One giant step to EU fiscal union

BBC

Watching the French president and the German chancellor in Paris yesterday I tried to imagine myself a Dutch or Italian voter.

Here, in the middle of August, the two leaders of the eurozone's most powerful countries had interrupted their August to announce that, in future, there would be a eurozone government with an elected president.

Delivering a Franco-German Bouquet of Irony

The Wall Street Journal

By ALEN MATTICH

This week's Franco-German deal to save the euro is a collection of ironies, not least that it's likely to precipitate an early withdrawal from the single currency by some of its beleaguered member states.

French President Nicolas Sarkozy and German Chancellor Angela Merkel drew up a plan to fix the euro zone's problems by making sure member countries stick to sound fiscal policies. And by sound they mean budget deficits of no more than 3% of gross domestic product, with the aim they balance their budgets over the economic cycle, and gross-debt-to-GDP ratios of below 60%.

Euro Zone Weighs New Plan on Greek Bailout Collateral

The Wall Street Journal

By MATTHEW DALTON, RIVA FROYMOVICH and BERND RADOWITZ

BRUSSELS—Euro-zone governments are discussing a plan to have noncash Greek government assets, including real estate, offered as collateral for a new round of rescue lending to Greece, backing away from a bilateral agreement reached last week between Greece and Finland, officials said Tuesday.

Greek Cuts Erode Livelihoods

The Wall Street Journal

Households, Small Businesses Wilt Under Strain of Austerity Measures; Holiday Bonuses for Pensioners Are Cut

By COSTAS PARIS And ALKMAN GRANITSAS

ATHENS—Greek households and small businesses show growing signs of strain as knock-on effects of government cutbacks ripple through the country's fragile economy.

Analysis: Stocks' volatility keeps forecasters busy

(Reuters) - Nobel Laureate Paul Samuelson is famous for saying the stock market predicted nine of the last five recessions.

This joke by the first American to win the Nobel Memorial Prize in Economic Sciences is not lost on economists as they repeatedly downgrade U.S. growth forecasts in response to the exceptional turmoil in financial markets.

Global Markets Move, but Merkel Won't

The Wall Street Journal

Never say that euro-zone countries can't agree on anything. A consensus is rapidly forming: Germany should transfer to its euroland partners more of its hard-earned money, either by lending its impeccable credit to an issue of euro bonds, or contributing more to a much-enlarged European Financial Stability Facility.

U.S. investigating S&P over mortgages: report

(Reuters) - The U.S. Justice Department is investigating whether Standard & Poor's improperly rated dozens of mortgage securities in the years before the financial crisis, The New York Times reported on Thursday, citing sources familiar with the matter.

Growth worries hobble stocks, Swiss franc slips

(Reuters) - European equities followed Asian stockslower on Thursday as investors fretting about the global growth outlook cut exposure to riskier assets, while the Swiss franc fell on talk the central bank was intervening in the forwards market.

Franc Gains as Switzerland Stops Short of Peg

Bloomberg

The Swiss franc strengthened after the country’s central bank announced additional liquidity measures while refraining from announcing tougher moves such as adopting a currency target or a temporary peg.

Franco-German Proposal Disappoints

Sarkozy and Merkel Propose Euro-Zone Council for Better Governance

By NATHALIE BOSCHAT, BERND RADOWITZ and GABRIELE PARUSSINI

PARIS—The plan by France and Germany to create a head of the euro zone to shore up economic governance of the monetary union stopped short of more fundamental steps toward refashioning the area into a federal entity that would issue its own debt, disappointing investors hungry for a more radical solution to the euro-zone crisis

Poor German data hits stocks and euro

(Reuters) - Stagnant growth in Europe's powerhouseGermany knocked stocks lower on Tuesday and hit the euro, adding to investor fears that the world economy is slowing more than expected.

Focus was also on a meeting in Paris between French President Nicolas Sarkozy and German Chancellor Angela Merkel, with investors looking for any signs of new measures to contain the spreading euro zone debt crisis.

U.K. Leader Blames Riots on 'Moral Collapse'

U.K. Prime Minister's Promise to Use Policy to Remedy Social Ills Comes Amid Debate Over His Cuts to Police

The Wall Street Journal

By ALISTAIR MACDONALD

LONDON—Prime Minister David Cameron sought to bolster his law-and-order credentials Monday with a speech promising a root and branch review of all government policy to tackle the "slow-motion moral collapse" he believes led to the U.K.'s worst rioting in decades.

Mr. Cameron faces many obstacles in turning round what he described as "broken Britain"—including his government's cuts to police forces, and divisions between the police and government that have erupted since the unrest.

Selloff raises stakes in Sarkozy-Merkel talks

(Reuters) - The leaders of France and Germany face a stark choice in talks on Tuesday over whether to begin steering the embattled euro zone toward closer fiscal union or risk watching the bloc unravel.

French President Nicolas Sarkozy and German Chancellor Angela Merkel meet in Paris to discuss what further measures they can take to contain Europe's debt crisis, which is now spreading to the continent's core.

Italy has been forced to ramp up its austerity measures and financial market jitters hit France last week with French banks' shares subject to panic selling following rumors that the country could be next to lose its prized AAA debt rating.

Markets heading to new danger zone: Zoellick

(Reuters) - The loss of market confidence in economic leadership in key countries like the United States and Europe coupled with a fragile economic recovery have pushed markets into a new danger zone, something that policymakers have to take seriously, the head of the World Bank said on Sunday.

U.S. Shows off Carrier Amid Tensions

The Wall Street Journal

ABOARD THE USS GEORGE WASHINGTON—Less than a week after China launched its first aircraft carrier, the U.S. showed off its own big-boy supercarrier to former enemy Vietnam—one of several smaller Asian nations with jittery nerves amid Beijing's burgeoning maritime ambitions. A delegation of Vietnamese military and government officials was treated to a tour aboard the sprawling USS George Washington nuclear carrier this weekend off the country's southern coast, once home to the U.S.-backed capital of South Vietnam during the Vietnam War.

It's the second such visit to the U.S. Navy's hulking carrier in as many years and a symbol of the former foes' warming military ties. But Saturday's visit also came amid heated tensions between China and its Asian neighbors. Hanoi's relations with Beijing hit a low point this summer following weeks of squabbling over disputed territory in the South China Sea—where the U.S. carrier cruised under blue skies about 140 miles (225 kilometers) off the coast.

Greece’s economy

Keep calm and carry on

Does the government have the will to see through its ambitious bail-out plan?

Aug 13th 2011 | ATHENS | The Economist

PATROCLES, a taxi driver, had to borrow his wife’s car to ferry customers to and from Athens airport to avoid being spotted by his colleagues on strike.

France and Greece feel economic strain

12 August 2011 Last updated at 10:38 GMT

BBC News

French economic growth was zero in the second quarter, compared with the previous three months, adding pressure for the government to curb its deficit.

But French Finance Minister Francois Baroin insisted the economy was solid.

Meanwhile, the Greek economy shrank by 6.9% in the second quarter, compared with the same period a year earlier.

Italy and UK press case for deeper euro zone fiscal ties

(Reuters) - Britain's finance minister called for some form of fiscal union to resolve the euro zone's debt crisis on Saturday, while his Italian counterpart renewed a call for the introduction of common euro zone bonds.

After more than a year of piecemeal responses to the euro zone's still-expanding debt crisis, some economists and policymakers are making the case for broader changes to how the currency bloc works.

The spread of market concerns in the crisis to France in the past week have raised the stakes further ahead of a meeting of the bloc's French and German leaders next week -- both of whom have opposed more radical moves to date.

American idiocracy

Schumpeter

The civil war in Washington, DC, is damaging American business

Aug 13th 2011 | from the print edition he Economist

THE great Calvin Coolidge reputedly said that “the business of America is business.” These days the business of America is carpet-chewing rage. American politicians are intent, not on improving their country’s competitiveness, but on gouging each other’s eyes out.

Looking for the bottom

Aug 9th 2011, 9:39 by Buttonwood

The Economist

HOW does one tell when markets are cheap? Regular readers will know that this blogger has been gloomy for a while but the trick is to have some cash available so one can follow the old rule of being greedy when others are fearful. The Vix index of volatility has reached 48, the kind of levels that indicate panic. Hedge funds say there is unusually high volume for August and that there are signs of capitulation in the financial stocks, perhaps as value investors exit the sector.