MidnightWatcher – Prophecy in Motion

“Moody’s on Friday downgraded its ratings for a dozen British banks, including state-owned Royal Bank of Scotland and Lloyds TSB, due to the removal of government financial support.

Moody’s said it chose to downgrade five large banks and seven small lenders as government action had ‘significantly reduced the predictability of support over the medium to long-term.’

The downgrades did not concern HSBC, Barclays or Standard Chartered banks, the agency said. But it added that it believed Britain’s government was in the current climate more likely to allow small lenders to fail if necessary.

The announcement comes as the European Union seeks swift recapitalisation of the region’s banks to avert the spreading across borders of the eurozone debt crisis.

Friday’s downgrades could result in banks facing higher rates of interest when looking to borrow money on markets, further hindering their attempts to return to better health.

Moody’s said it had downgraded Royal Bank of Scotland and Nationwide Building Society each by two notches to A2 from Aa3; Lloyds TSB Bank and Santander UK were cut by one grade to A1 from Aa3; the Co-Operative Bank was downgraded one level to A3 from A2.” Read more.

IMF Advisor: Could See Eurozone ‘Meltdown’ in 2 Or 3 Weeks – “In an interview on the BBC (via ZeroHedge), IMF advisor Robert Shapiro said some incredibly alarmist things. He tells broadcasters that if eurozone leaders don’t address the crisis properly we will see a meltdown as soon as later this month. In his words: ‘If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system.'” Read more.

Bank of England Governor: The World is Facing the Worst Financial Crisis in History, A ‘Titanic’ Disaster for Pensioners, Savers and Workers Approaching Retirement – “‘This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.’ Announcing its decision, the Bank said that the eurozone debt crisis was creating ‘severe strains in bank funding markets and financial markets’… Financial experts said the committee’s actions would be a ‘Titanic’ disaster for pensioners, savers and workers approaching retirement. Sir Mervyn suggested that was a price worth paying to save the economy from recession.” Read more.

“CREST the hill into the village of Iitate, and the reading on a radiation dosimeter surges eightfold—even with the car windows shut. ‘Don’t worry, I’ve been coming here for months and I’m still alive,’ chuckles Chohei Sato, chief of the village council, as he rolls down the window and inhales cheerfully. He pulls off the road, gets out of the car and buries the dosimeter in the grass. The reading doubles again.

Iitate is located 45km (28 miles) from the Fukushima Dai-ichi nuclear power plant hit by a tsunami on March 11th this year. In the mountains above the town, the forests are turning the colour of autumn. But their beauty is deceptive. Every time a gust of wind blows, Mr Sato says it shakes invisible particles of radioactive caesium off the trees and showers them over the village. Radiation levels in the hills are so high that villagers dare not go near them. Mr Sato cannot bury his father’s bones, which he keeps in an urn in his abandoned farmhouse, because of the dangers of going up the hill to the graveyard.

Iitate had the misfortune to be caught by a wind that carried radioactive particles (including plutonium) much farther than anybody initially expected after the nuclear disaster. Almost all the 6,000 residents have been evacuated, albeit belatedly, because it took the government months to decide that some villages outside a 30km radius of the plant warranted special attention. Now it offers an extreme example of how difficult it will be to recover from the disaster.

That is mainly because of the enormous spread of radiation. Recently the government said it needed to clear about 2,419 square kilometres of contaminated soil—an area larger than greater Tokyo—that received an annual radiation dose of at least five millisieverts, or over 0.5 microsieverts an hour. That covered an area far beyond the official 30km restriction zone (see map). Besides pressure- hosing urban areas, this would involve removing about 5cm of topsoil from local farms as well as all the dead leaves in caesium-laden forests.” Read more.

Actual Fukushima worker warns to get out of Japan before Spring comes – “Children have already started to have thyroid problems ‘even though they evacuated’. It was assumed to take 5 years but the symptoms are showing up much faster than we ever thought. Now it’s known that most part of the plume is stuck to the trees or soil in the mountains, where you can hardly decontaminate. Last night, the actual Fukushima worker Happy20790 tweeted these below: ‘Speaking of the pine, the pollen next year is very ‘serious’ … radiation will spread around again even though they decontaminate.'” Read more.

By James Kirkup – “Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession.

Economists said the Bank’s decision to resume its quantitative easing [QE], or asset purchase programme, showed it was increasingly fearful for the economy, and predicted more such moves ahead.

Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster.

‘This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.’

Announcing its decision, the Bank said that the eurozone debt crisis was creating ‘severe strains in bank funding markets and financial markets’.

The Monetary Policy Committee [MPC] also said that the inflation-driven ‘squeeze on households’ real incomes’ and the Government’s programme of spending cuts will ‘continue to weigh on domestic spending’ for some time to come.

The ‘deterioration in the outlook’ meant more QE was justified, the Bank said.

Financial experts said the committee’s actions would be a ‘Titanic’ disaster for pensioners, savers and workers approaching retirement. Sir Mervyn suggested that was a price worth paying to save the economy from recession.

Under QE, the Bank electronically creates new money which it then uses to buy assets such as government bonds, or gilts, from banks. In theory, the banks then use the cash they gain to increase their lending to businesses and individuals.

By increasing the demand for gilts, QE pushes down the interest rate yields paid to holders of these and other bonds. Critics of the policy say it pushes up inflation and drives down sterling.

The National Association of Pension Funds yesterday called for urgent talks with ministers to address the negative impact of lower gilt yields on pension funds. Joanne Segars, its chief executive, said QE makes it more expensive for employers to provide pensions and will weaken the funding of schemes as their deficits increase. ‘All this will put additional pressure on employers at a time when they are facing a bleak economic situation,’ she said.” Read more.

“Greece has enough money to pay pensions, salaries and bondholders through mid-November, the finance minister said Tuesday, as global markets sank on worries that a messy default could bring down European banks and trigger another global recession.

The Athens stock index was down more than 6 percent by late afternoon while the main Europe markets fell more than 3 percent. The turmoil endangered French-Belgian bank Dexia, whose shares plunged as much as 40 percent, on worries about its exposure to Greek bonds.

Greece had previously said it would start running out of money in mid-October if it didn’t get the next euro8 billion ($11 billion) installment of the euro110 billion rescue package it has been relying on since May 2010.

Evangelos Venizelos sought to reassure Greeks and investors that the country can hold on a little longer while its rescue creditors decide whether to give it more loans.

‘Until mid-November it is clear there will be no problem,’ said Venizelos, upon returning from a eurozone finance ministers’ meeting in Luxembourg.

The worry is that a messy default by Greece — in which sharp losses are imposed with little warning on bondholders, among which are many European banks — would cause massive losses in the financial sector and trigger a credit crunch. That could stifle loans to the real economy, cause huge uncertainty and push the world economy into another recession.” Read more.

Bernanke Warns Recovery ‘Close to Faltering’ – “Europe has a debt crisis. America has a jobs crisis. Corporate profits could be in trouble. World financial markets are in turmoil. And no one seems prepared to ride to the rescue. Federal Reserve Chairman Ben Bernanke bluntly warned Congress on Tuesday of what most of America has sensed for some time: The economic recovery, such as it is, ‘is close to faltering.’ The central bank chief spoke on a day when the stock market spent most of the trading hours in bear market territory — down 20 percent from its most recent highs in April. A late-day rally helped the market finish higher. Bernanke’s exchange with lawmakers seemed to capture the growing belief that no one is prepared to help the global economy in any meaningful way anytime soon.” Read more.

By Liam Halligan – “More than one in three international investors expect a global economic meltdown within the next 12 months, according to a new Bloomberg poll. Far more – almost 70pc – say the world economy is deteriorating, up from just 18pc four months ago.

At the heart of the gloom, of course, is the eurozone, with 90pc of those surveyed judging that the economy of the single currency area is getting worse. One wonders what planet the other 10pc are on.

The eurozone is clearly sliding. The European Commission’s economic sentiment indicator fell to 95 in September, from 98.4 the month before, plunging at a rate not seen since the Lehman Brothers collapse. German retail sales dropped faster in August than at any time since May 2007.

The eurozone – an economy second in size only to the US – is on the brink of a double-dip recession.

This grim prognosis, though, is set against a more hideous backdrop – the danger of a ‘euro-quake’. Greece will default. The only question is how the default is managed – indeed, if it is managed at all.

A bungled Greek payment failure will spark ‘contagion’, as spooked creditors pull the plug on some big eurozone government, leading to non-payment of wages and benefits, serious social unrest, and a single currency break-up.

We face the very real prospect of a major economic shock, the negative impact of which will be felt around the world.” Read more.

Germany ‘won’t give more to EU bail-out fund‘ – “German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the beefed-up EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday. ‘The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished,’ he told the magazine Super-Illu. He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.” Read more.

By Dina Kyriakidou and Ingrid Melander – “(Reuters) – Greece will miss a deficit target set just months ago in a massive bailout package, according to government draft budget figures released on Sunday, showing that drastic steps taken to avert bankruptcy may not be enough.

The dire forecasts came while inspectors from the International Monetary Fund, EU and European Central Bank, known as the troika, were in Athens scouring the country’s books to decide whether to approve a loan tranche. Without that installment, Greece would run out of cash as soon as this month.

The 2012 draft budget approved by cabinet on Sunday predicts a deficit of 8.5 percent of gross domestic product (GDP) for 2011, well short of the 7.6 percent target.

The 2012 deficit is set to meet a nominal target of 14.6 billion euros, but at 6.8 percent of GDP it falls short of a target of 6.5 percent, because the economy will shrink further.

“Three critical months remain to finish 2011, and the final estimate of 8.5 percent of GDP deficit can be achieved if the state mechanism and citizens respond accordingly,” the Finance Ministry said in a statement.

European officials are scrambling to avert an abrupt Greek bankruptcy, which would wreck the balance sheets of European banks, jeopardise the future of the single currency and potentially plunge the world into a new global financial crisis.” Read more.

Greece is slipping into the abyss – “… The Athens I knew 20 years ago has changed radically. I used to tell British friends that despite its chaos, it was a very civilised city. When I moved here, you didn’t have homeless people sleeping on the streets, there was little crime and the sick and needy were looked after. That civility is vanishing fast. With economic doom becoming ever more likely, it sometimes feels as if the fabric of society is being ripped asunder… But we are only at the start of this crisis. What will happen next year when unemployment doubles and people lose their homes? The Communist calls for revolution don’t look nearly as far-fetched as they did six months ago. While civil war doesn’t look likely, a return to the military days must be a possibility. If the Greek people reject their entire political system and the state falls apart, what will be left?” Read more.

The ‘Revived Roman Empire’ has now been put on life support, and the prognosis doesn’t look good …

“(Reuters) – The euro is dead and cannot be saved, while Greece will inevitably default, Attila Szalay-Berzeviczy, Head of Global Securities Services at UniCredit Group wrote in an article on a Hungarian website on Wednesday.

Szalay-Berzeviczy signed the article as former head of the Budapest Stock Exchange.

‘The common currency of Europe is practically dead,’ he said in a long article posted on news website Index.hu.

A UniCredit spokesperson said, “The comments expressed by Mr Szalay-Berzeviczy are his own personal view and do not reflect the position of the company”.

Szalay-Berzeviczy said the only remaining question now was ‘for how many days the hopeless rearguard fight of European governments and the European Central Bank can keep up Greece’s spirits.’

‘As the moment when Greece declares default, Europe can be shaken by an earthquake of magnitude 10, which will bring the onset of an entirely new era in the life of the old Continent,’ Szalay-Berzeviczy wrote.

Szalay-Berzeviczy signed the article as former head of the Budapest Stock Exchange. He could not immediately be reached for comments.

He said Greece’s default will mean that the state will not be able to pay wages to its employees and will not pay pensions for quite a while, which would lead to a rush to banks’ cash-machines.

‘With the government securities stuck with local banks becoming worthless, an immediate liquidity crisis will lead to the total collapse of the Greek banking system,’ he said.

‘So the savings of depositors will also be lost as the Greek state’s deposit guarantee will no longer be available.’

Szalay-Berzeviczy said in this case, this ‘catastrophe’ would very quickly spread to the entire euro zone, Europe and would also shake the world, with contagion spreading via the banking system under such a scenario.” Read more.

“A former adviser to the Japanese cabinet has revealed the government has known for months that thousands of evacuees from around the Fukushima nuclear plant will not be able to return to their homes.

Nearly seven months after the meltdowns at Fukushima, about 80,000 people are still living in shelters or temporary housing.

Former special adviser to Japan’s prime minister and cabinet Kenichi Matsumoto has told the ABC that the government has known for months that many who live close to the Fukushima plant will not be able to return to their homes for 10 to 20 years because of contamination.

The history professor and author has given the ABC an insider’s account of what happened in the hours and days after March 11, as three of the Fukushima reactors bubbled towards meltdown after a tsunami knocked out backup power to the plant.

Professor Matsumoto witnessed both the government’s and the plant operator’s responses to the worst nuclear accident in a quarter of a century.

He says the government is simply too scared to tell Fukushima residents that they cannot return.

‘The cabinet knew right after the disaster that some people would not be able to live in their communities for 10 to 20 years, especially those a few kilometres from the plant,’ he said.

‘The government should have conveyed the truth to the evacuees. But it felt scared; it feared telling the truth to the people.’

Professor Matsumoto also confirms the prime minister at the time – Naoto Kan – also contemplated evacuating tens of millions of people from in and around Tokyo.” Read more.

By Yuriy Humber, Yuji Okada and Stuart Biggs – “Beyond the police roadblocks that mark the no-go zone around Japan’s wrecked Fukushima nuclear plant, six-foot tall weeds invade rice paddies and vines gone wild strangle road signs along empty streets.

Takako Harada, 80, returned to an evacuated area of Iitate village to retrieve her car. Beside her house is an empty cattle pen, the 100 cows slaughtered on government order after radiation from the March 11 atomic disaster saturated the area, forcing 160,000 people to move away and leaving some places uninhabitable for two decades or more.

‘Older folks want to return, but the young worry about radiation,’ said Harada, whose family ran the farm for 40 years. ‘I want to farm, but will we be able to sell anything?’

What’s emerging in Japan six months since the nuclear meltdown at the Tokyo Electric Power Co. plant is a radioactive zone bigger than that left by the 1945 atomic bombings at Hiroshima and Nagasaki. While nature reclaims the 20 kilometer (12 mile) no-go zone, Fukushima’s $3.2 billion-a-year farm industry is being devastated and tourists that hiked the prefecture’s mountains and surfed off its beaches have all but vanished.” Read more.

Fukushima Getting Worse – Tokyo Becoming Uninhabitable? – “The radiation coming out of that hell-hole is still INCREASING. As I have said for months, there is no way to stop it. The only solution is to hide it and pretend it doesn’t exist… Moving right along…the Japanese are gearing up to restart all of the nuclear plants that are now offline. They have no other sources of energy and winter is approaching – so all the plants that were shut down because they were – and still are – unsafe are going to be put back on line before winter. I absolutely guarantee you that there will be another Fukushima-type accident in the near future because of these unsafe plants. Japan will not only kill off it’s own citizens, but everyone else as well. That’s not rhetoric. Tokyo is rapidly becoming uninhabitable. As my VERY FIRST POST said back in March, when the cores hit groundwater, it will get very serious. Now it is happening.” Read more.

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By Jonathan Sibun and Jeremy Warner – “The FTSE 100 closed up 25.20 to 5,066.81 on Friday, but ended the week down 5.62pc, with £78bn knocked off the value of Britain’s blue-chip companies. While the index closed higher, it had fallen as much as 1.6pc earlier in the day, dropping through the pyschologically important 5,000 mark.

The falls came as traders were left underwhelmed by a communique rushed out in the early hours of Friday morning by G20 finance ministers at the IMF meeting in Washington. In the wake of Thursday’s global stock market rout, the G20 committed ‘to take all necessary actions to preserve the stability of banking systems and financial markets’ but was criticised for failing to introduce concrete measures.

Speaking at the IMF meeting on Friday, UK Chancellor George Osborne ratcheted up the pressure on European leaders to solve the crisis by calling on them to bolster the European bail-out fund and declaring they have just six weeks to find solutions.

‘Patience is running out in the international community… More needs to be done to avoid a disorderly outcome,’ he said, before referring to the next G20 meeting in Cannes on November 3 and 4. ‘The eurozone has six weeks to resolve its political crisis.'” Read more.

Alessio Rastani: ‘In less than 12 months the savings of million of people is going to vanish’