EU-DIGEST

Turkey not facing prospect of recession says minister - growth 3-4 %

Turkey is not facing the prospect of recession and expects growth of 3-4 percent this year, while a forecast of 4 percent growth for 2009 remains valid, Industry Minister Zafer Caglayan said on Wednesday.He was speaking after a Moody's analyst said on Tuesday Turkey would enter a recession next year unless it agreed to a program with the International Monetary Fund (IMF). "I do not attach value to what the credit rating agencies say. The crisis showed they are not subject to supervision," Caglayan told reporters when asked about the negative Moody's comments.

Labels: Economy, Turkey

EU members ready to embrace public spending plan - by Robert Wielaard

European Union finance ministers worked on a plan Tuesday to pump euro200 billion ($252 billion) into the European Union economy in the next two years to stave off a recession. The ministers were drafting a declaration calling an economic recovery proposal by the European Commission a good basis to stimulate the economy of the 27-country EU, which fell into recession by shrinking 0.2 percent in the third quarter. They welcomed public spending "in the magnitude of 1.5 percent" of the EU gross domestic product but ruled out a cut in sales taxes.Britain — which does not use the euro — has cut its value-added tax charged at the point of sale from 17.5 percent to 15 percent until the end of 2009. But Germany and France opposed that as it could shrink state revenues and in their view do little to encouraging shoppers to spend.The European Commission plans to publish new forecasts for the EU economy on Jan. 19.

The EU's economy commissioner, Joaquin Almunia, is to ask governments for updated details on spending in 2009 to see to what extent they will break EU sound finances rules that limit yearly budget deficits to under 3 percent of GDP.

Labels: Economy, EU

Russia - Putin Labels Markets 'Unfair' - by Courtney Weaver

Prime Minister Vladimir Putin described the effect foreign markets have on domestic share prices as "unfair" during a government meeting Monday, saying the values of the securities do not accurately reflect those of the companies themselves. Putin also spoke out against insider trading and again blamed the West for the country's economic difficulties, adding that those trading on domestic exchanges would be compensated for financial losses, Interfax reported. "Decisions concerning which securities to buy or sell on Russian markets are, for the most part, made abroad," Putin said, the news agency reported. "Moreover, the criteria by which these decisions are made have very little connection to the actual state of our economy or Russian companies." At the same time, he was careful to point out that the country did not want to exclude foreign investors. "No one is preparing to limit the activities of foreign capital in the Russian stock market — we welcome foreign investors," Putin said. "But at the same time, the task lies in properly building a large class of domestic investors as a powerful and capable financial institution of its own."The lack of domestic investors is clearly a problem and shares in Russian companies trade at levels below what might be expected given their fundamentals, said James Beadle, director of Pilgrim Asset Management. "On the face of it, Putin is completely correct — I think a lot of the market's reaction has had nothing to do with the Russian economy," Beadle said. "But Russia's situation has been, as we know, worse than most emerging markets.

Vladimir Milovidov, head of the Federal Financial Markets Service said, "I don't see any clear obstacles to the creation of such a system of compensation based on the idea of the Deposit Insurance Agency," Milovidov said, although he added that the question would require further consultation with various ministries and departments."

Labels: Economy, Putin, Russia

Is Britain's Stimulus Plan a Wise Move? - by Mark Scott

The economic picture in Britain—Europe's second-largest economy—is getting ugly. The country's GDP growth has started to slow, unemployment levels have risen at their fastest rate in almost two decades, the value of British real estate has fallen 15% in the last year, and the pound has lost a quarter of its value against the dollar since midsummer. To bolster confidence, Britain's Prime Minister, Gordon Brown, already has poured billions of Pound Sterling into the country's financial-services industry. Now, his attention has turned to the wider economy. The country's public finances—already facing a roughly 4% deficit—will come under additional strain as policymakers take on more debt to jump-start lagging consumer spending. As a result of the new stimulus package, public borrowing will top £118 billion ($178.6 billion) next year, equivalent to approximately 8% of Britain's total GDP. To pay for these extra costs, experts figure taxes eventually will have to be increased and government spending slashed.

"We've never had a package like this before in light of the huge structural deficit we currently find ourselves in," says Geoffrey Wood, professor of economics at City University's Cass Business School in London. "An increase in public spending could be ill-advised to help strengthen the economy."

Labels: Bailout, Britain, Economy, EU

The road to financial disaster? - by Rick Morren

A report on Wednesday from Bloomberg which showed that the US Fed is prepared to lend another $7.4 trillion on behalf of U.S. taxpayers to "further" rescue the troubled US financial system, got my attention. According to that story, this $7.4 trillion dollar amount is half of the value of everything produced in the US in the past year! This enormous pledge of funds includes $2.8 trillion already siphoned off by financial institutions in the most important response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment also dwarfs the only plan that was actually approved by the US Congress, the so-called Treasury Department’s $700 billion Troubled Asset Relief Program (TARP), better known before as the bail-out plan. The report also notes that the US Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, you can only wonder why this is happening. Worse, it is happening without much or any reaction from the Congress or the Public at large.

You don't need to be an Einstein to see that there seems to be something "fishy in Denmark", as to the huge amounts of liquidity the Bush Administration is pulling out of the US national coffers at warp speed before they leave office? Whether it’s lending or spending, it’s tax dollars that are going out the window and the US taxpayer is apparently ending up holding "collateral" they don’t know anything about. Shouldn't the "Obama team" start blowing the whistle? Where is all this transparency we were promised by all of them.

Labels: Barack Obama, Economy, George Bush, Henry Paulson, NATO. US, The US economic meltdown

The Era of Consumption Is Over - Dying of Consumption - by Stephen Roach

"It's game over for the American consumer. Inflation-adjusted personal consumption expenditures are on track for rare back-to-back quarterly declines in the second half of 2008 at a 3.5 percent average annual rate.There is a deeper, potentially positive, meaning to all this: Consumers are now abandoning the asset-dependent spending and saving strategies they embraced during the bubbles of the past dozen years and moving back to more prudent income-based lifestyles. This is a painful but necessary adjustment. Since the mid-1990s, vigorous growth in American consumption has consistently outstripped sub-par gains in household income. This led to a steady decline in personal saving. As a share of disposable income, the personal saving rate fell from 5.7 percent in early 1995 to nearly zero from 2005 to 2007.

Labels: Consumerism, Economy, USA

Europe's €200bn recovery plan targets energy-efficiency - by Richard Wilson

A €200bn recovery plan announced by the European Commission will include a major economic stimulus to the European technology sector including energy-efficient electronic systems. One aspect of the recovery plan is a bid to boost efforts to tackle climate change while creating much-needed jobs at the same time, through for example strategic investment in energy efficient buildings and technologies."The Recovery Plan can keep millions in work in the short-term. It can turn the crisis into an opportunity to create clean growth and more and better jobs in the future,” said Commission President José Manuel Barroso. The plan includes short-term measures to boost demand, save jobs and help restore confidence. A further strategy for what the EC calls “smart investment" will look to generate loner term growth.

According to Brian Halla, CEO of National Semiconductor this spells a re-birth for the semiconductor industry. “I'm wildly optimistic about the future of our industry."

Labels: Economy, Electronics, EU, recovery plan

Spain to present 2-yr plan to boost demand

Spain's government will present a two-year plan on Thursday to boost demand in the country's flagging economy, the prime minister said on Tuesday. The measures would be aimed primarily at 2009 and 2010, Jose Luis Rodriguez Zapatero told a forum organized by The Economist magazine in Madrid. He also said any breaches of the European Union's Stability Pact should be temporary. His comments came after he said last week that Spain will exceed the European Union budget deficit limit of 3 percent as it spends more to tackle the economic crisis. Last week, an OECD survey said Spain's economy would contract in 2009 due to falls in house building and consumer spending and would make a slow recovery in 2010 as financial turmoil recedes and world growth resumes.

Labels: Economy, EU, Spain

Latvia's IMF handout could total euro 1.92 billion

Latvia could be in line to get around euro 1.92 billion(US$2.5b) from the coffers of the International Monetary Fund (IMF) and European Union (EU) according to an economic expert on the Baltic states. Over the weekend, the IMF confirmed that the Latvian authorities had asked it to provide 'technical and financial support' and that it stood 'ready to rapidly assist their efforts in the context of a comprehensive economic program.'

Labels: Economy, EU, IMF, Latvia

Hungary unexpectedly lowers interest rates - by Polya Lesova

Hungary's central bank unexpectedly cut its benchmark interest rate on Monday, saying that economic growth and inflation may be both sharply lower than expected. Earlier this month, the International Monetary Fund approved a $15.7 billion loan for Hungary aimed at restoring confidence in its financial markets. The IMF loan is part of a $25 billion financing package to which the European Union has committed $8.4 billion and the World Bank $1.3 billion.
"The crisis hitting the international financial system has caused a fundamental change in the path of the Hungarian economy in recent months," the central bank said in a statement Monday.

Labels: Economy, EU, Hungary

EU prepares massive growth plan worth €130 billion

The 27 EU countries will be asked to give away 1% of their GDP to contribute to a Europe-wide economic stimulus package, including loans for automakers, aimed at helping restart the economy and weather the effects of the recession, it emerged yesterday.Speaking on German television on Wednesday (19 November), Michael Glos, the German economy minister, said the package would involve contributions by member states of about 1% of their Gross Domestic Product (GDP).

A decision on the precise nature and amount of the package will be taken by EU heads of states and government during a summit in Brussels on 11-12 December.

Labels: Economy, EU

France stands strong against economic crisis

The French economy has confounded expectations by not following Germany into recession. The French Economy Minister, Christine Lagarde, says the economy grew by 0.4 per cent in the third quarter of the year. Everyone, including the official statistics office had been predicting that economic activity in France would shrink in the third quarter, as it did in the second quarter, thus ushering in a technical recession. Instead France's economy grew, only by a tiny 0.14 per cent, but that was enough.

Labels: Economy, EU, France

Romania's trade deficit soars

Romania's current account deficit grew by nearly 15 per cent in the first nine months of the year, authorities said Wednesday, the latest sign of a possible economic crunch for the European Union newcomer. Goods imports running far ahead of exports were the main reason for the 12.7-billion-euro (16.1-billion-dollar) shortfall in the nation's broadest measure of international trade, central bank data showed.

Labels: Economy, EU, Romania

Massive Foreign Reserves Outflow Puts Russia's Ruble Trading Band Under Threat

Russia's currency reserves, the third-biggest in the world, are falling steadily as tumbling oil prices and an exodus of capital are piling the pressure on the central bank and government policymakers to accept a devaluation in the ruble. Oil prices which are now down 60% from their july peak, slowing economic growth and increasing investor concern are steadily draining Russia's foreign exchange reserves, which fell 19 percent (to $484.6 billion) in the 12 weeks through Oct. 31. This is down from $598.1 billion in the week before the invasion of Southern Ossetia. Russia had been using the reserves to try and contain the upward movement in the ruble was thought to present a threat to the competitiveness of exports. But resistance is now becoming increasingly difficult in the fact of a 13 percent drop against the dollar since August 1.

Labels: Eastern Europe, Economy

Dutch economy healthier than EU counterparts

The European Commission has predicted that the Netherlands will not enter a recession and that the Dutch economy will grow by 0.4 percent in 2009. The economic outlook for the Netherlands is far rosier than for the other 14 countries in the euro zone. The EC has predicted that average growth in the euro zone in 2009 will be 0.1 percent but also said that Germany, France and Italy will see their economies stagnate and experience zero growth. The EC has also forecast that the Dutch economy will grow by 2.3 percent in 2010, well above the euro zone average of 0.9 percent.

Labels: Economy, EU, The Netherlands

Running on fumes: U.S. must invest in new economies through support for education, research - by Shawn Lawrence Otto

In an effort to shore up the failing economy we've now seen the government pump hundreds of billions of taxpayer dollars into corporations in what is either the largest socialization of the free market or the largest raiding of the public trust in history, depending on your perspective. This emergency response may stop the bleeding, but it does little to tackle a major cause: inadequate investment in producing new economies as our old ones mature. As a result, we're running on fumes and debt.

And a 2005 Business Roundtable report projects that by 2010, 90 percent of all scientists and engineers will live in Asia. If that projection turns out to be even close, it represents a major shift in the underpinnings of the American economy.

Labels: Economy, Education, US

Hungary: Central bank makes emergency rate hike

Hungary's central bank Wednesday made a steep emergency interest rate hike to stabilize the country's currency, hurt by the financial crisis, raising the possibility that other countries in the region could follow its lead. The National Bank of Hungary's Monetary Council raised the base rate to 11.5 percent from 8.5 percent. The base rate is the interest paid by the central bank to commercial banks using its two-week bill facility, the main instrument used by the National Bank of Hungary to manage liquidity on the interbank market. The move is meant to protect the national currency, the forint, which has fallen 16 percent against the euro since the start of October, according to Neil Shearing of Capital Economics.

Labels: Economy, EU, Hungary

EU contemplates 'common market' with Russia

French President and EU presidency holder Nicolas Sarkozy yesterday (21 October) unveiled a new cooperation strategy with Russia that would build stronger economic links between Europe and its largest Eastern European neighbor

Speaking in the European Parliament in Strasbourg, Sarkozy called Russia "our neighbours" and surprised the audience by alluding to "a common economic space between Russia and the EU". The term recalls the early stages of EU history, which saw the development of a 'common market' that was subsequently renamed the 'single market' in the 1980s. Sarkozy's view of Russia sharing a common economic space marks another step in his attempt to forge a new relationship with Moscow based on trust and tighter integration.

At a recent meeting in Evian, the French president and his Russian counterpart Dmitry Medvedev voiced similar messages about the need to reconstruct Europe's security architecture

Labels: Economy, EU, Russia

Bulgaria’s Foreign Investments Drop by EUR 1,173 B in January-August 2008

The foreign direct investments in Bulgaria decreased by EUR 1,17 B in the first eight months of 2008 compared to the same period of 2007. The news were announced by Bulgaria's Economy Minister Petar Dimitrov during an investment forum in Sofia on Wednesday.

According to the preliminary data, Bulgaria's foreign direct investments amounted to EUR 2,980 B in January-August, 2008, or 8,8% of the GDP, compared to EUR 4,154 B or 14,4 of the GDP in the same period of 2007.

Labels: Bulgaria, Economy, EU

Russia - Crisis spares Russia's 'average Joe - by Fred Weir

While many Americans are watching as their pensions crash with the markets, across Russia it's a different story. Though their stock market crash has been longer and deeper than in almost any other country, most Russians remain relatively unaffected. Meanwhile, Russia's wealthiest man, aluminum king Oleg Deripaska, has reportedly lost $16 billion over the past month.While Russian industrial barons are falling like kingpins, the government has maintained a budget surplus thanks to oil revenues and sovereign debts paid off by former President Vladimir Putin. Additionally, the general population has also been largely protected due to outmoded financial practices and social beliefs that kept pensions separate from the stock market. The varied effects of the market crisis are likely to alter the underpinnings of Russian society, say many Russian economic analysts. "The Russian economy will survive this crisis, but will emerge greatly changed," says Olga Kryshtanovskaya, director of the independent Institute of Applied Politics.

Labels: Economy, Russia

Russia should join EU, Berlusconi says

Russia should be allowed to join the European Union in the coming years, Italian Prime Minister Silvio Berlusconi said Wednesday. "I consider Russia to be a Western nation. So my project is that the Russian Federation should become a member of the EU in the coming years," Berlusconi told Italian reporters on the sidelines of an EU summit in Brussels.Asked whether the time had come for the EU to normalize its relations with Moscow, Berlusconi said: "I would go beyond that." Berlusconi has frequently touted his close friendship with Russian Prime Minister Vladimir Putin, and Putin's two daughters have been spotted in the past spending their summer holidays at Berlusconi's villa in Sardinia.

Labels: Berlusconi, Economy, EU, Putin, Russia

Netherlands Conference Held At Turkish Foreign Ministry

Turkish Foreign Minister Ali Babacan has said that the Netherlands was a powerful partner of Turkey, and they aimed at further intensifying and deepening the bilateral relations with that country in all areas. Babacan attended the Second Turkey-Netherlands Conference at the Turkish Ministry of Foreign Affairs together with his Dutch counterpart Maxime Verhagen who is currently in Ankara on a formal visit. Speaking at the conference, Babacan said that the Netherlands was one of the countries making the most investments in Turkey. Our bilateral trade has been rapidly growing, he said. "More than 400 thousand people of Turkish descent live in the Netherlands. We expect number of Dutch tourists spending their holidays in Turkey to exceed 1 million by the end of this year. Relations between Turkish and Dutch peoples constitute an important part of the relations between the two countries," Babacan said.

Dutch Foreign Minister Verhagen, in his part, expressed his profound sorrow over killing of Turkish police officers in Wednesday`s terrorist attack in Diyarbakir. Referring to the bilateral relations, Verhagen said that the 400th anniversary of establishment of diplomatic relations between Turkey and the Netherlands would be celebrated in 2012. Verhagen said that Turkey was the fourth biggest commercial partner of the Netherlands.

Labels: Economy, EU, Netherlands, Tourism, Turkey

Turkey:Wake Up to Rising Economic Risks - by Wolfango Piccoli

Despite its large parliamentary majority and past pragmatism, the government led by Turkey's Justice & Development (AKP) party has remained essentially idle as the country faces the dual challenges of a slowing domestic economy and a global credit crunch. A risky sense of overconfidence and lack of focus on economic issues seems to prevail among policymakers. The Turkish banking sector appears relatively shielded from global liquidity problems. This is mainly thanks to reforms introduced after a 2001 banking crisis, including the creation of a bank regulatory and supervision agency and strengthened requirements for risk management, internal control, and auditing. Regulators say the banking system at the end of July had a healthy capital adequacy ratio of about 17% overall, while the loans-to-deposit ratio was 86.8%.

However, there are still risks to watch for. Foreign exchange liabilities of Turkish corporations to local banks had reached $39.42 billion as of March 2008. Local banks' gross debt to banks abroad stood at about $45 billion at the end of the first quarter. Credit-card default risk is another worry. Individual consumer credit-card debt is $26.9 billion, and the default rate is around 6.3%.

Labels: Economy, Turkey

"Pentecostalism is the largest self-organized movement of urban poor in the world," according to the U.S. urban specialist Mike Davis. His opinions on this religious movement tend to be rejected outright by many leftist intellectuals. However, Davis is convinced that "many people on the left have made the mistake of assuming that Pentecostalism is a reactionary force—and it's not." "Pentecostals not only get many people away from alcohol, but also occasionally get them to give up drug trafficking and delinquency. And they do it without pressure. However, Pentecostals are also a social and political force, not just religious. In an historical irony, the largest left party on the Latin American continent, the Workers Party (PT), created by the Catholic Church and other entities, came into power with a Pentecostal vice president, José Alencar.

The vice president's Brazilian Republican Party (PRB), created in 2005 and linked to the Universal Church, is the fastest growing political force in the country. The Universal Church of the Kingdom of God to which he belongs controls 70 television and 50-plus radio stations, a bank, several newspapers, and has 3,500 temples. Its Record TV Network vies for the largest audience against the legendary Globo Network and earns a billion dollars a year.

"It's a question of giving people alternatives and hopes for a better future". Of the 550 total legislative representatives in Brazil, 61 are Pentecostals, and 91 call themselves militant Catholics. "Anyone living in the urban peripheries of today's Brazil, can confirm that this is an important phenomenon. Many participants in the Homeless Workers Movement are also members of the local Pentecostal church. We cannot forget that religion played an important role in the formation of our left," says Marco Fernandes, an historian and social psychologist who participates in the Homeless Workers Movement (Movimento dos Trabalhadores Sem Teto, MTST).

Labels: Christianity, Economy, Latin America, Pentacostals, Political

For the complete report from Radio Netherlands Worldwide click on this link

A growing number of Dutch provinces and councils have revealed huge investments in the now-bankrupt Lehman Brothers bank and in Iceland's failed financial institutions. The Dutch government says that more than 250 million euros worth of taxpayers' money was invested or deposited in now-bankrupt financial institutions. It is not yet clear if it will be possible to get any of the money back. The hardest hit province is North Holland, it had 100 million euros invested with Lehman Brothers and Iceland's Landesbanki. Groningen has also been hard hit; it had 30 million euros deposited in an Icelandic bank. With 15 million euros deposited in Landesbanki, Amstelveen tops the list of municipalities facing huge losses. Texel stands to lose eight million, while Opmeer is facing losses of seven million. The authorities in Opmeer say they could be facing serious problems if they do not get the money back. The cabinet is considering measures to help regional authorities experiencing difficulties. Finance Minister Wouter Bos says that in future, provincial and municipal authorities should not be allowed to invest taxpayers' money themselves and recommended that money be deposited in the Dutch Municipal Bank.

Labels: Economy, EU, Iceland, meltdown, Netherlands

Deregulation fails big time

Thoughtful people have warned of approaching economic disaster for some time, and these thinkers included professional economists. The recent noble prize winner Paul Krugman quickly comes to mind. Editorialists who regularly mocked Krugman's writings have grown quiet lately. But you really didn't need advanced degrees in economics to see the present mess coming. All that was required was some understanding of human nature, specifically the nature of the right-wing financiers who apply great influence on the American government. Greed drives them; moderation is repugnant. When deregulation became official government policy, when the upscale operators were no longer restrained by statutes or security guards, it was inevitable they would gorge themselves sick. They regard the American public as a dog regards a garbage can. They must be called off; they never quit voluntarily.

Note: EU-Digest: Even after we saw most of the stock market listed shares rise quickly again when governments around the world pumped billions of cash into what is basically a defunct Global financial and banking system, you can be sure the euphoria won't last. Unfortunately the present bail out plans applied are still based on the belief that a deregulated "trickle down" economic theory works.It does not. What really matters is to improve the financial health and economic status of the consumer.

When the consumer stops or slows down on his or her spending habits, for a variety of reasons, including unemployment, the party basically ends for the corporations supplying the goods and services to the consumer. No matter how much the government pumps into the financial system. Right now this is exactly what is happening. What is required are government funded programs which stimulate job creation or at least programs that are a mixture of corporate bailouts and economic rescue plans for the lower and middle class. A study by Acxiom, a data collection company in Little Rock, Arkansas, estimates that 19 percent of US households are "digging in" by dramatically tightening their belts, while 48 percent are maintaining the status quo on. Whit Andrews, vice president at Gartner, Inc. the world’s leading information technology research and advisory company, concludes: "a financial era is ending. The age of conspicuous consumption is over, and the age of conspicuous frugality starts now".

Nicolas Sarkozy, Angela Merkel, Gordon Brown, Barrack Obama and a few other enlightened politicians understand that capitalism needs an urgent overhaul and have been saying so.The formula is simple: job creation = spending power = economic growth. Unfortunately moving the "fat cats" from the strategic positions they presently hold will be a herculean task.

Labels: Asia, Bailout, Barack Obama, deregulation, Economy, EU, John McCain, US

France eyes local tax overhaul - by Ben Hall in Paris

The French government is to reform the country’s system of local taxation within three years in a bid to improve the competitiveness of its business, according to the industry minister. Luc Chatel told the Financial Times that Paris would initiate an overhaul of the taxe professionnelle in the new year and aim to put the changes in place before the end of President Nicolas Sarkozy’s five-year term, which ends in 2012.

Labels: Economy, EU, France

Eastern Europe Heads for Slowdown

While eastern European economies have yet to be hit hard by the international financial crisis, the happenings in the West are causing a slowdown in many of the former Soviet Bloc nations. Eastern Europe's slowing economies face growing risks from the global credit crunch, but most of the ex-communist regions will post faster growth than western Europe in 2009, the International Monetary Fund (IMF) said Wednesday. Slovakia, which is slated to switch to the euro on Jan. 1, was tipped to lead growth next year -- 5.6 percent -- followed by European Union newcomers Romania, 4.8 percent, and Bulgaria, 4.2 percent.

Labels: Eastern Europe, Economy, EU

The Sex Industry in Bulgaria Generates 1 Billion Euro Income - by Stefan Nikolov

Ex Secretary of the police Tzvyatko Tzvetkov said at a round table that the monthly income of a prostitute is 12-18 thousand Euro. According to Tzvetkov the total turnover from the sex industry in Bulgaria is 1 billion Euro. There are 300 clubs with prostitutes in Bulgaria as 100 of them are in Sofia. Tzvetkov added that the prostitution business is third in Bulgaria after the drugs business and the stolen cars business. He also noted that in Bulgaria policemen protect prostitutes, trucks with cigarettes, drugs traffic and a solution must be devised for breaking police connections with crime.

Labels: Bulgaria, Economy, EU, Prostitution, Sex tourism

ICELAND - The party's over for Iceland, the island that tried to buy the world - by Tracy McVeigh

Iceland is on the brink of collapse. Inflation and interest rates are raging upwards. The krona, Iceland's currency, is in freefall and is rated just above those of Zimbabwe and Turkmenistan. One of the country's three independent banks has been nationalised, another is asking customers for money, and the discredited government and officials from the central bank have been huddled behind closed doors for three days with still no sign of a plan. International banks won't send any more money and supplies of foreign currency are running out. People talk about whether a new emergency unity government is needed and if the EU would fast-track the country to membership. On Friday the queues at the banks were huge, as people moved savings into the most secure accounts. Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.

This North Atlantic volcanic island, which is the size of Cuba, with a population of 320,000 - the size of Coventry's - is an unlikely player on the global financial stage. It is famous for its fish, geysers and for winning the UN's 2007 'best country to live in' poll. But Iceland built its extraordinary wealth on the crest of the worldwide credit boom and now the crunch is sweeping it away, bankrupting a people for whom the past eight years have been, for most of them and by their own admission, one long party.

Labels: Economy, Iceland

Across Europe, it's becoming 'politics as USual'

From this month's Social Democrat convention in northwestern Denmark to the slick imagery that has replaced the communist snoozefests of Cold War Eastern Europe, "Elements of the American way are seeping in," says Reginald Dale, a British expert. They're evident in televised debates of unprecedented feistiness; in candidates' obsession with polls, focus groups and image control; and in mass media, embracing a bold new role as definers — not just moderators — of key election themes. Experts say a watershed moment in the rise of image over substance came in 1997, when Britain's Conservative Party ran a poster that gave Tony Blair devil's eyes over the slogan "New Labour, New Danger."

Labels: Economy, EU

EU to speed up company reforms to combat slowdown

EU governments will speed up reforms to help smaller companies create jobs in a bid to combat economic fallout from the credit crunch, though Germany remained reluctant to back reduced rates of sales taxes. EU Industry Commissioner Guenter Verheugen said it was impossible to gauge the fallout on the European Union economy of a crisis in American banks. 'It can and probably will hit small and medium sized enterprises,' Verheugen told a news conference at the end of a meeting of the bloc's industry ministers

Labels: Economy, EU

European Two-Year Notes Post Biggest Weekly Gain in Seven Years

European Two-Year Notes Post Biggest Weekly Gain in Seven Years

European two-year government bonds posted the biggest weekly gain in seven years as investors sought the safest assets after negotiations on a U.S. financial-rescue plan faltered. Investors piled into short-dated debt as lawmakers in the U.S. planned to meet for a second day after talks two days ago ended without an agreement. A group of House Republicans led by Eric Cantor of Virginia said they wouldn't back a plan based on the approach outlined by Treasury Secretary Henry Paulson and supported by President George W. Bush. Bonds also gained after Washington Mutual Inc. was taken over by JPMorgan Chase & Co. in the biggest U.S. bank failure in history.

Labels: Economy, EU

Is Another Third World Debt Crisis in the Offing? - by Eric Toussaint

While taking a significant toll on public revenues , repayment of public debt has, since 2004, ceased to be a major concern for most middle-revenue countries and for raw material exporting countries in general. In fact the majority of governments of these countries are having no trouble finding loans at historically low interest rates. However, the debt crisis that hit the advanced industrial countries in 2007 could radically change the conditions of indebtedness in developing countries in the near future. Are we approaching the onset of another debt crisis in developing countries? The question requires thought, because if such is the case, we need to be prepared and take appropriate measures to limit the damage.

While there was a veritable flood of credit up to July 2007, the various private sources suddenly dried up in the North. Private banks that were tied up in shaky debt packages began to distrust each other and were reluctant to lend money. The authorities of the US, Western Europe and Japan had to inject huge liquidities on several occasions (hundreds of billions of dollars and euros) to prevent the North’s financial system from collapsing.

US capitalism is facing its worst crisis since 1929 and the US government is attempting a (dangerous) damage limitation process through a (taxpayer financed) rescue package that if accepted will end up costing over 700 billion dollars. (with very limited chance of success) The current crisis has a global dimension and the consequences for developing countries will be very important.

Labels: Economy, Third World

‘I know what it's like to be prejudiced, drunk, imprisoned - by Nabeelah Shab

‘I don’t like most journalists,’ grumbles John Bird. He has just rounded up an editorial meeting at Ponti’s café, above platform seventeen in London’s Liverpool Street station. ‘They don’t think analytically.Meet the founder of The Big Issue (TBI), an entertainment and current affairs street weekly which is also a ‘social business’. Written by professionals, it is distributed in five regional editions by the homeless. Badged vendors buy the magazine from The Big Issue Foundation (which funds programs for the homeless) for 70p (90 cents) and sell them on the streets for £1.50 (2 euros), thus making a profit of 80p (1 euro) per copy. ‘I’m not a particularly good editor,’ Bird admits over a second ‘bucket of tea’, as the city suits criss-cross and trains rumble in the station below. He left the post in 2006. ‘Writing is a good way of sharpening up your ideas and that shit. If you’re a very good conductor you might not be good on the violin. But I’d rather play it.’

Labels: Communication, Economy, EU

EURO: STRONG AT CLOSE

The euro has closed trading strongly up, at over 1.48 dollars. In final trading the euro was fetching 1.4889 dollars, having approached the 1.49 mark. Weighing the greenback down were fears for the stability of the US financial system, linked above all to the fates of mortgage giants Fannie Mae and Freddie Mac. The euro closed on 161.13 yen while the dollar was fetching 108,26 yen.

Labels: Economy, EU, euro

Five Forces Driving the Euro Down - by Kathy Lien

Five forces are driving the EUR/USD lower, and with no respite in sight for any of these trends, the currency pair should be headed for 1.45. These 5 factors are oil prices, eurozone and US economic data, market sentiment and the chances of a rate hike by the Federal Reserve before the end of the year.

Note EU-Digest Basically all bets are off given the volatility of present market forces and the financial stability in the banking sector.

Labels: Economy, EU, euro

Europe Economy Shrinks as Spending, Investment Falter by Fergal O'Brien and Christian Vits

Europe's economy contracted for the first time since the introduction of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power. Gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today. The year-on-year growth rate slowed for a third straight quarter, to 1.5 percent. Separate figures showed inflation held at 4 percent in July, less than initial