MidnightWatcher – Prophecy in Motion

Frame-by-frame we’re witnessing yet another picture leading up to the Euro’s inevitable all-out collapse. Although the scene may change momentarily, the end result of this slow-motion train wreck still leads to nothing but one monumental mess …

“Standard & Poor’s put 15 European Union nations on watch for a possible downgrade of their credit ratings as the continent’s debt crisis lingers.

The threat to downgrade the euro zone countries — including the ones that enjoy the stellar triple-A-rating — comes ahead of a crucial summit of EU leaders later this week.

The nations include Austria, Belgium, Estonia, Finland, France, Germany, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, the Solvak Republic, Slovenia and Spain.

Greece and Cyprus were not included on the list. Cyprus was already on negative watch.” Read more.

“PARIS: One way or another, this is crunch week for the euro. By the end of the EU summit on Friday, European voters and markets will know how their leaders plan to save the single currency bloc.

The outlines of a plan have begun to emerge, but details will be thrashed out over a perilous week of high-wire economic diplomacy, starting on Monday, when Germany’s Chancellor Angela Merkel comes back to Paris.

She and French President Nicolas Sarkozy have vowed to unveil proposed EU treaty changes to create what Merkel has dubbed a ‘European fiscal union with strict rules’ and the French leader calls ‘true economic government.’

If the proposed reforms are seen as a credible guarantee that eurozone governments will at last bring their deficits under control, European Central Bank chief Mario Draghi has suggested ‘that other elements might follow’.

This has been taken as a signal the ECB might intervene to protect European banks from any credit crunch and to buy bonds to rein in soaring interest rates on government borrowing, perhaps acting in concert with the IMF.

Would that be enough to end the debt crisis and save the euro? Some expert observers think so, others fear it will be too little too late, and in any case between now and then many questions will have to be answered.” Read more.

Sarkozy Says Euro Risks Breakup Without Economic Convergence – “French President Nicolas Sarkozy said the 17-nation euro area would risk ‘exploding’ if members fail to converge economically. The countries sharing the currency must prepare their budgets in common, narrow competitiveness gaps and face tougher automatic penalties for rule breaking, Sarkozy said today in Toulon, France, outlining proposals to overhaul Europe’s governing treaties. “There can’t be a single currency without economies heading toward more convergence,” Sarkozy told 5,000 supporters in 50-minute speech in the Mediterranean port. ‘If living standards, productivity, and competitiveness gaps widen among euro-zone countries, the euro will sooner rather than later be too strong for some and too weak for others, and the euro zone will explode.'” Read more.

The roller coaster called Wall Street never ceases to amaze.  Upon hearing about a can-kicking band-aid solution to temporarily cover up the Euro debt mess, the DOW sees its highest one-day gain in years.  If concealing the bleeding can rally the market this much, imagine how hard the fall will be when they come to terms with the fact that after running its course the band-aid fix has solved nothing and we’re now left with an open, unstoppable bleeding wound …

By Deepanshu Bagchee – “Stocks in Asia surged on Thursday, after the coordinated action by global central banks to provide cheaper dollar funding to European banks spurred massive gains on Wall Street. But according to a number of analysts CNBC spoke to, the rally is unlikely to last, as the move merely bought time for European leaders and doesn’t solve the euro zone’s fundamental debt problems.

‘This liquidity is definitely something that’s addressing the symptoms of the problems, but we really need the Europeans themselves to be attacking the cause and the solvency issues,’ said Nick Bennenbroek, Head of Currency Strategy at Wells Fargo in New York.

Michael McCarthy, Chief Markets Strategist at CMC Markets in Sydney said the stock surge was typical of a bear market rally. ‘Right now Europe needs a leader, somebody who can take this situation by the scruff of the neck and bring all of European interests to bear to get them to act in concert,’ he added

Europe’s already crippling debt crisis is set to worsen in 2012, when many of the region’s governments are forced to refinance huge amounts of debt. According to Ilian Mihov, a professor of Economics at the INSEAD business school, Italy alone will have to roll over 400 billion euros ($538 billion) in 2012, about 20 percent of its total debt. With yields on bonds at 7 to 8 percent, that could be difficult, he added.” Read more.

‘Prepare for Armageddon’: Banks told to prepare for Eurozone collapse – “BRITAIN’S banks have been told to prepare for the end of the Eurozone, it emerged today. City regulator the Financial Services Authority has told banks to ready themselves for armageddon by running ‘stress tests’ on their balance sheets. FSA chief Hector Sants met the heads of BARCLAYS, SANTANDER, HSBC, LLOYDS and RBS last week. News of the shock warning came as the world’s biggest central banks today launched a desperate bid to save the global economy by flooding markets with cheaper cash. The Bank of England was one of six pledging to make it cheaper for big banks to access ‘unlimited amounts’ of US dollars.” Read more.

CIO at Emergent Asset Management: The Western World Is ‘Finished Financially’ – “The Western world has run out of ideas and is ‘finished financially’ while emerging economies across the world will continue to grow, David Murrin, CIO at Emergent Asset Management told CNBC on the tenth anniversary of coining of the so-called BRIC nations of Brazil, Russia, India and China, by Goldman Sachs’ Jim O’Neill. ‘I still subscribe and I’ve spoken about it regularly on this show that this is the moment when the Western world realizes it is finished financially and the implications are huge, whereas the emerging BRIC countries are at the beginning of their continuation cycle,’ Murrin told CNBC. Murrin added he believes the power shift from the West to emerging economies beyond Europe and the United States was ‘unstoppable’ …” Read more.

By Dunstan Prial – “Standard & Poor’s on Tuesday cut its credit ratings for many of the world’s largest banks, including Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC).

The move follows S&P’s shift, announced earlier this month, in the methods it uses for rating the banks.

Citigroup, Goldman Sachs and Bank of America Corp. each had their long-term credit rating downgraded a single notch to A- from A. Similar cuts were applied to JPMorgan Chase (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC) and Morgan Stanley (NYSE: MS).

Dozens of other banks were also affected by S&P’s new criteria and many of the downgrades stemmed from the affected banks’ exposure to the European debt crisis. S&P cited weaker confidence in governments’ ability to bail out struggling banks.

The new criteria for rating banks comes in the wake of criticism leveled at all three major rating firms – Moody’s and Fitch’s are the other two — that they rubber stamped their highest ratings on investment products loaded with subprime mortgages in the years leading up to the financial crisis.” Read more.

U.S. Stock Futures Decline After S&P Cuts Banks’ Credit Ratings – “U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will end a two-day rally, after S&P cut credit ratings for lenders including Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc… ‘Banks are in a difficult position,’ Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4.1 billion, said in a telephone interview. ‘There are so many unknowns for the industry, including Europe. The reward is not worth the risk right now.'” Read more.

U.S. Outlook Cut to Negative by Fitch After Committee Fails – “The U.S. lost its last stable outlook from the three biggest credit-ranking companies after Fitch Ratings lowered the nation to negative following a congressional committee’s failure to agree on deficit cuts. Fitch’s outlook on the U.S., which it still assigns its top AAA grade, reflects ‘declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path will be forthcoming,’ making the probability of a downgrade greater than 50 percent over two years, the company said yesterday in a statement.” Read more.

Is it me, or is panic over the debt mess in Europe really starting to ratchet up? …

By Quentin Peel in Berlin, Jan Cienski in Warsaw and Norma Cohen – “Germany is the only country in Europe that can act to save the eurozone and the wider European Union from ‘a crisis of apocalyptic proportions’, the Polish foreign minister warned on Monday in a passionate call for more drastic action to prevent the collapse of the European monetary union.

The extraordinary appeal by Radoslaw Sikorski, delivered in the shadow of the Brandenburg Gate in the German capital, came as the Organisation for Economic Co-operation and Development called on European leaders to provide ‘credible and large enough firepower’ to halt the sell-off in the eurozone sovereign debt market, or risk a severe recession.

The OECD’s comments came as the organisation slashed its half-yearly forecasts for growth in the world’s richest countries, warning that economic activity in Europe would grind to a near-halt.” Read more.

OECD: euro collapse would have ‘highly devastating outcomes’ worldwide – “The collapse of the euro could send the world’s advanced economies into a severe recession, dragging emerging markets with them into the mire, the Organisation for Economic Co-operation and Development warned on Monday… Pier Carlo Padoan, OECD chief economist, made plain in the body’s latest six-monthly economic outlook that the greatest threat to global economic health comes from the eurozone rather than from the tax-and-spend gridlock in the US Congress. In his introduction to the report he said: ‘Recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption if not addressed.’ In a devastating critique of eurozone leaders’ hesitancy and dilatoriness, he said: ‘The scenario so far is that Europe’s leaders have been behind the curve. We believe this could be very serious.'” Read more.

Britain Now Planning On Belief That Euro Collapse is Now Just a Matter of Time, Foreign Office Warns to Prepare for Riots and Social Unrest – “As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible. Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis. The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.” Read more.

By Wolfgang Münchau – “In virtually all the debates about the eurozone I have been engaged in, someone usually makes the point that it is only when things get bad enough, the politicians finally act – eurobond, debt monetisation, quantitative easing, whatever. I am not so sure. The argument ignores the problem of acute collective action.

Last week, the crisis reached a new qualitative stage. With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function.

The banking sector, too, is broken. Important parts of the eurozone economy are cut off from credit. The eurozone is now subject to a run by global investors, and a quiet bank run among its citizens.

This massive erosion of trust has also destroyed the main plank of the rescue strategy. The European Financial Stability Facility derives its firepower from the guarantees of its shareholders. As the crisis has spread to France, Belgium, the Netherlands and Austria, the EFSF itself is affected by the contagious spread of the disease. Unless something very drastic happens, the eurozone could break up very soon.” Read more.

The Eurozone Has 10 Days At Most – “If you’re looking for some good Euro-scare meat, look no further than this column from the FT’s Wolfgang Münchau. The basic gist: No really, now we’re getting into endgame. Why now? Because the increase in core yields, the failure of that German bund auction, and the increase in Spanish and Italian short-term yields, as well as the tightening of money for the banks, means it’s all almost over unless Europe immediately cooks up some kind of ECB-backed/Eurobond/fiscal union concoction. ‘I am hearing that there are exploratory talks about a compromise package comprising those three elements. If the European summit could reach a deal on December 9, its next scheduled meeting, the eurozone will survive. If not, it risks a violent collapse.'” Read more.

Italy Is Closer To Collapse Than Anyone Realized, And So Is The World – “Some stories in the European press (La Stampa – Zero Hedge link) suggest that Italy is working on a very big loan package from the IMF. I have no doubt that there are ongoing discussions. There have to be. Either someone puts a finger in the dike or Italy goes tapioca. That thought is difficult for me to fathom. How could we be so close to the brink? At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong.” Read more.

By James Kirkup – “As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

‘It’s in our interests that they keep playing for time because that gives us more time to prepare,’ the minister told the Daily Telegraph.

Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.

Greece has seen several outbreaks of civil disorder as its government struggles with its huge debts. British officials think similar scenes cannot be ruled out in other nations if the euro collapses.

Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash.” Read more.

Wall Street Analysts Everywhere Are In Agreement: The World is Ending – “Blame the weighty issues of the day (Europe, mostly), and yesterday’s big selloff for the spasm of bearishness. It started off with Nomura’s Bob Janjuah. He said that any talk of the ECB saving Europe was a mere pipedream, and that if the ECB did go whole-hog buying up peripheral debt to suppress yields, then that would prompt a German departure from the the Eurozone… But then there was Deutsche Bank’s Jim Reid, who is always sober, but not usually wildly negative. He offered up one of the most bearish lines in history in regards to German opposition to ECB debt monetization: ‘If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.’ Oy. But it got even wilder with the latest from SocGen’s Dylan Grice…” Read more.

By TAKASHI SUGIMOTO – “Radioactive water from the damaged Fukushima No. 1 nuclear power plant has reached the international date line, about 4,000 kilometers east of Japan in the Pacific Ocean, according to estimates.

The concentration of radioactive cesium-137 will be 0.1-0.01 becquerel per liter by the end of November, 10 to 100 times higher than before the accident started, according to estimates by the Japan Agency for Marine-Earth Science and Technology.

The concentration will be at one-2,000th to one-20,000th of the government safety standard for potable water, but monitoring will be necessary for any impact on fish and shellfish.

A team of researchers led by Yukio Masumoto estimated the flow based on radiation levels measured in waters around the Fukushima No. 1 plant, taking convection and other factors into account.

Radioactive water that leaked from the plant first moved along the coast and then gradually moved offshore.” Read more.

Nuke crisis sends hundreds of Tokyoites fleeing to Okinawa – “Following the Fukushima nuclear crisis and fearing the spread of radiation, a number of Kanto residents fled to this southernmost prefecture and continue to live here despite the lack of personal connections. ‘The Okinawans are really warm-hearted. I wouldn’t want to live in Tokyo again,’ said Jin Tanimura, 38, clad in ‘kariyushi’ wear, a locally promoted attire that looks like a Hawaiian shirt. Following the nuclear crisis, more people have moved out of Tokyo and surrounding areas to Okinawa and other parts of western Japan than have moved in. Some well-known figures, including the writer Hitomi Kanehara, have openly said they evacuated out of the region to safety.” Read more.

By Mark Willacy – “Japan’s science ministry says 8 per cent of the country’s surface area has been contaminated by radiation from the crippled Fukushima nuclear plant.

It says more than 30,000 square kilometres of the country has been blanketed by radioactive caesium.

The ministry says most of the contamination was caused by four large plumes of radiation spewed out by the Fukushima nuclear plant in the first two weeks after meltdowns.

The government says some of the radioactive material fell with rain and snow, leaving the affected areas with accumulations of more than 10,000 becquerels of caesium per square metre.

Last week tests found unsafe levels of radioactive contamination in recently harvested rice from the Fukushima region.

The levels of radioactive caesium were measured at 630 becquerels per kilogram, above the maximum allowable level of 500 becquerels.

Officials from Fukushima prefecture have now asked all rice farmers in the district to suspend shipments.

There have been a series of scares over radiation in food in Japan in recent months; in products such as beef, mushrooms and green tea, but never before in the country’s staple, rice.

Authorities have also begun testing soil in some Tokyo playgrounds and schools for traces of radioactive contamination.

Many people in Japan have purchased their own Geiger counters to monitor radiation levels around them.

The Fukushima plant went into meltdown after a massive earthquake and tsunami hit the country in March.” Source – ABC Melbourne.

Highlest levels yet recorded at Fukushima reactor 3 – “Tepco announced they measured 1.6 Sv/h at reactor 3, which is the highest reading of reactor 3. Since last week, Tepco has been measuring radiation in reactor 3 by using human worker to assist robot. 11/14/2011, when they washed off water on the floor and it was 1.32 Sv/h. Now they measured even higher radiation from the floor of the building. Tepco is supposed to declare that they managed to cold shut down the Fukushima plants by the end of this year, but actually, they don’t even know what is going on inside of the reactor.” Source – Fukushima Diary.

“Economists are warning of dire consequences if US politicians fail to make progress this weekend in tense talks aimed at reducing America’s massive deficit ahead of a Wednesday deadline.

The bi-partisan congressional super-committee is charged with drawing up plans for a $1.2tn reduction in the nation’s deficit by the middle of next week. Failure to do so will trigger an automatic “sequester” that will make cuts of that size to defence and social welfare programmes starting in 2013. But the two sides seem far from finding a solution after clashing over tax revenues.

While Wednesday is the official deadline for the supercommittee to report back, it has until Monday to tell the Congressional Budget Office about the impact any plan they send to Congress will have on the budget.

‘Time is running out. What I can say is we are leaving no stone unturned, negotiations continue and we are looking to find a way. We recognise what’s at stake and we’re hoping to reach an agreement,’ Democrat committee member Chris Van Hollen told CNN Friday.

Failure to reach an agreement on what is essentially a small reduction on the deficit – just 0.7% of gross domestic product in 2013 – could trigger another rating’s agency downgrade, warned economists including Paul Ashworth, chief North American economist at Capital Economics.” Read more.

Debt Panel Co-Chair: Failure Would Be ‘Huge Missed Opportunity’ – “The Republican co-chairman of the bipartisan deficit panel said Sunday that the members’ inability to strike a deal is a ‘huge missed opportunity,’ while refusing to say definitively that the committee had failed… ‘There’s still time on the clock,’ Becerra said. But the committee has a matter of hours to submit a plan in order to give congressional budget scorekeepers enough time to review it. The de facto deadline could be as early as Sunday night. While Hensarling said lawmakers are ‘not going to give up hope’ and continuing to talk, he did not dispute suggestions that the committee was headed for failure. ‘Nobody wants to give up hope — reality is to some extent starting to overtake hope,’ Hensarling, R-Texas, told ‘Fox News Sunday.'” Read more.