying jobs.  Of those Americans that do have a job at this point, one out of every four works a job that pays $10 an hour or less.

#3 The “working poor” is a group that is rapidly growing in this country.  If you can believe it, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

#4 Over the past several decades, the percentage of low income jobs has steadily increased.  Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#5 The way that our economic system is structured today, almost all of the economic rewards go to the very top of the food chain.  The following is how income gains in the United States were distributed during 2010….

-37 percent of all income gains went to the top 0.01 percent of all income earners

-56 percent of all income gains went to the rest of the top 1 percent

-7 percent of all income gains went to the bottom 99 percent

#6 Several decades ago, there was a much more even distribution of income in this country.  Back in the 1970s, the top 1 percent of all income earners brought in about 8 percent of all income.  Today, they bring in about 21 percent of all income.

#7 As the middle class shrinks, the number of “low income” and “poor” Americans is rapidly rising.  Today, approximately 48 percent of all Americans are currently either considered to be “low income” or are living in poverty.

#8 Manufacturing jobs once enabled huge numbers of Americans to enjoy a middle class lifestyle.  Unfortunately, those jobs are leaving this country at a breathtaking pace.  Back in 1940, 23.4% of all American workers had manufacturing jobs.  Today, only 10.4% of all American workers have manufacturing jobs.

#9 In the old days, any man that was willing to work hard and wanted a job could get one.  Today, there are millions of American men sitting on their couches at home wondering why nobody will hire them.  Back in 1950, more than 80 percent of all men in the United States had jobs.  Today, less than 65 percent of all men in the United States have jobs.

#10 The middle class is shrinking at the same time that America is getting poorer as a nation.  In the middle of the last century, the United States was #1 in the world in GDP per capita.  Today, the United States is #13 in GDP per capita.

#11 Every year now, we see millions of Americans fall out of the middle class.  In 2010, 2.6 million more Americans descended into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#12 The shrinking middle class is having a disproportionate impact on children.  At this point, approximately 22 percent of all American children are living in poverty.

#13 In the old days, most Americans grew up in middle class neighborhoods.  Sadly, this is no longer true.  In 1970, 65 percent of all Americans lived in “middle class neighborhoods”.  By 2007, only 44 percent of all Americans lived in “middle class neighborhoods”.

#14 The concentration of wealth at the very top of the food chain is astounding.  Right now, over 50 percent of all stocks and bonds are owned by just 1 percent of the U.S. population.

#15 When you concentrate too much power in the hands of the federal government and the big corporations, it is inevitable that massive amounts of wealth will become concentrated in just a few hands.  In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

#16 There is nothing wrong with making money, but there is something wrong with a game where individuals and small businesses cannot compete fairly.  According to Forbes, the 400 wealthiest Americans now have more wealth than the bottom 150 million Americans combined.

#17 When the number of poor people rapidly expands in a society, that is a recipe for social unrest.  At this point, the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.

#18 The hidden tax of inflation is absolutely devastating middle class families all over America.  Since 1970, the U.S. dollar has lost more than 83 percent of its value.  Any dollars that middle class families try to save are constantly losing a little bit more value every single day.

#19 American workers that try to play by the rules find that they are constantly fighting a losing battle.  According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#20 In recent years, many middle class families have seen their paychecks get smaller.  Median household income in the United States has fallen 7.8 percent since December 2007 after adjusting for inflation.

#21 In recent years, many middle class families have seen many of their basic expenses absolutely soar.  For example, health insurance costs have risen by 23 percent since Barack Obama became president.

#22 Just turning on the lights and heating their homes has become a major burden for many middle class families.  Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#23 Just putting gas in the car has become a major financial ordeal for millions of hard working Americans.  The average price of a gallon of gasoline in the United States has increased by more than 100 percent since Barack Obama became president.

#24 Sadly, government dependence is now at an all-time high, and that is the way that many among the elite like it.  When Barack Obama took office, there were 32 million Americans on food stamps.  Now, there are more than 46 million Americans on food stamps.  In particular, an astounding number of children are on food stamps right now.  At this point, approximately one-fourth of all American children are enrolled in the food stamp program.

#25 Many middle class families will not be in the middle class for too much longer.  According to a shocking new study from the National Bureau of Economic Research, 200,000 U.S. households will use the money from their tax refunds this year “to pay for bankruptcy filing and legal fees“.

Unless major changes are made on a national level, the middle class is going to continue to disappear.

If you are playing the game the way that the system tells you to play it and you expect to live a middle class lifestyle for many years to come there is a good chance that you will be deeply disappointed at some point.

Millions upon millions of Americans have done everything that the system told them to do and the system has still failed them.  They got good grades all the way through school, they went to college, they worked really hard, they stayed out of trouble and they gave everything they could to their employers.  In spite of all that, millions of hard working families have still lost their jobs and their homes in recent years.

Do not trust that the system will take care of you, and you should not trust that the government will take care of you either.

We don’t need the federal government to hand out more money to everyone.  Government handouts are already at record levels and the government is not even coming close to paying for all of this reckless spending.

More government spending is not going to solve any of our problems.

Instead, what we need is an environment where the size and power of the federal government is limited and the size and the power of the big corporations is limited.  We need an environment where individuals and small businesses can thrive and compete fairly.

Unfortunately, neither major political party is going to move us in that direction, so there is not much hope for solutions on the national level any time soon.

On an individual level, we can all learn how to prepare for the very difficult years that are coming.  It is imperative that we all work to become more independent of the system, because the system could fail at any time.

If you have blind faith that your job will always be there and that the federal government will rescue you if the economy crashes then you are likely to be bitterly disappointed at some point.

The truth is that our economy is slowly dying and the great American middle class is being systematically wiped out.

Many of the things that worked in the past are not going to work any longer.

You can choose to adapt or you can suffer the consequences.

Our world is rapidly changing, and we all need to prepare for what is coming.

Spanish Company Will “Count” American Votes Overseas In November

westernjournalism.com | Apr 10, 2012

By Doug Book

When the Spanish online voting company SKYTL bought the largest vote processing corporation in the United States, it also acquired the means of manufacturing the outcome of the 2012 election. For SOE, the Tampa based corporation purchased by SKYTL in January, supplies the election software which records, counts, and reports the votes of Americans in 26 states–900 total jurisdictions–across the nation.

As the largest election results reporting company in the US, SOE provides reports right down to the precinct level. But before going anywhere else, those election returns are routed to individual, company servers where the people who run them “…get ‘first look’ at results and the ability to immediately and privately examine vote details throughout the USA.”   In short, “this redirects results …to a centralized privately held server which is not just for Ohio, but national; not just USA-based, but global.”

And although the votes will be cast in hometown, American precincts on Election Day, with the Barcelona-based SKYTL taking charge of the process, they will be routed and counted overseas.

SKYTL itself is a leader in internet voting technology and in 2010 was involved in modernizing election systems for the midterm election in 14 American states.

But although SKYTL’s self-proclaimed reputation for security had won the company the Congressionally approved task of handling internet voting for American citizens and members of the military overseas, upon opening the system for use in the District of Columbia, the University of Michigan fight song “The Victors” was suddenly heard after the casting of each ballot. The system had been hacked by U of M computer teachers and students in response to a challenge by SKYTL that anyone who wished to do so, might try!

Nevertheless, in spite of warnings by experts across the nation, American soldiers overseas will once again vote via the internet in 2012. And because SKYTL will control the method of voting and—thanks to the purchase of SOE–the method of counting the votes as well, there “…will be no ballots, no physical evidence, no way for the public to authenticate who actually cast the votes…or the count.”

The American advocacy group Project Vote has concluded that SKYTL’s internet voting system is vulnerable to attack from the outside AND the inside, a situation which could result in “…an election that does not accurately reflect the will of the voters…” Talk about having a flair for understatement!

It has also been claimed that SKYTL CEO Pere Valles is a socialist who donated heavily to the 2008 Obama campaign and lived in Chicago during Obama’s time as Illinois State Senator. Unfortunately, given what is known about the character of Barack Obama, such rumors must be taken as serious threats to the integrity of the 2012 vote and the legitimate outcome of the election.

Though much has been written about the threat of nationwide voting by illegals in November, it is still true that most election fraud is an “inside” job. And there now exists a purely electronic voting service which uses no physical ballots to which an electronic count can be matched should questions arise. Add to this the fact that the same company will have “first count” on all votes made in 14 US states and hundreds of jurisdictions in 12 others, and the stage is set for election fraud on a scale unimaginable just a decade ago.

Perhaps Obama had reason for supreme confidence when he said “after my election” rather than “in case of” to Russian President Medvedev a week ago.

New World Order? Emerging Giants Set to Meet for Fourth BRICS Summit

India’s Prime Minister Manmohan Singh, Russia’s President Dmitry Medvedev, China’s President Hu Jintao, Brazil’s President Dilma Rousseff and South Africa’s President Jacob Zuma (top L-R) attend a joint news conference during the BRICS summit in 2011. (Photo: Reuters)

Peter Schiff – who oversees around $1 billion in assets as head of Euro Pacific Capital in Connecticut — said: “I think you are going to see real growth in emerging markets as they are the fruits of their hard work and production. I think you have better prospects for growth and earnings than you do here in the U.S.”

ibtimes.com | Mar 28, 2012

By Oliver Tree

Leaders from the five emerging nations known collectively as BRICS have gathered for their annual meeting in India, which begins Thursday, amid growing tensions and competing interests among the rising economic giants.

The fourth meeting of the heads of Brazil, Russia, India, China and South Africa in New Delhi is set to focus on global food and energy security, international terrorism and establishing a global development bank that would rival  the Western-dominated International Monetary Fund and World Bank.

But while the event, a diplomatic forum akin to the Group of Eight and G-20 gatherings, is seen as another example of the growing economic and political confidence of so-called emerging markets, the BRICS continue to show little cohesion beyond their collective name.

“There is little sign of action from BRIC governments with regards to actually seeking collective economic stances on trade, investment, or other economic issues,” said Victoria Lai of the Economist Intelligence Unit.

Politically the group remains stuck in a two-tier hierarchy: Russia and China are permanent members of the United Nations Security Council, while Brazil, India and South Africa are not.

They are also divided when it comes to addressing multilateral issues.

“On most fronts, they present vastly divergent — and at times competing — strategic and economic interests,” Dr. Alexandra A. Arkhangelskaya, head of the Center for Information and International Relations at the Russian Academy of Sciences, told Al Jazeera. “Beyond Russia and China, the five countries rarely vote together at the UN.”

In political terms, the BRICS have also failed to convert their collective sway to the level of U.S. or European clout.

Current tensions in Iran, the escalating violence in Syria and a potential showdown over nuclear weapons with North Korea are issues on which the group could take the lead, and these will be discussed during the two-day summit in India.

But while the BRICS wield varying degrees of international influence and remain fierce economic rivals, they all share one common goal: the need to show the West they can make their own decisions.

Up For Discussion

Despite the political differences, the New Delhi summit is set to produce a number of key accords further marking the group as an alternative power bloc.

Two agreements on intra-BRICS trading are expected to be signed, in an effort to promote growth in a market already valued at $230 billion and growing at 28 percent annually.

Discussions will also include the formation of a BRICS development bank, modeled on the World Bank, that would prioritize emerging-market projects in infrastructure and other areas. That could reduce the members’ dependence on U.S. and Western European institutions for financing.

“The ability of BRICS to make intra-BRICS lending in their own currencies is a sign that they are breaking away from a dollar-denominated system,” said Cary Leahey, a U.S.-based economist with Decision Economics. “But it’s a glacial change; it’s not going to be a big change soon.”

Other commentators also regard the establishment of a development bank as a clear shot across the bow for Western global financial institutions.

“It is a way the emerging nations are trying to pull out of the Western-dominated World Bank and the IMF,” said John Mashaka, financial analyst at Wells Fargo Capital Markets, according to Al Jazeera. “Basically, India, China and perhaps Russia are trying to show off their economic clout; they are trying to demonstrate to the West that they can do without them. Above all they need freedom from Western financial influence.”

Bilateral deals may also be negotiated on the sidelines of the event, at which cooperation on renewable-energy projects will be discussed. Some observers expect news of a possible gas deal between Russia and China that could be worth up to $1 trillion and involve as much as 70 billion cubic feet of natural gas to be piped from Siberia to China each year.

At last year’s BRICS summit, in South Africa, seven stock exchanges in the bloc agreed to cross-list their traded securities, creating an intraregional market of more than 9,400 publicly traded companies worth a combined $9 trillion.

The initiative will be advanced this week with the launch of a benchmark equity derivatives index shared by the five major BRICS exchanges that can be bought in the local currencies of each investor nation.

Crouching Dragon

Hanging over delegates at the meeting however will be the issue of alleged Chinese currency manipulation.

At present, China is the U.S. government’s biggest lender, as it swaps dollar-denominated trade receipts (which pay no interest) for interest-paying U.S. Treasury securities. In March, China held roughly $1.11 trillion in Treasurys.

Critics have long maintained that China’s use of U.S. debt is a back-door strategy that artificially devalues its own currency, the yuan, giving it an unfair advantage in the export market.

While the U.S. and other Western nations often criticize what they call blatant currency manipulation, BRICS members such as Brazil are also unhappy with the practice.

Brazil’s powerful manufacturing lobby has voiced irritation about the undervalued yuan, and Brazilian delegates at this week’s summit are expected to raise the matter with their Chinese counterparts.

Lastly, the China Development Bank is expected to extend renminbi loans to the other BRIC countries, escalating its bid to oust the U.S. dollar as the reserve currency of choice.

Rising Stars

Despite their political differences, uneven economic clout and undefined association, the meeting is set to further highlight the group’s growing independence.

With the value of the BRICS economies expected to overtake that of the United States within three years, Peter Schiff — who oversees around $1 billion in assets as head of Euro Pacific Capital in Connecticut — said: “I think you are going to see real growth in emerging markets as they are the fruits of their hard work and production.”

“I think you have better prospects for growth and earnings than you do here in the U.S. We’ve got some serious, serious problems over here.”

Russian ship leaves after ice-bound Alaska fuel run

Russian-flagged tanker Renda sits just off the coast of Nome, Alaska with two fuel transfer hoses running to a causeway in the harbor, in this January 16, 2012 handout photo. Reuters

AFP | Jan 21, 2012

NOME, Alaska — A Russian tanker left the Alaskan coast Saturday bound for home after delivering fuel to a remote Alaskan port, in an unprecedented winter operation helped by a US Coast Guard ice-breaker.

The Vladivostok-based Renda followed its escort the USCG Healy into the mist, leaving Nome after supplying 1.3 million gallons of fuel to top off the ice-locked town’s winter fuel supply.

The Russian ship had arrived a week earlier after battling across 300 miles (480 kilometers) of Arctic ice to reach Nome, a town of 3,500 people, with the help of the Healy.

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In some cases, the ice has been so thick that the Healy has opened a path for the Renda, only to see it close before the Renda could use it, forcing the Healy to circle around and reopen a path.

The remote town did not get its usual pre-winter oil delivery due to a storm, necessitating the unprecedented operation to bring fuel in during winter.

A special waiver had to be granted to allow the Renda to head to the rescue, as under a 1920 law only US-owned and operated vessels are allowed to make such deliveries.

The two ships finally arrived near Nome late last week, although it took several days to move the tanker into position and start pumping fuel through some 460 yards (meters) of arctic-proof hoses to fuel storage tanks onshore.

Once out of the ice, the ships will separate. The Healy will go to Seattle for maintenance.

Mark Smith, head of Vitus Marine, the company that chartered the Renda for the fuel delivery, said ice and wind conditions could be favorable for the ship’s return to Vladivostock, its home port in Russia’s Far East.

Forecasts suggested 100-150 miles of open water were opening up, he said before the tanker and its US escort left.

“They are optimistic that if they can get away from shore fast ice they can make some rapid progress,” he said.

“It’s all about ice conditions, but once the Renda is free of the ice pack, they are probably 10 days away from homeport in Vladivostok.”

Europe moves ahead with fiscal union, deep economic integration

Germany’s Chancellor Angela Merkel addresses a news conference at the end of an European Union summit in Brussels December 9, 2011. Europe divided on Friday in a historic rift over building a closer fiscal union to preserve the euro, with an overwhelming majority of countries led by Germany and France agreeing to forge ahead with a separate treaty, leaving the EU’s third biggest economy Britain isolated. Reuters

New pact will have stricter debt rules and enforcement

Reuters | Dec 9, 2011

By Luke Baker and Mark John

BRUSSELS, Dec 9 (Reuters) – Europe secured an historic agreement to draft a new treaty for deeper economic integration in the euro zone on Friday, but Britain, the region’s third largest economy, refused to join the other 26 countries in a fiscal union and was isolated.

The outcome of a two-day European Union summit left financial markets uncertain whether and when more decisive action would be taken to stem a debt crisis that began in Greece in 2009, spread to Portugal, Ireland, Italy and Spain and now threatens France and even economic powerhouse Germany.

A new treaty could take three months to negotiate and may require risky referendums in countries such as Ireland.

Two ECB sources told Reuters the European Central Bank would keep purchases of euro zone government bonds capped for now and take no extra firefighting action. Debt markets were wary. Interbank lending rates eased but Italian 10-year bond yields rose to around 6.5 percent.

Twenty-six of the 27 EU leaders agreed to pursue a tougher budget discipline regime with automatic sanctions for deficit sinners in the single currency area, but Britain said it could not accept proposed EU treaty amendments after failing to secure concessions for itself.

“This is a breakthrough to a union of stability,” German Chancellor Angela Merkel said. “We will use the crisis as a chance for a new beginning.”

After 10 hours of talks that ran into the early hours of Friday, all 17 members of the euro zone and nine of the 10 outsiders resolved to negotiate a new agreement alongside the EU treaty.

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Britain’s few allies melted away in the Brussels dawn. All the other nine non-euro states said they wanted to take part in the fiscal union process, subject to parliamentary approval.

The rift, which could widen into a permanent divide between London and the continental mainland, occurred 20 years to the day after European leaders agreed at the Maastricht summit to create the single currency, with Britain opting to stay out.

Prime Minister David Cameron insisted at a news conference that it remained in Britain’s interest to stay in the EU and take advantage of its single market.

One senior EU diplomat called Cameron’s negotiating tactics “clumsy”. Among other things, he had sought a veto on a proposed financial transaction tax, which may now be voted through by a majority over the objections of the City of London financial centre.

NO BIG BAZOOKA

ECB President Mario Draghi called the EU’s decision a step forward for the stricter budget rules he has said are necessary for the euro zone to emerge stronger from the turmoil.

“It’s going to be the basis for a good fiscal compact and more discipline in economic policy in the euro area members,” Draghi said. “We came to conclusions that will have to be fleshed out more in the coming days.”

Two ECB sources said the bank’s governing council decided on Thursday to keep bond buying limited to around 20 billion euros a week and there was no need to review the decision in the light of the summit outcome.

“You will see some further purchases but not the huge bazooka that some people in the markets and the media are awaiting,” one central banker said on condition of anonymity.

French President Nicolas Sarkozy told reporters the ECB’s move to provide unlimited three-year funds to cash-starved European banks would be more effective, by enabling them to continue buying government bonds.

“This means that each state can turn to its banks, which will have liquidity at their disposal,” he said.

Analysts said the notion that commercial banks could step up their purchases of government bonds looked optimistic given the same banks are being asked to deleverage and recapitalise if necessary.

“SEETHES, SULKS, GLOATS”

Merkel said the world would see that Europe had learned from its mistakes and avoided “lousy compromise”.

Sarkozy sounded elated at having united a big group around the euro zone as the EU’s core, long a French objective.

“This is a summit that will go down in history,” he said. “We would have preferred a reform of the treaties among 27. That wasn’t possible given the position of our British friends. And so it will be through an intergovernmental treaty of 17, but open to others.”

One EU diplomat summed up the outcome as: “Britain seethes, Germany sulks, and France gloats.”

Active ECB support will be vital in the coming days with markets doubting the strength of Europe’s financial firewalls to protect vulnerable economies such as Italy and Spain, which have to roll over hundreds of billions of euros in debt next year.

Traders said the ECB bought Italian bonds on Friday to steady markets.

The euro rallied in Europe and U.S. shares gained, but analysts said the summit had done little to convince markets that a solution to the crisis was at hand.

Asked if the euro was safe now, Polish Prime Minister Donald Tusk said: “I’m not sure.”

BRITAIN OUTSIDE?

Britain refused to allow its partners to amend the EU treaty, demanding guarantees in a protocol protecting its financial services industry, roughly one-tenth of the country’s economy. Sarkozy described Cameron’s demand as unacceptable.

Cameron hinted London may now try to prevent the others from using the executive European Commission and the European Court of Justice, saying: “Clearly the institutions of the European Union belong to the European Union, they belong to the 27.”

But European Council President Herman Van Rompuy, who chaired the summit, said the EU institutions would be fully involved in the new treaty, which would be signed in early March at the latest. The euro zone plus nine may hold a summit without Britain as early as January, diplomats said.

The rift may increase pressure from Eurosceptics within Cameron’s Conservative party and outside it for Britain to hold a referendum on leaving the EU, which it joined in 1973. The prime minister strongly opposes such a course, which he has said would be disastrous for British interests.

Britain conducts more than half of its trade within the EU and could suffer on a broad range of financial regulation issues if the other countries decided to move forward as 26.

Van Rompuy said the summit’s key achievement was to tighten fiscal limits, including the need for countries to bring budgets close to balance.

“It means reinforcing our rules on excessive deficit procedures by making them more automatic. It also means that member states would have to submit their draft budgetary plans to the (European) Commission,” Van Rompuy said.

But a new treaty will take weeks of wrangling as countries like Finland and Slovakia oppose a Franco-German drive to take decisions on future bailouts by an 85 percent supermajority to avoid being taken hostage by a single small country.

LAST-CHANCE SALOON?

In a meeting billed by some as a last chance to save the euro, the leaders also took several decisions on the permanent bailout fund, the European Stability Mechanism, which will come into force a year early in July 2012.

The ESM’s capacity will be capped at 500 billion euros ($666 billion), less than had been suggested was possible before the summit, and the facility will not get a banking licence, as Van Rompuy originally had proposed, due to German opposition.

It also was agreed that EU countries would provide up to 200 billion euros in bilateral loans to the International Monetary Fund (IMF) to help it tackle the crisis, with 150 billion euros of the total coming from the euro zone countries.

Cameron’s decision to stay out of the treaty-change camp could spell problems for Britain. Deeper integration on the continent could involve changes to the single market and financial regulation, both of which could have a profound impact on the British economy.

“Cameron was clumsy in his manoeuvring,” a senior EU diplomat said. It may be possible that Britain will shift its position in the days ahead if it discovers that isolation really is not a viable course of action, diplomats said.

Goldman Sachs conquers Europe

While ordinary people fret about austerity and jobs, the eurozone’s corridors of power have been undergoing a remarkable transformation

What price the new democracy? Goldman Sachs conquers Europe

Independent | Nov 18, 2011

by Stephen Foley

The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic.

This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project.

It is not just Mr Monti. The European Central Bank, another crucial player in the sovereign debt drama, is under ex-Goldman management, and the investment bank’s alumni hold sway in the corridors of power in almost every European nation, as they have done in the US throughout the financial crisis. Until Wednesday, the International Monetary Fund’s European division was also run by a Goldman man, Antonio Borges, who just resigned for personal reasons.

Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as “the Vampire Squid”, and now that its tentacles reach to the top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.

Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”

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This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.

Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him. First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies.

With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro.

Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland. He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.

Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank.

Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.

The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time.

Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.”

When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.

It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus.

“My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.”

So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default.

When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.

The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent.  Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse.

Shared illusions, perhaps? Who would dare test it?

China holds Europe to ransom over £62bn bailout deal

Beijing plays down expectations of immediate cash injection

independent.co.uk | Oct 29, 2011

by Clifford Coonan

Eurozone leaders were left sweating last night after China played down expectations that it would quickly make a much-needed cash injection to the EU bailout fund.

The chief executive of the European Financial Stability Facility (EFSF), Klaus Regling, was in Beijing yesterday with the hope of coaxing a speedy investment from the world’s second-largest economy. But, despite hopes that the opportunity to take a leading role in managing global finances would prove a powerful incentive for Beijing, European observers were prepared for the Chinese to exact a heavy price in return for providing up to €70bn (£62bn) to the fund.

After meetings with senior officials, Mr Regling told reporters that a quick deal was unlikely. Meanwhile, the Chinese Deputy Finance Minister Zhu Guangyao said China would need more details of the planned boost to the EFSF before it would commit to any deal. “We must wait for the technical structure to be very clear and have serious and specialised discussions before making a decision on investment,” Mr Zhu told a news conference in Beijing.

Mr Regling was nonetheless bullish about the prospects of China ultimately putting in the cash that the eurozone countries so urgently want for the fund, which was set up in May 2010 and is set to be boosted to £880bn under the plan.

China is a likely candidate to provide a share of that money. Europe is a key export market, and Beijing has cash to spend. With a war chest of £2 trillion, it has the biggest foreign exchange reserves in the world and is keen for vehicles to invest its funds in.

“We all know China has a particular need to invest surpluses,” said Mr Regling. He said a quick deal was unlikely but he was “optimistic we will have a longer-term relationship”.

He said that China had not made any conditions about how it would buy EFSF bonds and that China had been a “good and loyal” buyer so far.

In a sign of the importance of Chinese participation, the French President, Nicolas Sarkozy, spoke to President Hu Jintao by telephone this week. “China hopes all these measures will help stabilise the European financial market and conquer the current difficulties and promote economic recovery and development,” Mr Hu said, quoted on China’s state television.

Mr Sarkozy said the Chinese leader had expressed his relief that Europe had announced a deal to tackle a debt crisis that otherwise could have taken down the entire world economy.

“China has a major role to play. China must deploy more resources to stimulate the world economy. If they decide to invest in the euro rather than the dollar, why reject that? Why not accept that the Chinese place their trust in the eurozone?” he said.

But Mr Hu made no explicit commitment of Chinese help. And speculation was rife yesterday that it would not provide Europe with the necessary funds without strong incentives.

Some analysts suggested that China could channel money through the International Monetary Fund because it would want to see stringent conditions over the extent of eurozone fiscal deficits applied to its investment. They also pointed to Beijing’s irritation at previous European criticism of its human rights record and suggested that a less interventionist approach from the EU could be a quid pro quo of any deal.

A Chinese official implied earlier this week that the Chinese investment would not come easily.

“The chief concern of the Chinese government is how to explain this decision to our own people,” Li Daokui, a monetary policy adviser to China’s central bank, told the Financial Times. “The last thing China wants is to throw away the country’s wealth.”

While China’s current holdings of euro bonds are not known, they are said to be focused on Germany and France, and much smaller than its holdings of US Treasury bonds. Some analysts reckon probably around one-quarter of its holdings are in euro assets.

‘EU is an occupying force’: Top Tory demands public referendum

Daily Mail | Sep 19, 2011

'Enslaved to Europe': Conservative MP Mark Pritchard said Britain the EU was now like an 'occupying force'

A senior Tory demanded a referendum on pulling Britain out of the EU last night, increasing tensions with the Lib Dems.

Mark Pritchard, secretary of the influential 1922 Committee of backbenchers, complained that the EU had become an ‘occupying force’ which has left Britain ‘enslaved to Europe’.

In a sharp reminder to the Prime Minister of Government tensions over Europe, Mr Pritchard says Tory MPs have tired of  tolerating their ‘Coalition bedfellows’ and their ‘Europhile views’.

But Lib Dem Treasury minister Danny Alexander yesterday said Eurosceptics were the ‘enemies of growth’.

Mr Pritchard said voters will ‘kick back’ at MPs if their worries over Europe were not addressed.

And he warned that voters will not tolerate future bailouts of the Euro.

He said: ‘Conservative MPs will not continue to write blank cheques for workers in Lisbon while people in London and Leicester are joining the dole queue.
‘For many Britons, the EU has already become a kind of occupying force, setting unfamiliar rules, demanding levies, curbing freedoms, subverting our culture, and imposing alien taxes.

‘In less than four decades, and without a single shot being fired, Britain has become enslaved to Europe – servitude that intrudes and impinges on millions of British lives every day.’

He said that the days of ‘unquestioning support’ from the Conservative backbench were over.

Mr Pritchard’s intervention comes after 120 Tory MPs last week held a meeting to lay out plans to push David Cameron towards rewriting the UK’s relationship with Brussels.

Mr Cameron recently ruled out a referendum on whether Britain should pull out of the EU, but Mr Pritchard has support from prominent politicians including foreign secretary William Hague and former aide to the Prime Minister George Eustice.

But Mr Pritchard insisted: ‘The Coalition should agree to a referendum on Europe asking whether Britain should be part of a political union or of the trade-only relationship we thought we had signed up to.’

US taxpayers could be on hook for Europe bailout

The U.S. is coming to Europe’s financial rescue.

As the largest shareholder, the United States provides the biggest single source of funding to the IMF.

MSNBC | Sep 16, 2011

By John W. Schoen

So far, America’s role is fairly limited. But if the crisis continues to grow and the U.S. takes on a wider role, U.S. consumers and taxpayers could feel a bigger impact. The biggest exposure could come from America’s status as the single largest source of money for the International Monetary Fund.

The latest round of American financial assistance came Thursday with a promise by the Federal Reserve to swap as many dollars for euros as European bankers need. In the short run, those transactions won’t have much impact because the central banks are simply swapping currencies of equal value. If the move helps avert a wider crisis, it could help spare the global economy from another recession.

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But over the long term, consumers could feel the impact of central bankers flooding the financial system with cash, according to John Ryding, chief economist at RDQ Economics.

“This is a lender of last resort function,” he told CNBC. “With the dollar injections that the Fed has done, it’s like giving a patient medicine with really bad side effects.”  Ryding said the bad side effect in the U.S. has been inflation, which has picked up to 3.8 percent year over year.

Fed policymakers meet next week to decide whether the flagging U.S. economy needs another round of easy-money measures that could include buying more Treasury bonds to push more cash into the financial system.

So far, no one has floated publicly the idea of the U.S underwriting a broader bailout of the European financial system. But Senate Republicans have already voiced concerns over such a move.

“Our concern is that innocent American taxpayers will pay for yet another bailout — this time to one or several countries whose spending and debt choices led them to financial calamity,” Sen. Orrin Hatch, R-Utah, and seven other Republican senators wrote in a letter to Treasury Secretary Timothy Geithner in June.

The source of the senators’ concern is an emergency provision, approved by the Group of 20 industrialized nations in 2009, granting the IMF broad powers to expand its lending authority. That could leave American taxpayers on the hook for any IMF loans that later go bad.

In July, Geithner sought to reassure the senators that won’t happen.

“The United States has never experienced a loss on its IMF commitments,” Geithner wrote. “The IMF’s claims are recognized by Europe to stand ahead of all others. This, along with the IMF’s strong financial resources, provides further assurance that our claims on the fund are secure.”

On Friday, Geithner made an unprecedented trip to meet with European officials who are wrestling with the creation of a bailout fund similar to the U.S. government response to the Panic of 2008. With European Union leaders deadlocked for over a year, Geithner, one of the architects of the U.S. financial bailout in 2008, urged the group to move more aggressively to solve a widening debt crisis that threatens to send the world back into recession.

Investors have become increasingly worried that a $740 billion euro EU bailout fund isn’t big enough to cope with potential losses if Greece and other countries default on their debts, wiping out those assets held by European banks. With richer countries like Germany and France unwilling to commit more funds, Geithner wants the Europeans to boost the existing bailout fund’s firepower. One idea would be to use the money just to guarantee losses from bond defaults rather than buying up the bonds themselves.

European officials are running out of ideas. This week, German Chancellor Angela Merkel shot down the idea of a unified Euro bond that would be substituted for the debt issued by individual nations.

After a year and half of failed attempts at a solution, the world economy has entered a “dangerous new phase” IMF Managing Director Christine Lagarde said in a Washington speech Thursday.

So far, the IMF has played a supporting role in a “troika” of agencies working to head off a Greek default that include the European Central Banks and the European Union. With Greece approaching a cash squeeze at the end of this month, those agencies are demanding deeper “austerity” measures – budget cuts of higher taxes – before releasing those funds.

As the largest shareholder, the United States provides the biggest single source of funding to the IMF. The ownership stake also gives the U.S. veto power over IMF funding decisions. Geithner is a member of the IMF board of governors. Fed Chairman Ben Bernanke is an alternate governor.

IMF funding requires congressional approval. But following the financial crisis of 2008, the Group of 20 countries approved a plan to give the IMF emergency borrowing authority, a program known as New Arrangements for Borrowing, which tripled the IMF’s lending authority to $750 billion. The borrowing authority is set to expire in November.