ALERT: DMND GOING NUTS TO THE UPSIDE

+30%. Short squeeze.

Possible due to a loan he took from the fund over more than $100 million.

BRUSSELS (AP) — The leaders of the 17 countries that use the euro, plus six others, have tentatively agreed to a new treaty that enforces stricter budget rules seen as crucial to solving Europe’s debt crisis and holding the currency-bloc together.

The effort by Germany and France to persuade all 27 European Union countries to agree to treaty changes failed, in large part because of Britain’s refusal to give up some powers.

Following marathon all-night talks, the 23 decided to back a new treaty with strict oversight over national budgets, as they try to convince markets that the euro has a future. An agreement on fiscal discpline is considered a critical first step before the European Central Bank, the International Monetary Fund and others would commit more financial aid to help countries like Italy and Spain, which have large debts and unsustainable borrowing costs.

ECB President Mario Draghi praised the tentative deal as a good result for the eurozone.

The immediate market response was lukewarm, with stock markets in Europe fairly steady — the Stoxx 50 of leading European shares was trading 0.1 percent lower while the euro was down 0.1 percent at $1.3336.

Markets may be worried that the failure of the EU to get unanimous support for more stringent budgetary rules may rattle the foundations of a union created to foster peace and prosperity across Europe following World War II.

Even after Friday’s long-awaited deal, watched by governments and markets worldwide, the European leaders have huge hurdles still ahead. They are meeting again later Friday to work out what exactly their new treaty will contain and how violators of its strict budget rules will be policed. They want it written by March.

Britain, which doesn’t use the euro, led the push against a revised treaty tying all 27 EU countries to tighter fiscal union. The others that didn’t sign on were Hungary, the Czech Republic and Sweden.

Britain’s leaders argued that the revised treaty would threaten its national sovereignty and London’s esteemed financial services industry.

Most EU countries had pushed for an EU-wide accord to avoid a split, but Germany and France, the eurozone’s biggest economies, quickly made clear that a deal among the 17 euro countries and whoever else wanted to join was better than nothing.

French President Nicolas Sarkozy laid the blame at the feet of British Prime Minister David Cameron.

“David Cameron made a proposal that seemed to us unacceptable, a protocol to the treaty that would have exonerated the United Kingdom from a great number of financial service regulations,” Sarkozy said shortly before dawn, after what he called a “difficult” dinner meeting had dragged through the night.

Cameron defended his stance.

“What was on offer is not in Britain’s interest so I didn’t agree to it,” he told reporters in Brussels.

“We’re not in the euro and I’m glad we’re not in the euro,” he said. “We’re never going to join the euro and we’re never going to give up this kind of sovereignty that these countries are having to give up.”

ZH’s best work to date.

Via Bespoke:

Thursday, December 8, 2011 at 03:28PM

(Reuters) – European Union leaders agreed on new fiscal rules enshrining tougher budget discipline on Thursday, an EU official said, after the European Central Bank doused hopes of dramatic action on its part to arrest the euro area’s debt crisis.

The 27 EU leaders, meeting in Brussels, agreed on automatic sanctions for euro zone deficit offenders unless three-quarters of states vote against the move, and approved a new fiscal rule on balanced budgets to be written into national constitutions.

“There is a deal between leaders on the new fiscal compact,” an EU official told reporters after four hours of talks.

However, they were still debating how to strengthen their future permanent rescue fund and whether to give it a banking license, and had not yet broached the vexed question of whether the new pact requires major changes to the EU treaty.

European Council President Herman Van Rompuy, the summit chairman, wants all 27 EU states to agree to the rule changes via a minor adjustment to a treaty protocol that could be implemented quickly without requiring full ratification. But German Chancellor Angela Merkel demanded a fully fledged treaty change to give the measures extra weight.

“The Germans are obsessed with how we are going to do things, saying we have to change the treaty. They are totally obsessed. That’s why it can get difficult,” an EU diplomat said.

ECB President Mario Draghi earlier spooked financial markets by discouraging expectations that the bank would massively step up buying of government bonds if EU leaders agreed on moves towards closer fiscal union.

As soon as the draft summit agreement leaked, a senior German official rejected key measures including letting the future rescue fund, the European Stability Mechanism, operate as a bank, borrowing from the ECB, and a long-term goal of issuing common euro zone bonds.

Draghi said the bloc’s existing bailout facility should remain the main tool to fight bond market contagion, despite its clear limits. It was illegal for the ECB or national central banks to lend money to the IMF to buy euro zone bonds, he said, appearing to veto one firefighting option under consideration.

The ECB did take unprecedented action to support Europe’s cash-starved banks with three-year liquidity and cut interest rates back to a record low 1.0 percent to counter a forecast recession brought on by widespread austerity measures.

The euro and world shares briefly rallied on news of the draft summit conclusions, only to fall back on the German rejection. Investors are increasingly convinced only the ECB has the power to protect the euro zone, and were disappointed by Draghi’s caution on bond-buying.

“One step forward, two steps back,” said Alan Clarke, UK and euro zone economist at Scotia Capital. “The euro zone leaders might as well not bother. Pack their bags, go home, enjoy the weekend and do their Christmas shopping.”

French President Nicolas Sarkozy dramatized the danger facing the 17-nation single currency area hours before their eighth crisis summit of the year in a speech to European conservative leaders in the French port city of Marseille.

“Never has the risk of Europe exploding been so big,” he said. “If there is no deal on Friday there will be no second chance.”

France and Germany used the Marseille meeting to lobby for their plan to amend the European Union treaty to toughen budget discipline, which they want to have ready by March. But several countries are skeptical of full-blown treaty change.

Merkel said on arrival in Brussels: “The euro has lost credibility and this must be won back. We will make clear that we will accept more binding rules.”

The new ECB chief said his remark last week that “other elements” might follow if euro zone leaders agreed to seal tougher new budget rules had been overinterpreted as hinting the bank could step up bond purchases.

“I was surprised by the implicit meaning that was given,” Draghi said, without offering an alternative interpretation.

The ECB cut its main rate by a quarter-point and flagged a strong chance of recession next year. Draghi admitted the central bankers had been divided even on that decision.

The plight of Europe’s banks was also thrown into sharp relief. The European Banking Authority told them to increase their capital by a total of 114.7 billion euros, significantly more than predicted two months ago.

A Reuters poll of economists found that while 33 out of 57 believe the euro zone will probably survive in its current form, 38 of those questioned expected this week’s summit would fail to deliver a decisive solution to the debt crisis.

Read the rest here.

http://www.youtube.com/watch?v=WtHgOzGXXAU&feature=g-all

And he lit all the candles.

Full Article

In an unprecedented move, CNBC host, Jim Cramer, announced he was “going to DEFCON 2” on the markets because of the European “situation.” Obviously, his advice is to pair DEFCON 2 with an underground bunker and dry foods.

HAHAHAHAHA

FOLLOW LIVE NEWS FEED HERE 

BREAKING: Va. Tech: Police officer has been shot; potential 2nd victim reported at parking lot -ldh

Virginia Tech says gunshots have been reported on campus, and authorities are seeking a suspect.

The campus-wide alert at 12:36 p.m. said: “Gun shots reported- Coliseum Parking lot. Stay Inside. Secure doors. Emergency personnel responding. Call 911 for help.”

The suspect is described as white male wearing gray sweat pants, gray hat with neon green brim, maroon hoodie and backpack.

A message left with the university wasn’t immediately returned. Campus police referred all questions to the university.

A student gunman killed 32 students and faculty and then shot himself on the campus in 2007.

SOURCE: AP

Read here:

The prospect of oil topping $150 a barrel within a year has become the biggest bet in the options market as the U.S. and Europe work to limit Iran’s crude sales.

The number of outstanding calls to buy oil at $150 next December has jumped 29 percent since a Nov. 8 United Nations inspectors’ report on the Persian Gulf country’s nuclear program, to more than any other option on the New York Mercantile Exchange. The contracts equate to about 38 million barrels of oil, or 43 percent of daily global demand, based on data from the U.S. Energy Department.

“People are taking a long shot and buying cheap insurance,” Fred Rigolini, vice president of Paramount Options Inc. in New York, who has traded crude options for 23 years, said in a telephone interview on Dec. 5. “They’ll probably play this through the spring.”

The price of the $150 calls has risen 9.2 percent to $1.30 since the day before the UN report was published, outpacing the 5.2 percent gain in oil futures. Crude will surpass $250 a barrel if nations threaten to ban purchases from Iran, the Tehran-based Shargh newspaper cited Ramin Mehmanparast, an Iranian foreign ministry spokesman, as saying Dec. 4. Iran is OPEC’s second-biggest producer.

Open interest, the number of contracts not closed or delivered, in options to buy crude at $150 next December increased 11 percent on Nov. 22 alone as the U.S., U.K. and Canada imposed new sanctions on Iran’s financial system, including measures that may make it more difficult for buyers to pay for Iranian crude.

Finally, fucking thank you.

Read here:

Boone Pickens, on CNBC, recently said oil was over supplied currently. This world renowned expert expects a downward movement in oil prices in the near to medium term. The Libyan oil is coming back online more quickly than early estimates indicated. In Nov. Libya was already providing 600,000 bopd to world markets. Libya’s National Oil Corporation said it expects to provide 800,000 bopd of light sweet crude to world markets by year end. OPEC officials estimate that Libyan output will return to pre-conflict levels by mid-2012. The 300,000 bopd that will be available at the world level once the 150,000 bopd Seaway pipeline (to Cushing, Okla. from the Texas coast) is reversed in the spring of 2012 should act to lower overall oil prices too. The extra oil that the Saudi’s have provided to replace the Libyan oil may not disappear.

With the extra continuing expenses the Saudi government recently incurred in compromising with the Saudi rioters, the Saudi government will be loathe to curb their production. They are using the extra income to pay for the increased benefits they acceded to. Other OPEC economies that are hurting will likely over produce too. Admittedly there is talk of an EU ban on Iranian oil for political reasons. To me this seems unlikely as the EU is moving steadily into recession. Higher oil prices due to a self imposed ban on Iran exports would only exacerbate the recession(s). All this means that the price of oil is likely to go down in the near term.

The secular growth in energy demand due to emerging markets growing energy demands is still in place longer term; but shorter to medium term we may see a move downward, especially if the EU Summit disappoints investors. Such a disappointment would presage a deeper EU recession(s). I’m sure most people can remember the commodities crash as the recent US recession took hold. The EU mediated commodities crash should be smaller. Futures trading rule changes have prevented many futures from becoming as over bought as they were before the US recession. Plus the EU is not quite as much of an oil glutton as the US, so the decrease in EU demand for oil will be smaller than that seen in the US. Still an EU decrease in demand is coming.

In the shorter term, the EU credit crisis events may provide more dramatic moves either way. However, medium term the EU recession should move commodities prices downward. It is less clear whether this down move will include gold, but just about everything else should come under significant pressure. Even EU food consumption may lessen. The EU recession(s) will also have trickle down effects on its major suppliers such as the US, China, and Japan (and on its minor suppliers too).

Hackers are bombarding the world’s computer controlled energy sector, conducting industrial espionage and threatening potential global havoc through oil supply disruption.

Oil company executives warned that attacks were becoming more frequent and more carefully planned.

“If anybody gets into the area where you can control opening and closing of valves, or release valves, you can imagine what happens,” said Ludolf Luehmann, an IT manager at Shell Europe’s biggest company .

“It will cost lives and it will cost production, it will cost money, cause fires and cause loss of containment, environmental damage – huge, huge damage,” he told the World Petroleum Congress in Doha.

Computers control nearly all the world’s energy production and distribution in systems that are increasingly vulnerable to cyber attacks that could put cutting-edge fuel production technology in rival company hands.

“We see an increasing number of attacks on our IT systems and information and there are various motivations behind it – criminal and commercial,” said Luehmann. “We see an increasing number of attacks with clear commercial interests, focusing on research and development, to gain the competitive advantage.”

He said the Stuxnet computer worm discovered in 2010, the first found that was specifically designed to subvert industrial systems, changed the world of international oil companies because it was the first visible attack to have a significant impact on process control.

But the determination and stamina shown by hackers when they attack industrial systems and companies has now stepped up a gear, and there has been a surge in multi-pronged attacks to break into specific operation systems within producers, he said.

“Cyber crime is a huge issue. It’s not restricted to one company or another it’s really broad and it is ongoing,” said Dennis Painchaud, director of International Government Relations at Canada’s Nexen Inc. “It is a very significant risk to our business.”

“It’s something that we have to stay on top of every day. It is a risk that is only going to grow and is probably one of the preeminent risks that we face today and will continue to face for some time.”

Luehmann said hackers were increasingly staging attack over long periods, silently collecting information over weeks or months before attacking specific targets within company operations with the information they have collected over a long period.

“It’s a new dimension of attacks that we see in Shell,” he said.

NOT IN CONTROL

In October, security software maker Symantec Corp said it had found a mysterious virus that contained code similar to Stuxnet, called Duqu, which experts say appears designed to gather data to make it easier to launch future cyber attacks.

Other businesses can shut down their information technology (IT) systems to regularly install rapidly breached software security patches and update vulnerable operating systems.

But energy companies cannot keep taking down plants to patch up security holes.

“Oil needs to keep on flowing,” said Riemer Brouwer, head of IT security at Abu Dhabi Company for Onshore Oil Operations (ADCO).

“We have a very strategic position in the global oil and gas market,” he added. “If they could bring down one of the big players in the oil and gas market you can imagine what this will do for the oil price – it would blow the market.”

Hackers could finance their operations by using options markets to bet on the price movements caused by disruptions, Brouwer said.

“So far we haven’t had any major incidents,” he said. “But are we really in control? The answer has to be ‘no’.”

Oil prices usually rise whenever tensions escalate over Iran’s disputed nuclear program – itself thought to be the principal target of the Stuxnet worm and which has already identified Duqu infections – due to concern that oil production or exports from the Middle East could be affected by any conflict.

But the threat of a coordinated attack on energy installations across the world is also real, experts say, and unlike a blockade of the Gulf can be launched from anywhere, with no U.S. military might in sight and little chance of finding the perpetrator.

“We know that the Straits of Hormuz are of strategic importance to the world,” said Stephan Klein of business application software developer SAP.

“What about the approximately 80 million barrels that are processed through IT systems?,” said Klein, SAP vice president of oil and gas operations in the Middle East and North Africa.

Attacks like Stuxnet are so complex that very few organizations in the world are able to set them up, said Gordon Muehl, chief security officer at Germany’s SAP said, but it was still too simple to attack industries over the internet.

Only a few years ago hacking was confined to skilled computer programmers, but thanks to online video tutorials, breaking into corporate operating systems is now a free for all.

“Everyone can hack today,” Shell’s Luehmann said. “The number of potential hackers is not a few very skilled people — it’s everyone.”

SOURCE 

In one of the gloomiest predictions about the fallout from a breakup of the euro, Citigroup’s chief economist on Thursday warned a collapse of the currency will result in years of a global depression that could send unemployment spiking above 20% in the West.

The comments, from Citigroup chief economist Willem Buiter, underscore the growing concern that policymakers won’t be able to forge a credible solution that will keep the currency union intact.

Buiter, previously a professor at the London School of Economics, said the ensuing chaos caused by the unlikely event of a disorderly sovereign default and exit by all five periphery nations would trigger a financial catastrophe and global depression. The disaster, he said, would send GDP plummeting more than 10% and unemployment in the West surging to 20% or more.

“If Spain and Italy were to exit, there would be a collapse of systemically important financial institutions throughout the European Union and North America and years of global depression,” Buiter wrote.

Thankfully, Buiter sees little chance of these worst-case scenarios actually coming to fruition. He forecasts a 5% or lower chance of a disorderly default and exit by all five periphery states.

Likewise, Buiter believes the likelihood of an exit by Germany and other fiscally strong countries is even less likely, attributing a less than 3% probability of such an event. That’s a good thing because he believes this outcome would perhaps be even more disastrous and extremely messy from a legal standpoint.

Still, the financial markets appear to be bracing for at least the possibility that the eurozone will no longer have 17 nations.

Hurt by comments from the ECB, the euro slumped nearly 1% against the dollar and fell below $1.33 on Thursday. Individual European bank stocks like Deutsche Bank (DB: 28.25, -1.28, -4.32%) and Barclays (BCS: 11.36, -0.67, -5.57%) suffered steep selloffs as well.

According to The Wall Street Journal even some central banks are take precautionary steps to prepare for life without the euro, including central banks in Ireland, Greece, England and Switzerland.

If the only nation to leave the currency and suffer a disorderly sovereign default was Greece, Buiter said it would be “manageable” because it accounts for just 2.2% of euro-area GDP.

Ultimately, Buiter said the potential for economic ruin should present a compelling argument for keeping the eurozone intact as much as possible.

“The case for keeping the Euro Area show on the road would seem to be a strong one: financially, economically, and politically, including geopolitically,” he wrote.
Read more: http://www.foxbusiness.com/economy/2011/12/08/citi-euro-collapse-would-cause-global-depression-send-unemployment-above-20/#ixzz1fy0fqlhN