More 'Diplomacy ' With Iran As Obama And The EU Team Up To Fend Off An Israeli Strike

After taking a couple of weeks studying yet another proposal from the EU and the Obama Administration to enter talks on Iran's illegal nuclear program, the mullahs decided they had nothing to lose and only time to gain, so they sent an offer to EU foreign policy chief Lady Catherine Ashton, who promptly accepted it.

Iran's supreme leader Ayatollah Ali Khamenei welcomed the EU and President Obama's support for the new effort.

"This talk is good talk and shows an exit from illusion," AFP reported Khamenei as saying. However, Khamenei also made it plain that Iran was not going to give up it's nuclear program and that the sanctions would not budge him.

"The US president continued saying that he wants to make the Iranian people kneel through sanctions, this part of this speech shows the continuation of illusion in this issue," he said.

Of course, the actual target of this latest offer of diplomacy is Israel, not Iran. For the countries Lady Ashton the main point is that while these negotiations are ongoing, Israel is highly unlikely to make a preemptive strike to take out an Iranian nuclear program that represents an existential threat.

In President Obama's case, the idea is simply to tie Israel hands until after the election. The Israeli newspaper Ma'ariv reported today that President Obama attempted to bribe Israeli PM Netanyahu with a gift of advanced weaponry including the latest in bunker-busting bombs and more tanker refueling planes provided he agreed to pledge not to strike Iran until 2013.

This has advantages for President Obama. It assures him of a 'wag the dog' option to strike Iran himself come October if he's not doing well in the polls, and it ties Israel's hands until it's likely to be too late to do anything. Fortunately, Netanyahu reportedly just reiterated that Israel would retain freedom of action.

The talks themselves are in the 'talks about talks' stage. Following the usual pattern with Iran, they will delay things as much as possible, throwing an inconsequential bone at the West to keep things going. For instance, one thing Iran has apparently agreed to is to allow IAEA inspectors to look at Iran's Parchin military base outside Tehran, where the IAEA and outside observers have long suspected that Iran is developing nuclear weapons.

While talks about talks are going on, the IAEA has noticed a flurry of suspicious activity around Parchin...the Iranians are busily purging the site of anything they don't want the IAEA to see and cleaning up nuclear waste!



Israeli officials have been pretty blunt about their their skepticism over this latest diplomatic circus. Shabtai Shavit, a former director of the Mossad, was quoted as saying yesterday in an interview with Israel Radio:

In the past, every time the Iranians agreed to talk, the reason for their agreeing was in order to buy time in order to advance the development of their nuclear program. They didn’t invent this ruse, they learned it from the North Koreans.

And PM Benyamin Netanyahu, being interviewed on FOX essentially echoed these comments, albeit in far more diplomatic fashion:



It's the height of naïvete to the Iranians have anything else in mind besides stalling as long as possible to get closer to an operable nuclear weapon.

There's something absolutely creepy as well in the West's willingness to go along with the charade, especially with Israel, who has the most to lose directly closed out of the loop.It recalls the 1938 Munich Agreement on the edge of WWII, when the Czechs were locked out of the room and forbidden to participate while Czechoslovakia's western 'allies' and the Nazis negotiated on the fate of their small country.

However, there is a bright spot amidst all this.

This new round of talks is going to show exactly how futile the 'window of diplomacy' really is. The threats of an oil embargo and tighter sanctions have already been put on the table, and when the Iranians play the West for fools again, as they almost certainly will, there is a lot less leeway than there was before, simply because Israel is not Czechoslovakia nor is it willing to be, and there is a limit to how long the Israelis will allow the usual dance to continue. This time, when things get bogged down, it's going to be game over and the failure will show that those of us who said sactions and diplomacy were useless in this case were right all along. Any further delays will be seen as simply an excuse to avoid confronting the Iranian threat.

When the Iranians return to the old pattern - stalling its Western dupes for a few more months and then using another gambit to keep things going just when it appears the talks have fallen apart - they may surprised to find that the Israelis are likely to jump on the next failure of diplomacy to justify a preemptive strike. And given President Obama's rhetoric about not allowing a nuclear Iran, there's not going to be much he can say, especially with an election going on.

Iran invented the game of chess. But this time, they may very well have opened up an avenue for themselves to be checkmated once and for all.

More 'Diplomacy ' With Iran As Obama And The EU Team Up To Fend Off An Israeli Strike

After taking a couple of weeks studying yet another proposal from the EU and the Obama Administration to enter talks on Iran's illegal nuclear program, the mullahs decided they had nothing to lose and only time to gain, so they sent an offer to EU foreign policy chief Lady Catherine Ashton, who promptly accepted it.

Iran's supreme leader Ayatollah Ali Khamenei welcomed the EU and President Obama's support for the new effort.

"This talk is good talk and shows an exit from illusion," AFP reported Khamenei as saying. However, Khamenei also made it plain that Iran was not going to give up it's nuclear program and that the sanctions would not budge him.

"The US president continued saying that he wants to make the Iranian people kneel through sanctions, this part of this speech shows the continuation of illusion in this issue," he said.

Of course, the actual target of this latest offer of diplomacy is Israel, not Iran. For the countries Lady Ashton the main point is that while these negotiations are ongoing, Israel is highly unlikely to make a preemptive strike to take out an Iranian nuclear program that represents an existential threat.

In President Obama's case, the idea is simply to tie Israel hands until after the election. The Israeli newspaper Ma'ariv reported today that President Obama attempted to bribe Israeli PM Netanyahu with a gift of advanced weaponry including the latest in bunker-busting bombs and more tanker refueling planes provided he agreed to pledge not to strike Iran until 2013.

This has advantages for President Obama. It assures him of a 'wag the dog' option to strike Iran himself come October if he's not doing well in the polls, and it ties Israel's hands until it's likely to be too late to do anything. Fortunately, Netanyahu reportedly just reiterated that Israel would retain freedom of action.

The talks themselves are in the 'talks about talks' stage. Following the usual pattern with Iran, they will delay things as much as possible, throwing an inconsequential bone at the West to keep things going. For instance, one thing Iran has apparently agreed to is to allow IAEA inspectors to look at Iran's Parchin military base outside Tehran, where the IAEA and outside observers have long suspected that Iran is developing nuclear weapons.

While talks about talks are going on, the IAEA has noticed a flurry of suspicious activity around Parchin...the Iranians are busily purging the site of anything they don't want the IAEA to see and cleaning up nuclear waste!



Israeli officials have been pretty blunt about their their skepticism over this latest diplomatic circus. Shabtai Shavit, a former director of the Mossad, was quoted as saying yesterday in an interview with Israel Radio:

In the past, every time the Iranians agreed to talk, the reason for their agreeing was in order to buy time in order to advance the development of their nuclear program. They didn’t invent this ruse, they learned it from the North Koreans.

And PM Benyamin Netanyahu, being interviewed on FOX essentially echoed these comments, albeit in far more diplomatic fashion:



It's the height of naïvete to the Iranians have anything else in mind besides stalling as long as possible to get closer to an operable nuclear weapon.

There's something absolutely creepy as well in the West's willingness to go along with the charade, especially with Israel, who has the most to lose directly closed out of the loop.It recalls the 1938 Munich Agreement on the edge of WWII, when the Czechs were locked out of the room and forbidden to participate while Czechoslovakia's western 'allies' and the Nazis negotiated on the fate of their small country.

However, there is a bright spot amidst all this.

This new round of talks is going to show exactly how futile the 'window of diplomacy' really is. The threats of an oil embargo and tighter sanctions have already been put on the table, and when the Iranians play the West for fools again, as they almost certainly will, there is a lot less leeway than there was before, simply because Israel is not Czechoslovakia nor is it willing to be, and there is a limit to how long the Israelis will allow the usual dance to continue. This time, when things get bogged down, it's going to be game over and the failure will show that those of us who said sactions and diplomacy were useless in this case were right all along. Any further delays will be seen as simply an excuse to avoid confronting the Iranian threat.

When the Iranians return to the old pattern - stalling its Western dupes for a few more months and then using another gambit to keep things going just when it appears the talks have fallen apart - they may surprised to find that the Israelis are likely to jump on the next failure of diplomacy to justify a preemptive strike. And given President Obama's rhetoric about not allowing a nuclear Iran, there's not going to be much he can say, especially with an election going on.

Iran invented the game of chess. But this time, they may very well have opened up an avenue for themselves to be checkmated once and for all.

Eurozone Ministers Agree To Second Greek Bailout

The final deal has been hammered out, and the euro zone ministers have finally agreed to the conditions for a second Greek bailout. In exchange for a new loan of over 130 billion euros, the Greeks are going to have over 107 billion euros worth of debt written off.

Greece will also have to agree to the following tough conditions, with the goal of getting Greece to reduce its debt to a mere 120.5% of GDP by 2020:

Private holders of Greek debt are going to take a 70% 'haircut' on the value of their bonds, equivalent to 70 cents on the dollar.

Greece's economy will be subjected to permanent monitoring by euro zone monitors from the EU, the IMF and the ECB on the ground in Athens. In other words, Greece is essentially not in control of its own economy any longer.

The Greek constitution will be amended to give priority to debt repayments over the funding of government services

Greece will set up a special account, managed separately from its main budget, that must always contain enough money to service its debts for the coming three months

Essentially, the euro zone has 'purchased' Greece in exchange for lending them the money they need to pay their debts.

The deal reflects the schizoid nature of the euro zone on the matter. On one hand,they'd like to be rid of Greece, so they came up with conditions almost impossible to meet. On the other hand,they're afraid that if Greece defaults and skips put of the euro zone, it will give other countries like Spain, Portugal, Italy and Ireland similar ideas.

The Greek parliament is expected to vote on the bailout tomorrow.Personally, I think they'd be far better off simply defaulting,going back to the drachma and starting over fresh. No one is going to lend Greece any money or buy its bonds for some time anyway, so it's not like the country's credit ratings matter.And a number of Greeks see it that way.

"The funds that are coming in are not staying in Greece, are not being invested in Greece, are not here to help the Greeks get out of this crisis," Constantine Michalos, president of the Athens Chamber of Commerce and Industry, told the BBC.

"It's simply to repay the banks, so that they can retain their balance sheets on the profit side."

Yes...and also to provide the EU time for the euro zone to build greater firewall protection around its banks and reduce their exposure when Greece eventually defaults, as well as around other potentially vulnerable countries like Spain and Italy.

In a reversal of that old saying, it's the Greeks that need to beware of foreigners bearing gifts.

Eurozone Ministers Agree To Second Greek Bailout

The final deal has been hammered out, and the euro zone ministers have finally agreed to the conditions for a second Greek bailout. In exchange for a new loan of over 130 billion euros, the Greeks are going to have over 107 billion euros worth of debt written off.

Greece will also have to agree to the following tough conditions, with the goal of getting Greece to reduce its debt to a mere 120.5% of GDP by 2020:

Private holders of Greek debt are going to take a 70% 'haircut' on the value of their bonds, equivalent to 70 cents on the dollar.

Greece's economy will be subjected to permanent monitoring by euro zone monitors from the EU, the IMF and the ECB on the ground in Athens. In other words, Greece is essentially not in control of its own economy any longer.

The Greek constitution will be amended to give priority to debt repayments over the funding of government services

Greece will set up a special account, managed separately from its main budget, that must always contain enough money to service its debts for the coming three months

Essentially, the euro zone has 'purchased' Greece in exchange for lending them the money they need to pay their debts.

The deal reflects the schizoid nature of the euro zone on the matter. On one hand,they'd like to be rid of Greece, so they came up with conditions almost impossible to meet. On the other hand,they're afraid that if Greece defaults and skips put of the euro zone, it will give other countries like Spain, Portugal, Italy and Ireland similar ideas.

The Greek parliament is expected to vote on the bailout tomorrow.Personally, I think they'd be far better off simply defaulting,going back to the drachma and starting over fresh. No one is going to lend Greece any money or buy its bonds for some time anyway, so it's not like the country's credit ratings matter.And a number of Greeks see it that way.

"The funds that are coming in are not staying in Greece, are not being invested in Greece, are not here to help the Greeks get out of this crisis," Constantine Michalos, president of the Athens Chamber of Commerce and Industry, told the BBC.

"It's simply to repay the banks, so that they can retain their balance sheets on the profit side."

Yes...and also to provide the EU time for the euro zone to build greater firewall protection around its banks and reduce their exposure when Greece eventually defaults, as well as around other potentially vulnerable countries like Spain and Italy.

In a reversal of that old saying, it's the Greeks that need to beware of foreigners bearing gifts.

Iran Ends Crude Oil Sales To UK And French Companies

The Iranian regime has formally announced that it is cutting off all oil sales to French and British companies.

The ban is in retaliation for EU sanctions on buying Iranian oil, set to go into effect on July 1st of this year.

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying by the Ministry of Petroleum website. For 'new customers', read India and China.

The European countries had already cut back their purchases of Iran oil in anticipation of the sanctions, with major players like French company Total, Royal Dutch Shell and Spain's Cepsa and Repsol either cutting back sharply on Iranian crude or ceasing to buy it altogether.The EU accounted for close to 18% of Iran's imports.

The Europeans say they have reserves for about 120 days, and there are additional sources available like Russia, South America,Libya, the U.S.and European North Sea Oil. In addition, the Saudis and Gulf States have already pledged to make up any shortfall. That could lead to fireworks if the Iranians decide to try close off the Strait of Hormuz to stop the Persian Gulf Oil from reaching Europe.

The idea behind the sanctions is to force Tehran into giving up its illegal nuclear weapons program. I see the Iranian regime as trying something much more dramatic rather than giving up their nukes.

Iran Ends Crude Oil Sales To UK And French Companies

The Iranian regime has formally announced that it is cutting off all oil sales to French and British companies.

The ban is in retaliation for EU sanctions on buying Iranian oil, set to go into effect on July 1st of this year.

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying by the Ministry of Petroleum website. For 'new customers', read India and China.

The European countries had already cut back their purchases of Iran oil in anticipation of the sanctions, with major players like French company Total, Royal Dutch Shell and Spain's Cepsa and Repsol either cutting back sharply on Iranian crude or ceasing to buy it altogether.The EU accounted for close to 18% of Iran's imports.

The Europeans say they have reserves for about 120 days, and there are additional sources available like Russia, South America,Libya, the U.S.and European North Sea Oil. In addition, the Saudis and Gulf States have already pledged to make up any shortfall. That could lead to fireworks if the Iranians decide to try close off the Strait of Hormuz to stop the Persian Gulf Oil from reaching Europe.

The idea behind the sanctions is to force Tehran into giving up its illegal nuclear weapons program. I see the Iranian regime as trying something much more dramatic rather than giving up their nukes.

Germany Drawing Up Plans For Greece To Default And Leave The Euro

It seems Germany is finally ready to pull the trigger now that it's obvious Greece is likely to default on its debt with or without a second eurozone bailout:

But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.

His pessimism has been tipped into despair with a secret European Commission, Central and IMF report that even if Greece made good on its promises, it would not be enough to reach the target of bringing total debt to 120 per cent of GDP by 2020.

"He just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he - and a growing group - are convinced it will not pull Greece out the hole," said a euro zone official.

Of course it won't...and it was never really intended to. That became obvious after the first bailout failed. Greece agreeing to reforms in exchange for billions of euros was one thing but implementation was always the problem, just as it's likely to be after another bailout. Demonstrations and riots in the streets, high unemployment, strikes, an unwilling bureaucracy and a power struggle as different politicians play football with the unrest all make Greece an unlikely candidate for instituting the reforms called for by what Greeks refer to as 'the German diktat'. At least one Greek politico is using stories of the Greek resistance against the Nazis as a rallying point.

Even if the Greeks did manage to implement all the reforms properly, the euro zone's own figures now show it would still fall short, with debt likely to total 129 per cent of GDP in 2020.

None of this was any secret even before the current crisis. However, the kabuki was needed because there are certain legal problems with kicking Greece out of the euro zone.Unless the country fails to honor its agreements to implement reforms and pay back its creditors as agreed. So the solution is to hold out the carrot of another bailout while asking for reforms that are impossible to implement and debt service levels that are unsustainable,nicht wahr?

Under the current austerity demands, 20% of Greek civil servants are going to lose their jobs, a substantial rise in unemployment where a major percentage of the country's labor force works in the public sector and unemployment is already at over 18%. The minimum wage would be cut sharply, public sector salaries would be slashed even further,pensions reduced, taxes raised and the defense budget slashed to the bone.

No Greek politician wants to have him or herself associated with this.

In Greece itself there have been widespread increases in crime. Greeks are heading into the national forests to cut firewood to get them through the winter, and a barter economy is becoming common in some parts of the country.Greece's National Gallery has already been burgled, and a gang of armed thieves looted a museum in Olympia on Friday, stealing bronze and pottery artifacts for sale. Meanwhile, many Greeks, especially those 25 and under with educational qualifications or practical skills like plumbing or electrical work are leaving the country, because there simply aren't any jobs to be had.

In a very real sense, the country is already bankrupt. And even many Greeks are saying what's been obvious to me for quite some time. They'd be far better off defaulting on their debts,going back to the drachma and starting fresh. No one is going to lend Greece money or buy their public debt anyway for quite some time.Provided they make necessary reforms, reign in corruption,cut the public sector sharply and take steps to make Greece a preferred place to do business, getting out from under the euro might be the best thing that ever happened to them.

The country still has its gorgeous climate and its picturesque beaches, islands and scenery, and if they can manage to get their current law and order problem under control Greece has the potential to become a major tourist mecca for all budgets. In fact, tourism accounts for about 20% of the country's GDP right now as it is.

Greece also has its fishing industry, its shipping industry with the largest merchant navy in the world and the possibility of increasing its market share in commodities like olives and olive oil, tobacco, cotton and other agricultural products due to the reduced labor costs. And a fresh start might even encourage high tech companies to start making things like computers, cell phones and silicone chips in Athens.

The real downside of Greece defaulting is more of a problem for Germany, France and the other members of the euro zone. Once countries like Portugal, Italy, Spain and Ireland see the Greeks getting away with walking away from their debts, they're likely to make a move to do so too.

Germany Drawing Up Plans For Greece To Default And Leave The Euro

It seems Germany is finally ready to pull the trigger now that it's obvious Greece is likely to default on its debt with or without a second eurozone bailout:

But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.

His pessimism has been tipped into despair with a secret European Commission, Central and IMF report that even if Greece made good on its promises, it would not be enough to reach the target of bringing total debt to 120 per cent of GDP by 2020.

"He just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he - and a growing group - are convinced it will not pull Greece out the hole," said a euro zone official.

Of course it won't...and it was never really intended to. That became obvious after the first bailout failed. Greece agreeing to reforms in exchange for billions of euros was one thing but implementation was always the problem, just as it's likely to be after another bailout. Demonstrations and riots in the streets, high unemployment, strikes, an unwilling bureaucracy and a power struggle as different politicians play football with the unrest all make Greece an unlikely candidate for instituting the reforms called for by what Greeks refer to as 'the German diktat'. At least one Greek politico is using stories of the Greek resistance against the Nazis as a rallying point.

Even if the Greeks did manage to implement all the reforms properly, the euro zone's own figures now show it would still fall short, with debt likely to total 129 per cent of GDP in 2020.

None of this was any secret even before the current crisis. However, the kabuki was needed because there are certain legal problems with kicking Greece out of the euro zone.Unless the country fails to honor its agreements to implement reforms and pay back its creditors as agreed. So the solution is to hold out the carrot of another bailout while asking for reforms that are impossible to implement and debt service levels that are unsustainable,nicht wahr?

Under the current austerity demands, 20% of Greek civil servants are going to lose their jobs, a substantial rise in unemployment where a major percentage of the country's labor force works in the public sector and unemployment is already at over 18%. The minimum wage would be cut sharply, public sector salaries would be slashed even further,pensions reduced, taxes raised and the defense budget slashed to the bone.

No Greek politician wants to have him or herself associated with this.

In Greece itself there have been widespread increases in crime. Greeks are heading into the national forests to cut firewood to get them through the winter, and a barter economy is becoming common in some parts of the country.Greece's National Gallery has already been burgled, and a gang of armed thieves looted a museum in Olympia on Friday, stealing bronze and pottery artifacts for sale. Meanwhile, many Greeks, especially those 25 and under with educational qualifications or practical skills like plumbing or electrical work are leaving the country, because there simply aren't any jobs to be had.

In a very real sense, the country is already bankrupt. And even many Greeks are saying what's been obvious to me for quite some time. They'd be far better off defaulting on their debts,going back to the drachma and starting fresh. No one is going to lend Greece money or buy their public debt anyway for quite some time.Provided they make necessary reforms, reign in corruption,cut the public sector sharply and take steps to make Greece a preferred place to do business, getting out from under the euro might be the best thing that ever happened to them.

The country still has its gorgeous climate and its picturesque beaches, islands and scenery, and if they can manage to get their current law and order problem under control Greece has the potential to become a major tourist mecca for all budgets. In fact, tourism accounts for about 20% of the country's GDP right now as it is.

Greece also has its fishing industry, its shipping industry with the largest merchant navy in the world and the possibility of increasing its market share in commodities like olives and olive oil, tobacco, cotton and other agricultural products due to the reduced labor costs. And a fresh start might even encourage high tech companies to start making things like computers, cell phones and silicone chips in Athens.

The real downside of Greece defaulting is more of a problem for Germany, France and the other members of the euro zone. Once countries like Portugal, Italy, Spain and Ireland see the Greeks getting away with walking away from their debts, they're likely to make a move to do so too.

Athens On Fire

Under severe pressure by Germany and the other EU nations, the Greek parliament finally agreed to the harsh austerity program the EU demanded in exchange for yet another €130bn bail out:

( Greek PM)Mr Papademos warned earlier the €3.3bn package of cuts was “the only alternative to a catastrophic default ... that would force Greece, sooner or later, to leave the euro.”

“The social cost of this package is limited in comparison with the social and economic disaster that would follow if it is not adopted,” he said.

Lawmakers voted 199-74 in for the cutbacks, but with heavy dissent among the two main coalition members.

In response, the Socialists expelled 22 members and the conservatives expelled 21 lawmakers, reducing their majority in the 300-seat parliament from 236 to 193.

Intense rioting broke out in Athens as the new of the vote circulated, and has reportedly spread to the islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece, the worst hit town in that part of the country being Volos, where the town hall and other buildings were burned to the ground.

Among other things, the new cuts call for cutting one in five civil service jobs and slashing Greece's minimum wage by more than 20 per cent.In exchange, as part of the new bail out package Greek bond holders agree to take a 'haircut' of 70 per cent of the value of their holdings.It will be years before anyone buys Greek bonds again.

In Athens,crowds of rioters set bonfires in front of parliament and only squads of dozens of riot police formed lines kept them from making a run on the building. The police fired fired dozens of tear gas volleys at rioters, who attacked the police with firebombs and chunks of marble broken off the fronts of luxury hotels, banks and department stores.

Masked rioters also attacked a police station with firebombs and stones.

Streets all over Athens were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias.Looting was wide spread as shop windows were smashed, with the police occupied in guarding Parliament,City Hall and other public buildings.

Money quote from one rioter via Twitter: "I hate the deal. Maybe if I wreck this city I can get a job in construction building it up again."

Athens On Fire

Under severe pressure by Germany and the other EU nations, the Greek parliament finally agreed to the harsh austerity program the EU demanded in exchange for yet another €130bn bail out:

( Greek PM)Mr Papademos warned earlier the €3.3bn package of cuts was “the only alternative to a catastrophic default ... that would force Greece, sooner or later, to leave the euro.”

“The social cost of this package is limited in comparison with the social and economic disaster that would follow if it is not adopted,” he said.

Lawmakers voted 199-74 in for the cutbacks, but with heavy dissent among the two main coalition members.

In response, the Socialists expelled 22 members and the conservatives expelled 21 lawmakers, reducing their majority in the 300-seat parliament from 236 to 193.

Intense rioting broke out in Athens as the new of the vote circulated, and has reportedly spread to the islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece, the worst hit town in that part of the country being Volos, where the town hall and other buildings were burned to the ground.

Among other things, the new cuts call for cutting one in five civil service jobs and slashing Greece's minimum wage by more than 20 per cent.In exchange, as part of the new bail out package Greek bond holders agree to take a 'haircut' of 70 per cent of the value of their holdings.It will be years before anyone buys Greek bonds again.

In Athens,crowds of rioters set bonfires in front of parliament and only squads of dozens of riot police formed lines kept them from making a run on the building. The police fired fired dozens of tear gas volleys at rioters, who attacked the police with firebombs and chunks of marble broken off the fronts of luxury hotels, banks and department stores.

Masked rioters also attacked a police station with firebombs and stones.

Streets all over Athens were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias.Looting was wide spread as shop windows were smashed, with the police occupied in guarding Parliament,City Hall and other public buildings.

Money quote from one rioter via Twitter: "I hate the deal. Maybe if I wreck this city I can get a job in construction building it up again."

Eurozone: Dancing Downgrades!

The eurozone has been hit with a number of credit downgrades by Standard & Poor's, France and Austria both lost their AAA credit ratings and were reduced to AA+, and the credit ratings of Italy, Spain and Portugal were cut by two notches each.

Germany, the Netherlands, Finland and Luxembourg have maintained their triple A ratings for now.

In plain English, what the means is that the costs of borrowing for the countries hit with downgrades is headed upwards and they'll have to offer a higher rate on bonds to attract investors.It also means that the eurozone's rescue fund used for bailouts could also very likely have it's rating cut,ultimately meaning that the eurozone countries are going to have to pony up more cash to keep it solvent.

The current downgrade came on the heels of disappointing returns on the recent Italian bonds auction and a failure of the major banks participating in the write down of Greek debt to agree on who gets stuck for how much, thus stalling the negotiations.

On the selfishly plus side,this could spark more of an appetite among investors for non-EU debt in America, Israel, Australia, Canada, and elsewhere, because it's seen as safer.

Eurozone: Dancing Downgrades!

The eurozone has been hit with a number of credit downgrades by Standard & Poor's, France and Austria both lost their AAA credit ratings and were reduced to AA+, and the credit ratings of Italy, Spain and Portugal were cut by two notches each.

Germany, the Netherlands, Finland and Luxembourg have maintained their triple A ratings for now.

In plain English, what the means is that the costs of borrowing for the countries hit with downgrades is headed upwards and they'll have to offer a higher rate on bonds to attract investors.It also means that the eurozone's rescue fund used for bailouts could also very likely have it's rating cut,ultimately meaning that the eurozone countries are going to have to pony up more cash to keep it solvent.

The current downgrade came on the heels of disappointing returns on the recent Italian bonds auction and a failure of the major banks participating in the write down of Greek debt to agree on who gets stuck for how much, thus stalling the negotiations.

On the selfishly plus side,this could spark more of an appetite among investors for non-EU debt in America, Israel, Australia, Canada, and elsewhere, because it's seen as safer.

UK's Cameron Vetoes Changes to EU Treaty..France And Germany Outraged

The efforts to save the eurozone took another body blow as UK PM David Cameron exercised, for the first time, the UK's veto over major changes to the Eu treaty France and Germany worked out.

The new changes amounted to “automatic consequences” for countries whose public deficit exceeds 3 per cent of gross domestic product and a cap on countries’ structural deficits at 0.5 per cent. The tighter rules would be also be entered in the individuals laws of member countries, and the 'consequences' would be enforced by the other 27 members.

This is a fairly shocking abandonment of national sovereignty, and the French in particular were originally not planning to agree with it. But Germany's Angela Merkel was able to get France's Nicholas Sarkozy to capitulate.

And then Britain threw a monkey wrench into the entire structure by vetoing it. That led to several other countries refusing to go along until they 'consulted with their parliaments', namely Denmark, Sweden, The Czech Republic and Hungary.

PM Cameron's main sticking point was that he wanted secure safeguards for the single market and the City of London's financial infrastructure, and France and Germany refused to provide them..

'There are some real problems and nonsense there in terms of having safe and secure financial services, some deep unfairnesses that are currently in the system that I feel badly need to be addressed,' he said.

'You've got everyone else in the room saying give up your national interests, just go along with what everyone else wants, that would be the easy, comfortable, convenient thing to do. But it wasn't the right thing to do, so you've got to stick to your guns.'

France's President Sarkozy was particularly incensed at this, perhaps because he had caved in to Germany's demands in the face of considerable political pressure not to.

'What was on offer is not in Britain's interest so I didn't agree to it,' Cameron told reporters in Brussels.

'We're not in the euro and I'm glad we're not in the euro.'

'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.'

Merkel and Sarkozy are essentially ignoring the UK's veto and announced their plans to go ahead with finalizing the agreement,which is due to be signed in March.While this huge alteration of the Lisbon Treaty should normally signal referendums in the individual countries,there's no sign that this is going to happen. José Manuel Barroso, the European Commission president was quoted as saying that in his opinion,these difficulties could be "worked around."

In other words, they'll just impose it. Greece, Portugal,Ireland,Spain and Italy aren't going to squawk since they're in deep financial trouble and France and Germany are already on board,although it remains to be seen how long.

So why do these European shenanigans matter on this side of the pond? Well, among other things, thanks to President Obama, we're likely going to be footing the bill for a big chunk of the bail out cost.

Bypassing Congress,of course.

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UK's Cameron Vetoes Changes to EU Treaty..France And Germany Outraged

The efforts to save the eurozone took another body blow as UK PM David Cameron exercised, for the first time, the UK's veto over major changes to the Eu treaty France and Germany worked out.

The new changes amounted to “automatic consequences” for countries whose public deficit exceeds 3 per cent of gross domestic product and a cap on countries’ structural deficits at 0.5 per cent. The tighter rules would be also be entered in the individuals laws of member countries, and the 'consequences' would be enforced by the other 27 members.

This is a fairly shocking abandonment of national sovereignty, and the French in particular were originally not planning to agree with it. But Germany's Angela Merkel was able to get France's Nicholas Sarkozy to capitulate.

And then Britain threw a monkey wrench into the entire structure by vetoing it. That led to several other countries refusing to go along until they 'consulted with their parliaments', namely Denmark, Sweden, The Czech Republic and Hungary.

PM Cameron's main sticking point was that he wanted secure safeguards for the single market and the City of London's financial infrastructure, and France and Germany refused to provide them..

'There are some real problems and nonsense there in terms of having safe and secure financial services, some deep unfairnesses that are currently in the system that I feel badly need to be addressed,' he said.

'You've got everyone else in the room saying give up your national interests, just go along with what everyone else wants, that would be the easy, comfortable, convenient thing to do. But it wasn't the right thing to do, so you've got to stick to your guns.'

France's President Sarkozy was particularly incensed at this, perhaps because he had caved in to Germany's demands in the face of considerable political pressure not to.

'What was on offer is not in Britain's interest so I didn't agree to it,' Cameron told reporters in Brussels.

'We're not in the euro and I'm glad we're not in the euro.'

'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.'

Merkel and Sarkozy are essentially ignoring the UK's veto and announced their plans to go ahead with finalizing the agreement,which is due to be signed in March.While this huge alteration of the Lisbon Treaty should normally signal referendums in the individual countries,there's no sign that this is going to happen. José Manuel Barroso, the European Commission president was quoted as saying that in his opinion,these difficulties could be "worked around."

In other words, they'll just impose it. Greece, Portugal,Ireland,Spain and Italy aren't going to squawk since they're in deep financial trouble and France and Germany are already on board,although it remains to be seen how long.

So why do these European shenanigans matter on this side of the pond? Well, among other things, thanks to President Obama, we're likely going to be footing the bill for a big chunk of the bail out cost.

Bypassing Congress,of course.

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The Eurozone Under The Gun: France And Germany At Odds

Saving the eurozone has come down to two countries, France and Germany. President Sarkozy and Chancellor Merkel are meeting today to try and craft a common proposal to save the eurozone and the EU,but their differences are fairly wide.

The Germans are desperate to preserve the eurozone because their economy depends on exports, and returning to the Deutschmark would create a rise in the prices of German products. On the other hand, German taxpayers are fed up with costly bailouts.

Merkel wants a 'federalized' eurozone to enforce budget discipline and to have euro zone states surrender the control of their budgets to a European authority with veto power and the ability to punish governments that step out of line.

France opposes this, and Sarkozy, with only five months to go before elections, is taking major criticism from his political opposition and the press over handing French sovereignty to unelected EU officials.

At that, a proposal along the lines of what the Germans want might necessitate a change in the EU treaty.

It'll be interesting to see what they come up with.

Meanwhile, Italy has joined Greece, Spain, Ireland and Portugal as another country whose debt is out of control and may need an EU bailout.

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The Eurozone Under The Gun: France And Germany At Odds

Saving the eurozone has come down to two countries, France and Germany. President Sarkozy and Chancellor Merkel are meeting today to try and craft a common proposal to save the eurozone and the EU,but their differences are fairly wide.

The Germans are desperate to preserve the eurozone because their economy depends on exports, and returning to the Deutschmark would create a rise in the prices of German products. On the other hand, German taxpayers are fed up with costly bailouts.

Merkel wants a 'federalized' eurozone to enforce budget discipline and to have euro zone states surrender the control of their budgets to a European authority with veto power and the ability to punish governments that step out of line.

France opposes this, and Sarkozy, with only five months to go before elections, is taking major criticism from his political opposition and the press over handing French sovereignty to unelected EU officials.

At that, a proposal along the lines of what the Germans want might necessitate a change in the EU treaty.

It'll be interesting to see what they come up with.

Meanwhile, Italy has joined Greece, Spain, Ireland and Portugal as another country whose debt is out of control and may need an EU bailout.

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EU Says It Will Reward Abbas For Pretending To Negotiate

No, I'm not exaggerating.

Jordan's King Abdullah just presented a proposal from the EU to unelected 'Palestinian' dictator Mahmoud Abbas with a European initiative for resuming negotiations with Israel, according to the al-Quds al-Arabi newspaper.

The initiative calls for the 'Palestinians' to return to the negotiating table even without their precondition of an Israeli freeze on all development in Judea and Samaria including East Jerusalem in exchange for an EU pledge to support the 'Palestinian' bid for unilateral statehood in the UN if negotiations fail within the next year.

There are no requirements for Abbas to scuttle the alliance of Fatah with the genocidal Hamas, nor any consideration of the fact that this abrogates the Road Map that the EU is also a signatory to as a member of the Quartet.

Naturally, with that kind of deal being offered, there's no incentive for Abbas to enter into any serious negotiations with Israel.All he has to do is show up and stonewall for a year, and he gets what he wants out of the EU.

This is one of the most disgraceful instances of perfidy, appeasement and outright Jew hatred advanced anywhere outside of the Muslim world since the run up to WWII. The EU is essentially saying that it is just fine with breaking its pledged word and supporting the creation an apartheid little reichlet with genocide against Jews as its official policy. And furthermore, not only will they back it with their UN votes, but with their wallets.

Apparently not much has changed since the 1930's in Europe when it comes to Jews.

Not only should the Israelis reject negotiations on this basis out of hand, but they should immediately declare the Road Map null and void and de facto refuse to accept any further EU participation in future negotiations with 'Palestine'.

They've proven themselves politically and morally unworthy of any trust or consideration whatsoever.

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EU Says It Will Reward Abbas For Pretending To Negotiate

No, I'm not exaggerating.

Jordan's King Abdullah just presented a proposal from the EU to unelected 'Palestinian' dictator Mahmoud Abbas with a European initiative for resuming negotiations with Israel, according to the al-Quds al-Arabi newspaper.

The initiative calls for the 'Palestinians' to return to the negotiating table even without their precondition of an Israeli freeze on all development in Judea and Samaria including East Jerusalem in exchange for an EU pledge to support the 'Palestinian' bid for unilateral statehood in the UN if negotiations fail within the next year.

There are no requirements for Abbas to scuttle the alliance of Fatah with the genocidal Hamas, nor any consideration of the fact that this abrogates the Road Map that the EU is also a signatory to as a member of the Quartet.

Naturally, with that kind of deal being offered, there's no incentive for Abbas to enter into any serious negotiations with Israel.All he has to do is show up and stonewall for a year, and he gets what he wants out of the EU.

This is one of the most disgraceful instances of perfidy, appeasement and outright Jew hatred advanced anywhere outside of the Muslim world since the run up to WWII. The EU is essentially saying that it is just fine with breaking its pledged word and supporting the creation an apartheid little reichlet with genocide against Jews as its official policy. And furthermore, not only will they back it with their UN votes, but with their wallets.

Apparently not much has changed since the 1930's in Europe when it comes to Jews.

Not only should the Israelis reject negotiations on this basis out of hand, but they should immediately declare the Road Map null and void and de facto refuse to accept any further EU participation in future negotiations with 'Palestine'.

They've proven themselves politically and morally unworthy of any trust or consideration whatsoever.

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U Turn: Papandreou Cancels Greek Referendum On EU Bailout

After being summoned to an emergency meeting with Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, Greek PM George Papandreou announced that a planned referendum in Greece over whether to accept the additional austerity measures demanded by the EU as part of a second €130 billion bailout had been canceled.

Papandreou had announced the referendum after wide spread opposition to the new measures, but it provoked outrage among EU leaders who threatened to cut off all EU funds to Greece.

Without the funds from the EU, Greece wouldn't have been able to pay more than 700,000 public sector workers and more than 2 million pensioners at the end of November.Reportedly, the Greek government has already started postponing payments to suppliers.

In a meeting with his cabinet after his talks with Sarkozy and Merkel, Papandreou had offered his resignation, but it was withdrawn after the opposition New Democracy conservative party came aboard and said they would back the new measures in order to keep Greece in the eurozone.

Papandreou said: “We had a dilemma: consensus or a referendum ... Failure to back the package would mean the beginning of our departure from the euro. But if we have consensus, then we don’t need a referendum.”

How this is going to fly with the Greek electorate is another story.

Civil servants are going to mount another anti-austerity protest outside parliament on today, with officials from their union, Adedy, complaining that the latest round of pay cuts had reduced average public sector salaries by more than 20 per cent.

“We will send the message to the government that we have reached the limit of what we can take, “ a union official said.

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U Turn: Papandreou Cancels Greek Referendum On EU Bailout

After being summoned to an emergency meeting with Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, Greek PM George Papandreou announced that a planned referendum in Greece over whether to accept the additional austerity measures demanded by the EU as part of a second €130 billion bailout had been canceled.

Papandreou had announced the referendum after wide spread opposition to the new measures, but it provoked outrage among EU leaders who threatened to cut off all EU funds to Greece.

Without the funds from the EU, Greece wouldn't have been able to pay more than 700,000 public sector workers and more than 2 million pensioners at the end of November.Reportedly, the Greek government has already started postponing payments to suppliers.

In a meeting with his cabinet after his talks with Sarkozy and Merkel, Papandreou had offered his resignation, but it was withdrawn after the opposition New Democracy conservative party came aboard and said they would back the new measures in order to keep Greece in the eurozone.

Papandreou said: “We had a dilemma: consensus or a referendum ... Failure to back the package would mean the beginning of our departure from the euro. But if we have consensus, then we don’t need a referendum.”

How this is going to fly with the Greek electorate is another story.

Civil servants are going to mount another anti-austerity protest outside parliament on today, with officials from their union, Adedy, complaining that the latest round of pay cuts had reduced average public sector salaries by more than 20 per cent.

“We will send the message to the government that we have reached the limit of what we can take, “ a union official said.

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