From the man who broke the Sterling, we now hear the Euro has reached a “reflexivity” point. Greece is the epicentre of what is going on in Europe, but the problems will for sure spread to other countries. Let’s see what country finally decides to leave the sinking Euro project?

Billionaire investor George Soros said it’s “probably inevitable” that a mechanism will have to be put in place to allow weaker euro-region economies to exit the single currency.

“We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread,” Soros, 80, said at a panel discussion in Vienna today on whether liberal democracy is at risk inEurope. “The financial system remains extremely vulnerable.”

Concern Greek lawmakers will fail to pass austerity measures to ensure the next installment of the nation’s bailout is roiling global markets and pushed the euro to a record-low against the Swiss franc last week. Greece is one of three euro- region members to have sought international bailouts amid the sovereign debt crisis.

“I think most of us actually agree that” Europe’s crisis “is actually centered around the euro,” said Soros. “It’s a kind of financial crisis that is really developing. It’s foreseen. Most people realize it. It’s still developing. The authorities are actually engaged in buying time. And yet time is working against them,” he said.

The euro was created in 1999, with 11 member states – Germany, France, Italy, Belgium, the Netherlands, Luxembourg, Finland, Austria, Portugal, Spain and Ireland. Greece was the 12th country to adopt the shared currency in 2001, while Estonia is the newest member of the euro region, joining this January.

Maybe Sweden has something to teach other nations when it comes to Economics? Beside the exotic midnight sun, it’s extremely organized and somewhat dull society, Sweden has during the last years proven to be the European Tiger ruled by the only Finance Minister with a ponytail. As our site is registered in Sweden, we are proud to bring you the recipe of a prosperous Economy. Washington Post reports on the Swedish wonder, although they forgot about the future, ie the Swedish deteriorating education.

This Scandinavian nation of 9 million people has accomplished what the United States, Britain and Japan can only dream of: Growing rapidly, creating jobs and gaining a competitive edge. The banks are lending, the housing market booming. The budget is balanced.

Sweden was far from immune to the global downturn of 2008-09. But unlike other countries, it is bouncing back. Its 5.5 percent growth rate last year trounces the 2.8 percent expansion in the United States and was stronger than any other developed nation in Europe. And compared with the United States, unemployment peaked lower (around 9 percent, compared with 10 percent) and has come down faster (it now stands near 7 percent, compared with 9 percent in the U.S.).

Some of the reasons for the Swedish success are as unique to the nation as its citizens’ predilection for Abba, pickled herring and minimalist furniture. But there are plenty of lessons for other countries as they struggle to find a pathway toward prosperity.

The overarching lesson the Swedes offer is this: When you have a financial crisis, and Sweden had a nasty one in the early 1990s, learn from it. Don’t simply muddle through and hope that growth will eventually return. Rather, address the underlying causes of the crisis to create an economic and financial system that will be more resilient when bad times return.

Here is what that means in practice. Call them Sweden’s five lessons for a crisis-stricken nation.

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Guardian reports;

We are not all in this together. The UK economy is flat, the US is weak and the Greek debt crisis, according to some commentators, is threatening another Lehman Brothers-style meltdown. But a new report shows the world’s wealthiest people are getting more prosperous – and more numerous – by the day.

The globe’s richest have now recouped the losses they suffered after the 2008 banking crisis. They are richer than ever, and there are more of them – nearly 11 million – than before the recession struck.

In the world of the well-heeled, the rich are referred to as “high net worth individuals” (HNWIs) and defined as people who have more than $1m (£620,000) of free cash.

According to the annual world wealth report by Merrill Lynch and Capgemini, the wealth of HNWIs around the world reached $42.7tn (£26.5tn) in 2010, rising nearly 10% in a year and surpassing the peak of $40.7tn reached in 2007, even as austerity budgets were implemented by many governments in the developed world.

The report also measures a category of “ultra-high net worth individuals” – those with at least $30m rattling around, looking for a home. The number of individuals in this super-rich bracket climbed 10% to a total of 103,000, and the total value of their investments jumped by 11.5% to $15tn, demonstrating that even among the rich, the richest get richer quicker. Altogether they represent less than 1% of the world’s HNWIs – but they speak for 36% of HNWI’s total wealth.

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With 28 countries involved, quite some people knew about the Big oil news of the week. Let the hunt on insider begin. Dow Jones reports;

U.S. commodity regulators are examining whether traders received early word of a decision to coordinate a release of global oil stockpiles ahead of Thursday’s announcement by the International Energy Agency, according to a person familiar with the matter.

Officials with the U.S. Commodity Futures Trading Commission as well as market participants have said trading was unusual in the oil futures market prior to the IEA’s announcement that it would release 60 million barrels of oil, the person said.

The CFTC is reviewing market data to find clues as to whether some traders may have received an advance tip on the IEA’s plan, the person said.

The IEA, a Paris-based agency that represents 28 of the world’s largest oil consuming nations, announced the move early Thursday, sending oil futures falling 4.6% to a four-month low of $91.02 a barrel on the New York Mercantile Exchange. ICE Brent futures saw an even steeper drop, declining by 6.1% to $107.26 a barrel.

Analysts and traders said they noticed irregular trading prior to the official release of the report, and beginning Thursday raised concerns that some traders may have heard of the decision early. Others in the market attributed the decline to weak U.S. jobs data and concerns about Greece’s debt crisis.

“Twenty-eight countries–it’s tough to keep a secret,” said Dominick Chirichella, analyst at the Energy Management Institute in New York. “I don’t know how you keep a secret from the oil market when there are that many countries involved.”

The source described the CFTC’s actions are a preliminary step. In cases of this type, the agency will often try to work with foreign regulators to determine if suspicious trading patterns originated in other countries outside of the CFTC’s jurisdiction.

A CFTC spokesman declined to comment.

“Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones.

The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organised political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature.

The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education).

It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.”

Albert Einstein, 1949

Below some historic reading by Hudson. As we know, history is always repeating itself.

This article was published in the NYT more than 20 years ago, forecasting precisely what has happened.

I attended the annual meetings of the International Monetary Fund and World Bank in Washington
last month. When the meetings ended, I was left with the impression that no further writedowns
would be forthcoming for Latin America’s debtor countries unless they followed the lead of Mexico.

To do this, countries like Brazil and Argentina would have to sell off their public utilities, some
potentially profitable industrial corporations and some service industries like airlines.
In the past, one met mostly bankers at these big international meetings. Now there are a lot of
lawyers.

For Latin America the foreclosure process has begun, but for the time being it is called privatization
or debt-for-equity swaps. Countries hoping to borrow more money from creditor-nation
governments, the I.M.F. and the World Bank, are being told to help themselves by relinquishing
ownership of their basic economic infrastructure.

In advocating this brave new world of privatizing hitherto public monopolies, these local investors
and their partners, the international banking and investment community, cite a number of truisms.
Private-sector managers will run enterprises more efficiently, the proponents of privatization say.
This argument has merit, as far as it goes. But it should be remembered that the troubled savings
and loan institutions in Texas were all privately run businesses.

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Strafor on the growing importance of the Chinese middle class. With the Economy going from export orientated to more domestically consumption dependent, it is crucial Beijing gets the right Ying Yang mix in order to take the Economy forward.

The Chinese Academy of Social Science (CASS), the country’s top think tank, recently released the 2011Blue Book of China’s Commercial Sector. In the annual report, CASS estimated that the country’s middle class could number 104 million (nearly 8 percent of the country’s population) by the end of the year. Interestingly, this number was significantly lower than another report released by CASS just a year ago, which predicted that the middle class would account for nearly one-fourth of the country’s population by the end of 2010. This discrepancy can largely be attributed to the nebulous definition of middle class; the criteria includes socio-economic status, ownership of property and purchasing power as well as many other things with different weights assigned to different indicators.

Nonetheless, whether the middle class is growing is not the primary issue for Beijing. Theoretically, the middle class is an important pillar sustaining the development of society — it identifies with mainstream values and serves to maintain social stability; its comparatively higher economic status means it can bolster domestic consumption and help to sustain dynamic economic growth; and it naturally embraces progressive ideas and thus could facilitate gradual economic and political reform. However, the Chinese government is much more concerned with retaining the support of the elites who form the foundation of the Party’s power. Beijing must, however, be wary of the mounting financial burdens that could eventually cause its middle class to shrink — an outcome that would threaten economic growth and risk widespread social frustration.

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Some reflections on the American Debt Burdened Economy, and further implications on the Society. For great insight reading on the increasingly polarized US society, we also recommend books by the French author Emanuel Todd.

If a drunk driver crashed his speeding rental car into your house and killed your spouse, you would be outraged if law enforcers took bribes and refused to give the driver a blood test. If the judge then gave the killer a small fine and ordered you to pay the fine and pay for all the damages, you’d be outraged. If the government then handed the drunk-driver keys to a bigger faster rental car, handed the drunk driver an even bigger bottle of whiskey, and then gave you the rental bill; you’d storm Washington, blizzard elected officials with protests and organize friends and associates to vote these malefactors, the elected officials that betrayed your trust, out of office.

Yet, we’ve remained largely silent in the face of the same sort of behavior by Wall Street and Washington. Bonus-seeking bankers crashed into Main Street’s economy and ran control frauds within banks that would have failed without taxpayer bailouts. Bureaucrats and elected officials bailed them out without demanding consequences. Bankers are revving their engines again in credit derivatives, currency derivatives, and commodities trades. “Financial reform” addresses none of the latter problems.

Arianna Huffington’s Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream explains that the $787 billion American Recovery and Reinvestment Act, the bank bailout package also known as TARP, allotted only $72 billion to infrastructure projects. Another feature of the bill was to have banks agree to lend money to medium and small sized businesses to stimulate the economy. That didn’t happen and official unemployment numbers remain above 9%, while unofficial figures for underemployed Americans soar above 20%.

The number one stimulus for any economy is not consumer spending, although that is a powerful secondary effect. The number one stimulus is capital spending, investment in the production of real goods and consumables. As Third World America explains: “There were three flaws with the old economy that has crashed. It favored consumption over production, debt over small savings, and environmental damage over environmental renewal.”

Our ongoing bank bailouts included the mispricing of around $4 trillion of toxic assets that the banks cannot afford to honestly price, since bank capital would be wiped out sparking another global financial meltdown. We continue to provide cheap taxpayer funding through the Fed. New accounting rules allow banks to cover-up the low price of impaired assets, and government debt guarantees provide ongoing subsidies to banks that have a value of trillions of dollars.

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Some insight into the Greek and European situation by Hudson;

The fight for Europe’s future is being waged in Athens and other Greek cities to resist financial demands that are the 21st century’s version of an outright military attack. The threat of bank overlordship is not the kind of economy-killing policy that affords opportunities for heroism in armed battle, to be sure. Destructive financial policies are more like an exercise in the banality of evil – in this case, the pro-creditor assumptions of the European Central Bank (ECB), EU and IMF (egged on by the U.S. Treasury).

As Vladimir Putin pointed out some years ago, the neoliberal reforms put in Boris Yeltsin’s hands by the Harvard Boys in the 1990s caused Russia to suffer lower birth rates, shortening life spans and emigration – the greatest loss in population growth since World War II. Capital flight is another consequence of financial austerity. The ECB’s proposed “solution” to Greece’s debt problem is thus self-defeating. It only buys time for the ECB to take on yet more Greek government debt, leaving all EU taxpayers to get the bill. It is to avoid this shift of bank losses onto taxpayers that Angela Merkel in Germany has insisted that private bondholders must absorb some of the loss resulting from their bad investments.

The bankers are trying to get a windfall by using the debt hammer to achieve what warfare did in times past. They are demanding privatization of public assets (on credit, with tax deductibility for interest so as to leave more cash flow to pay the bankers). This transfer of land, public utilities and interest as financial booty and tribute to creditor economies is what makes financial austerity like war in its effect.

Socrates said that ignorance must be the root of all evil, because no one deliberately sets out to be bad. But the economic “medicine” of driving debtors into poverty and forcing the selloff of their public domain has become socially accepted wisdom taught in today’s business schools. One would think that after fifty years of austerity programs and privatization selloffs to pay bad debts, the world had learned enough about causes and consequences. The banking profession chooses deliberately to be ignorant. “Good accepted practice” is bolstered by Nobel Economics Prizes to provide a cloak of plausible deniability when markets “unexpectedly” are hollowed out and new investment slows as a result of financially bleeding economies, medieval-style, while wealth is siphoned up to the top of the economic pyramid.

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And we finally get some SHIBOR rates coming off today;

	O/N	7.0502		28.23
	1W	8.6700		40.08
	2W	7.3068		175.74
	1M	7.8857		3.10
	3M	6.3893		0.63
	6M	5.1735		1.88
	9M	5.0625		1.42
	1Y	5.1024		2.11

Interesting news from Market Watch is China’s commitment of European Debt. We will all be run by the Chinese in soon future.

China doesn’t want to see a eurozone debt restructuring and is making efforts with the International Monetary Fund and countries related to the sovereign crisis on avoiding it, a government researcher said Friday. “China, the IMF and related countries are all making efforts…we don’t want to see a debt restructuring,” Qu Xing, director of the China Institute of International Studies, a Foreign Ministry think tank, told reporters at a briefing here Friday.