Bikers Patch

Located on the Southern Spanish Costa del Sol, in the heart of the 'Golden Mile' only 5 minutes to Old Town Marbella and Puerto Banús, with 320 days of sunshine and a mild year round average temperature of 21ºC). Open year round, the renowned Marbella Club Hotel, was once the private residence of Prince Alfonso von Hohenlohe. The 121 luxury bedrooms and suites, spread over the beach front resort, harmonize with 14 Andalusian-Style villas throughout 42,000 square meters (452,083 sq. ft.) of lush subtropical gardens. Each guest room is decorated with the finest fabrics and Mediterranean interior design, reflecting the surrounding elements and has furnished balcony / terrace and spacious luxurious bathrooms with separate shower and bath. The 14 charming villas are in the unmistakable style of the Hotel, faithful replicas of traditional Andalucían architecture, blending harmoniously with their surroundings, and are ideal for families and guests seeking to enjoy more space and privacy. The 2, 3 or 5 bedroom villas have their own private garden and heated pool, providing guests with both comfort and privacy during their stay. Both of the 2 outdoor heated swimming pools, one with seawater invite you to relax in the surrounding gardens or to enjoy the views of the Mediterranean through the palm trees of the famous beach club.

Even celebrities are having a hard time selling their mega-mansions. More on DIS Fan Cam: The Next Sports Cash Machine?Jay Rasulo, Senior Executive Vice President And Chief Financial Officer, The Walt Disney Company, To Speak At The Goldman Sachs 20th Annual Communacopia ConferenceBond Funds See Huge Spike in Inflows Market Activity The Walt Disney Co| DIS Mommy-to-be Hillary Duff has put her first mansion that she purchased while starring in Disney's Lizzie McGuire up for sale with an asking price of $6.25 million. But according to The Real Estalker, Duff also attempted to sell the estate last year, listing for $7 million last time around. Real estate records reveal Duff bought the 9,277 square-foot house in Toluca Lake, Calif., in March 2004 for $3.5 million. Mark Wahlberg, a.k.a. Marky Mark, also recently re-listed his Beverly Hills estate with a $2 million price cut. Wahlberg originally listed the property in 2008 for $15.9 million. The 1.41-acre home is now listed for $13.9 million. The executive producer of Entourage purchased the mansion in 2001 for just $5 million, later remodeling it. Earlier in the summer, Christina Aguilera reduced the price on her home in the Hollywood Hills to $5.5 million from $8 million, while Jodi Foster's Beverly Hills mansion was brought down to $8.9 million from $10 million. The housing market continues to wobble with few consumers taking advantage of record-low mortgage rates. Sales of newly built homes are expected to be at their worst levels for decades this year, while sales of previously occupied homes are on pace for their poorest showing in nearly 15 years

One aspect of a plan to restore wealth tax in Spain makes no sense but there's nothing the government can do about it, the finance minister said Saturday. Elena Salgado spoke from Poland where she was attending a meeting of euro zone counterparts. The tax stems from the central, Socialist government but is collected by regional administrations. It was suspended in 2008 to stimulate growth as the global economic crisis started to bite in Spain. But the Madrid government has kept compensating regional governments for the lost revenue. Now, regions stand to get the money twice: once from high-earning taxpayers under a decree passed Friday and again from the central government because the compensation must continue under a separate law that has a higher status than a decree. Salgado said "this does not seem reasonable" but there's no way around it. "With a decree, there is nothing you can do to avoid it," she said. Her comments were the latest in a sea of confusing government statements about the wealth tax, which is levy on a person's net worth: assets minus debts. The flip-flops concerned the wealth level at which it will kick in and how much revenue it will raise. In the end, if passed by Parliament next week, the levy will apply to taxpayers' net worth above euro700,000 ($963,000), or an estimated 160,000 people, and raise euro2 billion in revenue. It is temporary, and will be in effect only in 2011 and 2012. The government says the tax is aimed at getting richer people to chip in more as Spain struggles with a 21 percent jobless rate, anemic growth and a high deficit. But it has been criticized by the conservative opposition as a populist nod to leftist voters angry over deficit-cutting austerity measures as Nov. 20 general elections approach. The ruling Socialists are projected to lose badly. Salgado's remarks seemed to contradict some made just Friday by government spokesman Jose Blanco, who said no region would get the wealth tax money twice. Salgado said Blanco really meant the same thing she did: that it seems unreasonable for regions to get the money doubly.

The Bank of Spain has promised to cover up to 20 billion euros ($27 billion) in losses at Caja Mediterraneo as it seeks to offload the troubled savings bank, a newspaper said Monday. The Bank of Spain took control of the bank in July and is now trying to sell it off. According to the daily El Mundo, the central bank let investors know it would cover up to 20 billion euros of losses, the estimated amount of property-related assets at risk in Caja Mediterraneo (CAM), if necessary. If confirmed, the central bank intervention would be "the costliest for the public treasury in Spanish financial sector history," the newspaper said, without identifying its source. The price tag could unnerve financial markets -- it is equal to a government estimate of the maximum cost of recapitalising Spain's entire banking sector. Contacted by AFP, Bank of Spain officials were unable to respond immediately to the report. The Bank of Spain injected 2.8 billion euros and opened a three-billion-euro line of credit for the CAM when it took control of the institution in July. But in early September CAM revealed a first-half loss of 1.136 billion euros and a high 19-percent ratio of bad loans, mostly property-related credits whose recovery was doubtful. The average bad loan ratio for the Spanish banking sector was 6.416 percent in June. According to El Mundo, the Bank of Spain is trying to complete the sale before general elections set for November 20. It said rival banks Santander, BBVA and CaixaBank, as well as a union of three Basque banks, were among candidates to buy the CAM, with Santander the favourite.

54,000 buyers were “gazanged” in the first six months of this year – with buyers now more likely to be gazanged, where they are left hanging, than gazumped, where a rival buyer’s higher offer is accepted, or to gazunder, where they lower their offer having already had it accepted. A survey suggests one in four sellers changed their mind because they could not find a suitable property to move to, while others got cold feet because of concerns about the state of the housing market. The number of people pulling out has risen by 20 per cent since last year. One in six said they pulled out because they were fed up with legal complications. It means thousands of buyers who have spent money on surveys and solicitors’ fees are left out of pocket. Phil Spencer, a broadcaster and property expert, said: “Gazanging is something that’s on the up. The seller accepts an offer, but then decides to pull out and stay put, leaving a very unhappy buyer and a broken property chain. In such a volatile market, it’s not that surprising that many more sellers are changing their minds at the last minute, especially when there are so few suitable homes available. “There are lots of reasons why gazanging has started to happen. One of the biggest frustrations is the drawn out conveyancing process and in particular the bad service often experienced. Ask the vast majority of buyers what it was like and they will tell you conveyancing took longer than expected, cost more than they planned and that they felt confused. “There are far fewer houses on the market and this means that people are finding it more difficult to find their dream home, so much so that some sellers eventually decide to stay put.” More than a quarter of sellers who opted to stay put said they could not find a suitable property to buy. The overall number of transactions declined by a quarter in the past 12 months. Figures from the Land Registry and Council of Mortgage Lenders show sales fell from 62,705 in June 2010 to 46,700 in June this year. Spencer added: “Limited access to credit means that many more people struggle to secure a mortgage, leaving them high and dry when it comes to buying their next home. And uncertainty about what is happening with house prices can also make sellers reassess their plans.”

A senior executive with the Libyan Investment Authority, the $70 billion fund used to invest the country's oil money abroad, said Mr Blair was one of three prominent western businessmen who regularly dealt with Saif al-Islam Gaddafi, son of the former leader. Saif al-Islam and his close aides oversaw the activities of the fund, and often directed its officials on where they should make its investments, he said. The executive, speaking on condition of anonymity, said officials were told the "ideas" they were ordered to pursue came from Mr Blair as well as one other British businessman and a former American diplomat. "Tony Blair's visits were purely lobby visits for banking deals with JP Morgan," he said. He said that unlike some other deals - notably some investments run by the US bank Goldman Sachs - JP Morgan's had never turned "bad".

Swiss bank UBS on Sunday increased the amount it said it had lost on rogue equity trades to $2.3 billion and alleged a trader concealed his risky deals by creating fictitious hedging positions in internal systems. UBS stunned markets on Thursday when it announced unauthorised trades had lost it some $2 billion. London trader Kweku Adoboli was charged on Friday with fraud and false accounting dating back to 2008. "The loss resulted from unauthorised speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months," UBS said in a brief statement. "The loss arising from this matter is $2.3 billion. As previously stated, no client positions were affected." Global stock markets have been extremely volatile in recent months, plunging on concerns over euro zone and U.S. debt crises and then rebounding on hopes for their resolution. The loss is a disaster for the reputation of Switzerland's biggest bank, which had just started to recover after it almost collapsed during the financial crisis and faced a damaging U.S. investigation into aiding wealthy Americans to dodge taxes. "Loss even more. Reads like they're making excuses," said Helvea analyst Peter Thorne of the UBS statement. The new scandal has prompted calls for its top managers to step down and for its investment bank to be split into a separate unit from its core wealth management business. Chief Executive Oswald Gruebel, who was brought out of retirement in 2009 to turn the bank around, was quoted in a newspaper on Sunday as saying he is not considering quitting over the crisis, but said it was up to the board to decide. In a memo to staff on Sunday, he said: "Ultimately, the buck stops with me. I and the rest of senior management are responsible for dealing with wrongdoing." Swiss newspapers quoted unnamed insiders as saying the UBS board and important shareholders such as the Singapore sovereign wealth fund were still backing Gruebel, with immediate changes at the top the last thing the bank needed. Gruebel is widely expected to present plans to drastically cut back the investment bank at an investor day in November. INDEPENDENT INVESTIGATION The bank, whose three keys logo symbolise "confidence, security, discretion," has pulled its "We will not rest" global advertising campaign for now, that was designed by advertising agency Publicis to try to rebuild its image. Meanwhile, UBS client advisers have been writing to customers to reassure them of the underlying financial strength of the bank despite the trading loss, a spokesman said. "That we now suffer this setback at this point in our efforts to improve our reputation is very disappointing. This incident also sets us back somewhat in our capital-building efforts," Gruebel said in his memo. "However, I wish to remind you that our fundamental strengths as a firm remain intact... we remain one of the best capitalized banks in the industry. UBS said its board of directors had set up a committee chaired by independent director David Sidwell, former chief financial officer at Morgan Stanley, to conduct an independent investigation into the trades and the bank's control systems. The bank said it had covered the risk resulting from the unauthorised trades, and its equities business was again operating normally within previously defined risk limits. It said the trader had allegedly concealed the fact his trades violated UBS risk limits by executing fake exchange-traded fund (ETFs) positions. "Following inquiries directed to him by UBS control functions that were reviewing his positions, the trader revealed his unauthorised activity," the bank said. "The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio," UBS said. "However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions." The Sunday Times cited unnamed insiders saying the trader placed bets worth $10 billion before his losses were detected. ETFs are index funds listed on an exchange and can be traded just like regular stocks. They try to replicate index performances and offer lower costs than actively managed funds, but regulators have warned about risks from some complex ETFs. In the past three months, DAX futures have fallen 22 percent, Eurostoxx 50 futures have dropped 20 percent and S&P 500 futures have dipped 4 percent. The instruments involved in the UBS case are similar to those that Jerome Kerviel, the rogue trader at Societe Generale, traded when he racked up a $6.7 billion loss in unauthorised deals in 2008. Christoph Blocher, vice-president of the right-wing Swiss People's Party (SVP) -- the country's biggest -- renewed his calls for a splitting off of the investment bank. "One has to seriously examine a ban on investment banking for commercial banks," he told the SonntagsZeitung, adding his party might team up with the center-left Social Democrats to push for such a move.

31-year-old man was arrested in London today in connection with allegations of £1.3 billion of rogue trading at Swiss banking giant UBS. The man, named in reports as Kweku Adoboli, was arrested at 3.30am on suspicion of fraud by abuse of position and remains in police custody, sources said. Related articles Notoriety awaits UBS rogue trader French banks scramble to prove they're strong enough for debt crisis Search the news archive for more stories The bank, which has 6,000 staff in the UK, revealed earlier that a trader had lost two billion US dollars (£1.3 billion) on unauthorised trades and warned that the activity could have tipped the bank to a third-quarter loss. Oswald Gruebel, UBS chief executive, called the loss "distressing" and said he "will spare no effort to establish how it happened". According to his LinkedIn profile, Adoboli works as a director in European equity trading and was previously a trade support analyst at UBS. He was a student at the University of Nottingham, according to his profile on the business networking website.

Germany's top representative on the European Central Bank resigned in an apparent protest of the bank's recent interventions in euro-zone debt markets, dealing a severe blow to an institution struggling to retain its credibility amid the region's worsening debt crisis.

Jürgen Stark is stepping down "for personal reasons," the ECB said in a statement. ECB President Jean-Claude Trichet "wholeheartedly" thanked Mr. Stark for his tenure at the ECB, the bank said.

Reuters

European Central Bank's Executive Board member Jürgen Stark.

Mr. Stark, one of the ECB's most outspoken anti-inflation "hawks," had opposed the ECB's decision last month to reactivate its government bond purchase program, as did the head of Germany's central bank, Jens Weidmann. The ECB has purchased €50 billion ($69 billion) in government bonds since reactivating the program.

Mr. Stark's departure comes as a surprise. His term doesn't expire for nearly three more years. As head of the ECB's economics division at the ECB's Frankfurt-based executive board, Mr. Stark holds considerable sway over the economic analysis behind the ECB's interest-rate decisions.

The news sent the euro tumbling to $1.3697, its lowest level since February, and ensured U.S. stocks got off to a weak start. The Dow Jones Industrial Average was down more than 300 points in interday trading, while Germany's DAX ended the day down 4% to 5189.93

Mr. Starks' resignation comes at a dicey time for the ECB. Mr. Trichet's eight-year term ends at the end of October. He will be succeeded by Mario Draghi, who currently heads the Bank of Italy.

Unless Mr. Stark is replaced by another German, his departure leaves the prospect of the ECB having three Italians on the 23-member governing council, and only one German.

Germany's government may nominate its deputy finance minister, Joerg Asmussen, to replace Mr. Stark on the ECB's executive board, according to one person familiar with the matter.

Mr. Stark is the second top German official at the ECB to step down this year. Former Bundesbank President Axel Weber resigned in April. Mr. Weber, who had been seen as a front-runner to succeed Mr. Trichet, later cited his opposition the the ECB's bond purchases as a factor in his decision to not seek the presidency.

German politicians have denounced the ECB's decision to purchase Italian and Spanish bonds during the past month, though the decision was praised in other parts of Europe, and in the financial markets, as having prevented a Lehman-like collapse in financial markets.

German President Christian Wulff, whose position is largely ceremonial, has called the ECB's bond purchases "politically and legally questionable." The head of German's center-left SPD party, Sigmar Gabriel, has also denounced the move.

At his monthly press conference Thursday, Mr. Trichet blasted his German critics, saying the ECB has kept inflation lower over its 12-plus years of existence than at any time in Germany over the past 50 years.

"I would very much like to hear the congratulations for an institution that has delivered price stability in Germany," Mr. Trichet said.

Germany's finance ministry declined to comment on who would succeed Mr. Stark. But it said Finance Minister Wolfgang Schaeuble will discuss Mr. Stark's resignation at a press conference in Marseille on Friday evening.

Mr. Stark's departure won't change the "fundamental direction" of the ECB, which is "clearly set in the EU treaty," Ewald Nowotny, an ECB Governing Council member and head of Austria's central bank, said in a statement Friday. Still, Austria's central bank regrets Stark's departure, the statement said.

Mr. Stark will leave once a successor is appointed, which will be by the end of the year, according to the bank's appointment procedure, the ECB said.

Mr. Asmussen, a member of Germany's opposition SPD party, became deputy finance minister in 2008 and was able to stay on in the post even after his party left government after the 2009 election.

As well as Hotmail, the outage affected Office 365 and the Skydrive online storage service. Microsoft said the cause appeared to be related to the Domain Name System, the computer network that ensures that web addresses are connected to websites. “Preliminary root cause suggests a DNS issue,” the firm said on its office 365 Twitter feed. The problems lasted for at least two-and-a-half hours, beginning at around 4AM British Summer Time. On a company blog, Microsoft said it had fixed the problem at 5.45AM, but the repairs took some time to “propagate” through the DNS network.  "We are working on propagating the DNS configuration changes and so it will take some time to restore service to everyone. Again we appreciate your patience," the firm said. For Office 365, Microsoft’s subscription-only competitor to Google Apps, which went live earlier this year, it was the second major technical failure in less than a month. Such incidents are likely to give pause to organisations considering migration to online “cloud” services, whereby software is delivered from vast data centres, over the internet.

Spain's struggling Caja Mediterraneo (CAM), under state control since in July, Monday posted first-half losses of 1.136 billion euros ($1.602 billion). It also reported a non-performing loan ratio of 19 percent, far above the average of 6.416 percent for the sector in June. The Bank of Spain announced on July 22 that it would take control of the CAM through an injection of 2.8 billion euros and the opening of a 3.0 billion euro line of credit. It now plans to sell-off the ailing savings bank. On Friday, the business daily Cinco Dias said the CAM may need about 1.0 billion euros in additional public funds. The CAM was one of five Spanish banks that failed new European stress tests on July 15 to see if they can survive a major crisis. Spain's lenders, especially its regional savings banks which account for about half of all lending in the country, have been heavily exposed to bad debt since the collapse of the property sector at the end of 2008. The government and Bank of Spain have forced a wave of consolidation in the sector this year and are requiring banks to quickly increase the proportion of core capital they hold to above international norms. CAM, based in the eastern coastal region of Alicante which was one of the worst hit by the bursting of the property bubble, had been set to merge with three other savings banks but the deal fell through earlier this year.

The bosses of Britain’s bailed-out banks are paid more than they were before the credit crunch struck, a damning report reveals today. The chief executives of the country’s basket-case lenders earned an average basic salary of more than £1.1million last year before bonuses or other benefits. Shockingly, this figure is an increase on the £1million average from 2007 – the year that the financial crisis struck, crippling Britain and plunging the country into recession. Despite the fact that they have the job of salvaging the banks propped up with more than £65billion of taxpayers’ money, they are among the best-paid executives in this country. Their average wage is almost more than 40 times that of the country’s average of £26,000 and it dwarfs the £142,500-a-year salary earned by our Prime Minister. When bonuses and other perks are included bank chiefs enjoyed average total earnings of £3.7million last year – The damning findings by the country’s leading pay experts are likely to anger British taxpayers, who are sitting on losses of £34billion in RBS and Lloyds – or £1,300 per household.

Stocks in Europe and Italian fixed-income securities were pummelled on concern about the euro zone's debt crisis. The benchmark Stoxx Europe 600 Index ended the day with a 4.1 per cent drop. US and Canadian financial markets were closed for the Labor Day holiday. Financial stocks led the decline in Europe as Deutsche Bank chief Josef Ackermann said profit in the banking sector would be curtailed for years because of the sovereign debt crisis and some banks would likely fail. "Prospects for the financial sector overall ... are rather limited," the CEO of Germany's top bank said on Monday. "The outlook for the future growth of revenues is limited by both the current situation and structurally." Deutsche Bank, Credit Suisse Group, Barclays, Societe Generale and Royal Bank of Scotland all shed more than 6.5 per cent, according to Bloomberg News. "Not a great start to the week. There is a lot going on for banks, especially in the light of a low-growth environment and the backdrop in the euro zone not improving," Mike Lenhoff, chief strategist at Brewin Dolphin, told Reuters. Investors also sold euros, buying gold and US dollars instead. The euro dropped 0.7 per cent against the greenback after German Chancellor Angela Merkel's Christian Democratic Union was defeated in an election in her home state, yet another indication voters are unhappy about her efforts to deal with the European debt crisis and reject plans to use more taxpayer money to help solve the problems of countries including Greece and Ireland. "Merkel's problem is that she fails to generate confidence in her policies and those of her coalition partner," Gero Neugebauer, a political science professor at the Free University in Berlin, told Bloomberg. "It's about the consistency of her statements" on bailouts for indebted euro countries. The US currency strengthened 0.66 per cent against a basket of its major counterparts. Investors are eyeing a German constitutional court ruling on Wednesday on claims that Berlin is breaking German law and European treaties by contributing to bailouts for Greece, Ireland and Portugal, according to Reuters. The court is not expected to rule against the contributions, but may add stipulations for dealing with future requests that will complicate the region's bailout plans. "People are pricing in the risk of European meltdown, rather than the likely outcome," Ian King, head of international equities at Legal & General, told Reuters. Against this backdrop, Group of Seven financial leaders are likely to agree later this week to keep monetary policy loose. The G7's finance ministers and central bankers meet on Friday in Marseilles, France to discuss potential to bolster the slowing global economy. Before then however, central bankers are meeting in Australia, Canada, the UK and Europe and may offer investors more perspective on the global outlook.

Swiss bankers have rejected another UBS-style tax evasion deal following an ultimatum from the United States last week to turn over the names of more tax cheats. The US has turned up the heat on Switzerland after finding evidence that Credit Suisse and other banks allegedly helped its citizens to break the law by hiding their wealth from the tax authorities. The successful prosecution of UBS two years ago led to a Swiss-US treaty that severely dented Swiss banking secrecy laws by providing the names of nearly 5,000 bank clients.   But rather than burying the problem, the success of the deal has encouraged the US to pursue yet more banks – some of whom are rumoured to have illegally given UBS clients safe haven after Switzerland’s largest bank was caught out.   The Swiss Bankers Association (SBA) is desperate to avoid other banks facing a UBS situation and called on negotiators to find a solution this time that keeps secrecy intact. Law abiding SBA chairman Patrick Odier demanded a universal treaty binding on all countries rather than a raft of ad-hoc agreements between Switzerland and other states.   “The solution must be globally applicable, definitive and in line with current Swiss laws,” Odier said at the SBA’s annual conference in Zurich on Monday.   While accepting that Swiss banks must pay a penalty if they had broken foreign laws, Odier nevertheless denounced the latest demands from US deputy attorney-general James Cole as “too tough”.   “The US must recognise that legal certainty [of banking secrecy] is something that Switzerland must guarantee,” he said. “We cannot have one country refusing to respect the laws of another.”   The SBA pointed to the recent deals with Britain and Germany as a possible template. Under the terms of these treaties – yet to be rubber stamped – Swiss banks would pay withholding taxes on past and future earnings of foreign account holders.   Switzerland has also negotiated a new double taxation agreement with the US that is awaiting approval by the US authorities. UBS deal stands alone “I am very confident that we can find a common solution that would be in the interests of Swiss banks and the US,” SBA chief executive Claude-Alain Margelisch told swissinfo.ch.   “We solved the UBS case and I hope we find a definitive global solution for all Swiss banks. We must make sure that we do not have the same problem for a third time.”   Margelisch also dismissed the option of another UBS-style treaty despite that deal containing a paragraph that could force other Swiss banks to hand over client data if they were found to have broken US laws in the same way.   “The UBS case was special because it involved only one bank in a context that is not comparable with other Swiss banks,” Margelisch told swissinfo.ch. “I could not imagine that the Swiss parliament would be ready to pass another such treaty for the rest of the banking community during election year.”   But the latest signs coming from the US do not indicate that the Department of Justice (DoJ) is willing to compromise. Investigations have widened to around ten Swiss banks and Credit Suisse was recently served with official notice that it was being probed. Not bluffing Stories are also appearing in the media that the US negotiators are losing patience with their Swiss counterparts.   The fact that the second-highest ranking DoJ official, James Cole, has become publicly involved suggests to US tax lawyer Scott Michel that the US is not likely to withdraw its demands for new bank client data.   “It is a mistake to assume that when the DoJ makes a demand that they are bluffing,” Michel told swissinfo.ch. “There appears to be pent-up frustration that two years after the UBS case there is still evidence that other Swiss banks are helping US citizens hide their money away.”   He added: “The DoJ is not even asking for an exchange of information – a lengthy process involving case-by-case examination. They want a large batch of Swiss banking client information and they want it now.”   According to Michel, the US authorities appear to be building a legal basis to impose “draconian financial penalties” on Swiss banks that could dwarf UBS’s $780 million ($990 million) fine.   Swiss media are also reporting that the US would be prepared to start criminal legal proceedings against banks if they do not comply with their demands.

bogus financial adviser who fraudulently manipulated his “clients’” pension funds to avoid paying tax of over £1.9m has been jailed at Hull Crown Court for three years. Colin Pearson (pictured), who previously worked for the Food Standards Agency and held a McDonalds franchise, claimed to be a financial adviser and persuaded his "clients" to release over ₤3.4m from their pension funds. Pearson completed UK pension transfer forms on behalf of his clients to falsely claim funds were going abroad to avoid paying tax due on the pension withdrawals, said HMRC. His fraudulent actions netted him commission payments of over £377,000. He provided fake documentation to register two overseas pension schemes before submitting the fake documents to ensure the funds were released without suspicion or delay to bank accounts he controlled. On occasions he even made telephone calls to the UK pension companies posing as the policy holder. On one call he disguised his voice with a Cypriot accent giving the impression he was calling from overseas. To add further legitimacy to the scam, he used articles from the internet to create a PowerPoint presentation to sell the scheme to unsuspecting UK clients, HMRC added. He then took a cut of the funds before passing the balance onto the pensioners. In total, Pearson persuaded over thirty UK pension holders to make unauthorised transfers of £3.4m to avoid paying tax of £1.9m. The value of the funds released was estimated as £3,440,143, of which £2,997,018 was returned to "clients". He also released his own pensions, valued at £74,619.08. In total approximately £377,608 was taken as commission. He used the proceeds of his scam to maintain a lavish lifestyle, driving expensive cars and owning luxury homes both in the UK and Cyprus. Bob Gaiger from HM Revenue & Customs said: "Whilst Pearson was living a life most people could only dream of, he left the individuals he conned out of pocket and without the pension funds they expected. "HMRC will not tolerate this type of blatant fraud and will investigate and prosecute those found to be involved in stealing from the public purse. If you have any information about tax fraud please contact our 24 hour hotline on 0800 50 5000". On sentencing Pearson, His Honour Judge Richardson QC, said: "You are branded a criminal, your life is utterly destroyed, and you are totally dishonest in your deceitful actions."

The Serious Fraud Office is conducting an examination into banks and their offering of asset backed securities, as part of a ‘scoping exercise’ to see if products have been misrepresented to UK clients. The watchdog said it is consulting with relevant ‘people in the city’ as part of its broad-sweeping investigation into any potentially fraudulent sales of asset backed securities. A spokesperson for the SFO said: ‘We are conducting a scoping exercise into UK banks about all asset backed securities.’ Although the watchdog said this examination has been going on for ‘some time’, it would not clarify whether it was targeting any particular types of asset backed securities. After 2008, asset backed products such as collateralised debt obligations and mortgage backed securities came under fire for arguably sparking the financial crisis. As part of the exercise, the SFO is making inquiries into Goldman Sachs, including the ‘Timberwolf’ deal, a mortgage security underwritten by the bank in 2007, which has been scrutinised by lawyers in the US, according to the Financial Times. Earlier in the year, the SFO said it was looking into exchange-traded funds, as a 'potential threat' to market stability and as a form of asset-backed security which could follow the path of CDOs.

While working for Rampart Investment Management in 1999, Markopolos was told about a money manager whose consistent profits seemed too good to be true. When Markopolos looked at Madoff’s financial records, he saw that the returns rose steadily at a 45-degree angle, with none of the wide swings usually associated with big-time investors.
“It was like a baseball player batting .966 for an entire season,” Markopolos said in an interview to promote the documentary “Chasing Madoff,” which chronicles his nine-year quest to expose Madoff’s Ponzi scheme.
Markopolos alerted the Securities and Exchange Commission several times, but the agency failed to investigate. The swindle continued until Madoff confessed to his family and was arrested in December 2008. Madoff, now 73, pleaded guilty and was sentenced to 150 years in prison.
With his thinning brown hair and lanky build, the 54-year- old Markopolos looks more like a middle-aged accountant than a feared gumshoe. Markopolos, now an independent fraud investigator in Boston, wore a blue suit, a mustard-colored shirt and a brightly patterned tie as we spoke in New York last week.
Warner: Madoff is going to die in jail. Do you feel vindicated?
Markopolos: No, I feel regret that he wasn’t stopped earlier. We tried, but nobody would listen.
Sociopath’s Apology
Warner: Madoff has apologized to his victims. Do you think he’s sincere?
Markopolos: I don’t trust any apology from a sociopath. It doesn’t make me feel any better about what happened, and it certainly doesn’t help the victims. He’s a man who caused so much misery and heartbreak.
Warner: Why were you ignored for so long?
Markopolos: Because the case was too big. Nobody would believe that the world’s biggest hedge fund was a fraud.
Warner: What about the SEC? Isn’t it their job to catch financial crooks?
Markopolos: The SEC had been captured by the industry it was supposed to regulate. Instead of protecting investors from Wall Street predators, it was protecting Wall Street predators from defrauded investors. The SEC wasn’t corrupt. It was systematically incompetent, which is far worse.
Feared for Life
Warner: For a while, you feared for your life and carried a gun. What made you so scared?
Markopolos: I discovered that Russian and Colombian gangsters were placing large sums into feeder funds, which were then giving the money to Bernie. If the Ponzi scheme unraveled, they were going to lose a lot of money. And people like that have a unique way of handling manager terminations.
Warner: Do you think Madoff’s family knew about the scam?
Markopolos: Of course they did. The sons were marketing for Bernie, and his wife helped with the accounting. Bernie’s younger brother, Peter, was chief compliance officer and Peter’s daughter, Shana, was the No. 2 compliance person. It’s ludicrous to think that the family wasn’t involved.
Warner: What about the clients? Did some of them know what Madoff was doing?
Markopolos: They had to suspect that Bernie was a crook. But as long as he was stealing on their behalf, they weren’t going to ask too many questions.
Picard’s Recovery
Warner: Irving Picard, the trustee in charge of liquidating Madoff’s company, has recovered about half of the $17.3 billion in principal that investors lost. Do you think he’s doing a good job?
Markopolos: Picard has exceeded all expectations. You can trade on Picard’s claims, and the last time I checked they were trading 70 cents on the dollar. That implies that Picard will recover between 85 cents and a dollar on every dollar lost.
Warner: Last year, Congress approved sweeping regulatory reform of the financial industry. Do you think that will prevent another Madoff?
Markopolos: Only nine people have been arrested in the U.S. in the Madoff case. What kind of message does that send? I think the lesson is, crime pays. Same thing with the big banks that generated tons of falsified mortgage loans. What happened to them? They all got bailed out.
“Chasing Madoff,” from Cohen Media Group, opens tomorrow in New York, Boston, Washington, Miami and Los Angeles.

Sir Fred Goodwin was obsessed with biscuits and had anger problems, a new book claims.

The former Royal Bank of Scotland boss, who was known as "Fred the Shred" because of his obsession with cutting costs, left the taxpayer with a £45 billion bailout bill.

According to the book, he was a terrible boss to work for. The book claims Sir Fred, 53, could not control his anger if the wrong type of biscuit was put in the boardroom, and even threatened catering staff with disciplinary action in an email titled "Rogue Biscuits" after executives were offered pink wafers.

RBS staff also "went into panic mode" after a window cleaner fell off a ladder in Sir Fred's office and broke a toy plane, the authors allege.

At dinner functions, an engineer was also kept on standby until the early hours to switch off fire alarms when executives wanted to smoke.

Peter de Vink, managing director of Edinburgh Financial & General Holdings, said bank staff "were absolutely terrified of him".

Details of Sir Fred's fall are revealed in the book: Masters Of Nothing: The Crash And How It Will Happen Again, which goes on sale next month.

Written by two Tory MPs - George Osborne's former chief of staff Matthew Hancock and Nadhim Zahawi - it claims that Sir Fred wasted huge sums indulging his personal tastes.

The authors allege that £5.3 million was spent refurbishing a listed building - known as "Sir Fred's Pleasure Dome" by staff - that was rarely used and the lobby outside his office was redecorated with wallpaper costing £1,000 a roll because someone had made a tiny stain on a surface.

The book also claims that fruit was flown in daily from Paris. Sir Fred, a father of two, lost his £4.2 million-a-year job as chief executive of RBS as a condition of the taxpayer-funded bailout in 2008 which saved the bank from the worst corporate loss in British history.

But he was vilified after it emerged that he received a pension of £703,000 a year, later reduced to £342,000. He now advises an architecture firm.

Recently it emerged that Sir Fred had taken out a privacy injunction to cover up an affair that he had with a married woman colleague as he led RBS to disaster.

On Saturday it was reported that Sir Fred had been kicked out of the family home by Lady Goodwin, his wife of 21 years.

RBS said it had no comment on the allegations

The Treasury suspects some UK residents have not paid enough tax
Existing account holders could be hit by a one-off deduction of between 19% and 34% in an attempt to settle any tax they owe.
Those who have already declared the full details of where their money is and paid their taxes should be unaffected by the plan, which could raise £5bn for Treasury coffers by 2015.
It is difficult to forecast how much it will bring in over the long term as British depositors in Swiss banks may rearrange their finances in response to the move.
Chancellor George Osborne said the agreement heralded the end of an era when it was "easy to stash the profits of tax evasion in Switzerland".
UK residents with money in Switzerland will also be affected by a new tax deducted at source, which will be 48% on investment income and 27% on gains.

George Osborne said the wealthy must pay their fair share
The two countries have agreed to share more information and, as a gesture of good faith, Swiss banks will make an up-front payment to the UK of £384m.
The country is keen to shed its image as a safe haven for money that has not been properly declared to HM Revenue and Customs in the UK.
"Tax evasion is wrong at the best of times, but in economic circumstances like this it means that hard-pressed, law-abiding taxpayers are forced to pay even more," Mr Osborne said.
"That is why this coalition Government made it a priority to go after those who don't pay their fair share.
"We will be as tough on the richest who evade tax as on those who cheat on benefits."
There is a stark choice for those who have abused Swiss banking secrecy - come forward and disclose, or run the risk of losing over a third of your historic Swiss assets.
Paul Harrison, KPMG's head of tax investigations
The deal is politically significant because the coalition wants to demonstrate its cuts to some benefits are being matched by equally stringent policies affecting the rich.
Describing it as an "historic" announcement, Exchequer Secretary to the Treasury David Gauke said too many people had abused Swiss banking secrecy.
"The message is clear: there is no hiding place for tax cheats," he added.
However, experts warned wealthy UK residents may simply transfer their cash elsewhere to avoid paying up.
Chris Oates, head of Ernst and Young's tax controversy team, predicts more people will move their assets to Liechtenstein.
"This will undoubtedly provide a much-needed boost to the UK's finances. It is expected to generate billions of additional tax flows to the UK Exchequer," he said.

The coalition wants to show it is targeting rich cheats, not just benefit claimants
"But HMRC will miss an opportunity to establish whether these individual cases are involved in much wider tax evasion as it will only be based on Swiss assets."
KPMG's head of tax investigations, Paul Harrison, said the move was "very significant".
"It seems there is a stark choice for those who have abused Swiss banking secrecy - come forward and disclose, or run the risk of losing over a third of your historic Swiss assets," he explained.
"But the authorities need to take care that the innocent and the confused do not get caught up in this.
"There will be people who simply don't know whether they have a problem and they will need help to sort their affairs out."

Credit Suisse Group AG has appointed five directors and six vice-presidents across its equities, fixed income and investment banking business in India, the company said in a statement on Wednesday.

The announcement comes days after sources told Reuters the Swiss bank was cutting its India wealth management unit by 20 percent as part of global staff reduction plans in tough market conditions.

The new hires include Graham Lappin, formerly of Royal Bank of Scotland , who joins as a director in equity sales, and Neil Bharadwaj, who joins as a director and chief operating officer and senior control officer for Credit Suisse's Mumbai bank branch. He was previously with Bank of America .

Kiran Chakravarthy joins as a director in fixed income sales, the bank said. He was previously with BNP Paribas , while Ankur Choudhary joins as a director in the bank's global markets solutions group. She was previously with JPMorgan

Credit default swaps on RBS subordinated debt yesterday closed at a new high of 662 basis points, meaning that to buy protection against the possibility of the state-backed lender missing an interest payment would cost £662,000 a year on a £10m holding of the bonds.
The previous high in RBS CDS was in February 2009 when it reached 649 basis points at the height of the financial crisis that only months before had forced the British government to take an 83pc stake in the bank as it stood on the brink of collapse.
The rise in the perceived risk of RBS has been dramatic and only a month ago the cost of insuring the lender’s junior debt against default stood at 385 basis points.
CDS quoted on the subordinated debt of other several other major UK banks is currently running at 12-month highs, with Barclays at 445 basis points, HSBC at 192.81 basis points, and even Standard Chartered, which had been relatively immune to the fears, at 243 basis points.
“The CDS is essentially an insurance contract used by investors for hedging, so it tends to be much more volatile than the actual interest cost a bank pays on its debt,” said Jon Peace, the London-based head of European banks research at Nomura.

Few people predicted the global financial crisis. Everybody predicted the crisis of the eurozone.

Read almost any critique of the euro from just a few years ago and you'll be struck by their foresight. The euro will encourage government profligacy - tick. The euro will be extremely vulnerable to a housing bubble - tick. It will rely on the willingness of stronger economies to bail out weak ones - tick. And it will do nothing to buffer Europe from an American downturn - tick.

These objections were raised by everyone from Paul Krugman to Milton Friedman.

So how on Earth did Europe get its doomed euro - an idea which was viewed with deep scepticism if not outright hostility by some of the finest economic minds of the age?

As Romano Prodi, the European president said in 2002, "The introduction of the euro is not economic at all. It is a completely political step".

Europe switched its currency for geopolitical purposes and got burned.

In his Euro On Trial (written well before the financial crisis) the economic historian Brendan Brown argues that the European monetary union was a power play between French policymakers and German monetary authorities. Germany is Europe's largest economy and the Deutschmark was its strongest currency. The influence of the Deutschmark was seen as a threat to both France's strategic interests and its moral leadership of Europe. French politicians worried that bolstered by monetary strength Germany could act independently of Europe, forging a unique relationship with the United States and even the Soviet Union.

So for the French, a common currency offered glue with which Germany could be stuck in Europe. German foreign policy interests could be overcome by French ones.

Of course, the Germans knew this. French politicians actively raised the spectre of German nationalism when campaigning for the common currency. But these days the only country which fears German power more than France is Germany. For historical reasons, Berlin wanted a deeper European Union. If that meant sacrificing the Deutschmark for French support, so be it.

In adopting the euro, both France and Germany were subordinating economic policy to foreign policy, each trying to bind future German politicians.

The economist Philipp Bagus also argues that prudence of the Bundesbank, the German central bank which dominated Europe, restrained other European countries from excessive spending. This discipline was, needless to say, unwanted. Get rid of the Bundesbank, and the spigots of government largess could open freely.

No wonder that in 2004 the Czech president Vaclav Klaus argued that the euro creates a perfect environment for fiscal irresponsibility.

Certainly, there was an intellectual case presented for monetary union. The theory of optimal currency areas suggests that, at the very least, the size of some currency jurisdictions are better than others.

Then there are the intuitive benefits of currency consolidation. Single currencies reduce the costs of trade, at least a little bit. One currency makes it easy to compare prices across the continent.

But there was no reason to suggest that Europe was such an optimal currency area. (Europe's economies are, obviously, different.) Even if it was, which countries opted in and opted out of the monetary union was, again, dictated by political considerations, not economic theory.

And the mild convenience of being able to compare prices between Barcelona and Berlin without using a currency converter seems to be a very mild benefit considering the costs of monetary union.

One of the more reasonable polemics in support of the European project was by the British author Mark Leonard - Why Europe Will Run The 21st Century. Social democratic Europe would retake world leadership from liberal democratic United States. And in Leonard's view, a common currency would be a core foundation in Europe's revitalisation - luring the centre of global finance back across the Atlantic.

Leonard's book was published in 2005. How times have changed.

In 2011, we can read in the Guardian that "the monetary union, unlike the EU itself, is an unambiguously right-wing project".

It's hard to see why. The European ideal is a long way from its classical liberal origins in a free trade and migration alliance. The 1957 Treaty of Rome set up a simple union of free movement in goods, services, capital, and people.

That early classical liberal vision is very different from the vision of Europe which informed the euro - one in which not only borders are being eliminated but policy differences as well. The monetary union sought to eliminate inter-state competition for the most stable currency. In the Europe of the 21st century, taxes are being harmonised. Regulations are being increased.

The Spanish prime minister said in 1998 that "The single currency is a decision of an essentially political character… We need a united Europe."

Unfortunately, the only people who have been surprised by the euro's failure have been the politicians who thought monetary policy should be a weapon for international diplomacy.

Four years to the month since the global credit crisis began, European lenders remain dependent on central bank aid, plaguing markets and economies worldwide.
Emergency steps such as unlimited loans from the European Central Bank are keeping many banks in Greece, Portugal, Italy and Spain solvent and greasing the lending of others, while low interest rates and debt-buying are containing borrowing costs. Such aid is needed as concerns about slowing economic growth and sovereign debt prompt banks to curb lending, stockpile dollars and hoard cash in safe havens.
“I’m not sleeping at night,” said Charles Wyplosz, director of the Geneva-based International Center for Money and Banking Studies. “We have moved into a new phase of crisis.”
Central bankers rescued financial firms after the collapse of Lehman Brothers Holdings Inc. in 2008 by providing limitless funding of as long as a year. While they treated the symptom -- a lack of ready cash -- politicians, regulators and bankers in Europe have proved unable to cure the root cause: some European lenders are at growing risk of insolvency.
The tremors, the biggest since Lehman’s collapse, were triggered by European governments’ continuing inability to stop the sovereign debt crisis from spreading beyond Greece, Portugal and Ireland to Italy and Spain. Renewed signs of economic weakness globally and the downgrading of U.S. debt by Standard & Poor’s rekindled concern about the quality of all government debt.
Bank Stocks Tumble
The signs of distress are widespread and mounting: Banks deposited 128.7 billion euros ($186 billion) overnight with the ECB yesterday, more than three times this year’s average, rather than lend the money to other firms. Banks also borrowed 555 million euros from the Frankfurt-based ECB’s overnight marginal lending facility, up from 90 million euros the day before.
European bank stocks have sunk 20 percent this month, led by Royal Bank of Scotland Group Plc (RBS) and Societe Generale (GLE) SA. Edinburgh-based RBS, Britain’s biggest government-controlled lender, has tumbled 43 percent, and Paris-based Societe Generale, France’s second-largest bank, dropped 39 percent.
The extra yield investors demand to buy bank bonds instead of benchmark government debt surged to 302 basis points yesterday, or 3.02 percentage points, the highest since July 2009, data compiled by Bank of America Merrill Lynch show. The cost of insuring that debt against default surged to a record today. The Markit iTraxx Financial Index linked to senior debt of 25 European banks and insurers rose to 252 basis points, compared with 149 when Lehman collapsed.
Greek Default Concern
It was the specter of government debt turning toxic that has revived the liquidity crisis policy makers had tried to stop in 2008. As speculation grew that European banks would have to write down their holdings of more governments’ debt after a Greek default, lenders pulled funding to those banks that held the most peripheral debt. It also raised concern European governments would struggle to afford a further bail out of their banks, because both the state and the lenders had failed to reduce their borrowings since the onset of the crisis.
“The debt has been transferred from the banks to the sovereign, but it hasn’t actually been eradicated,” said Gary Greenwood, a banking analyst at Shore Capital in Liverpool. “Until the sovereigns get their balance sheets in order, then these concerns are going to remain.”
Funding markets have seized up as investors speculate that sovereign debt writedowns are inevitable. Banks in the region hold 98.2 billion euros of Greek sovereign debt, 317 billion euros of Italian government debt and about 280 billion euros of Spanish bonds, according to European Banking Authority data.
Euribor-OIS
The difference between the three-month euro interbank offered rate, or Euribor, and the overnight indexed swap rate, a measure of banks’ reluctance to lend to each other, was at 0.66 percentage point today, within 4 basis points of the widest spread since May 2009.
“The central bank is the only clearer left to settle funds between banks,” said Christoph Rieger, head of fixed-income strategy at Commerzbank AG (CBK) in Frankfurt. “There is a mistrust between banks in general, between regions and with dollar providers overall.”
Overseas banks operating in the U.S. may have cut dollar holdings by as much as $300 billion in the past four weeks as European banks faced a squeeze on funding and sought dollars, Jens Nordvig, a managing director of currency research at Nomura Holdings Inc. in New York said Aug. 18. Dollar assets declined by about 38 percent to $550 billion in the period, he said.
‘More Nervous’
“Banks are becoming more nervous about being exposed to other banks as they hoard liquidity and become more suspicious of other banks’ balance sheets,” Guillaume Tiberghien, analyst at Exane BNP Paribas (BNP), wrote in a note to clients on Aug. 19.
By contrast, banks in the U.S. are “flush” with liquidity, loan loss reserves and capital, Goldman Sachs Group Inc. analyst Richard Ramsden wrote in an Aug. 6 report. Large commercial banks combined holdings of cash and securities at large have climbed to 30 percent of managed assets, up from 22 percent at the start of the U.S. financial crisis in October 2007, Ramsden wrote, citing Federal Reserve data.
The Federal Reserve, which provided as much as $1.2 trillion of loans to banks in December 2008, wound down most of its emergency programs by early 2010. One of the few exceptions was the central-bank liquidity swap lines that provide dollars to the ECB and other central banks so they can in turn auction off the dollars to banks in their own jurisdictions.
Trichet, Bernanke
Banks’ woes are again thrusting central bankers to the fore as ECB President Jean-Claude Trichet joins Fed Chairman Ben S. Bernanke and their counterparts from around the world in traveling this week to Jackson Hole, Wyoming for the Kansas City Fed’s annual policy symposium.
After increasing its benchmark rate twice this year to counter inflation, the ECB this month provided relief for banks by buying Italian and Spanish bonds for the first time, lending unlimited funds for six months, and providing one unnamed bank with dollars to satisfy the first such request since February. In doing so, it’s maintaining a role it began in August 2007 when it injected cash into markets after they began to freeze.
Coming to the rescue isn’t easy for the ECB. Its balance sheet is now 73 percent bigger than in August 2007 and its latest bond-buying opened it to accusations that by rescuing profligate nations it’s breaking a rule of the euro’s founding treaty and undermining its credibility. Policy makers are also divided over the best course of action, with Bundesbank President Jens Weidmann among those opposing the bond program.
Economic Threat
The central bank is acting in part because governments have yet to ratify a plan to extend the scope of a 440-billion euro rescue facility to allow it to buy bonds and inject capital into banks. Markets tumbled last week on concern policy makers aren’t acting fast enough.
The funding difficulties of banks was one reason cited by Morgan Stanley economists Aug. 17 for cutting their forecast for euro-area economic growth this year to 0.5 percent next year, less than half the 1.2 percent previously anticipated. They now expect the ECB to reverse this year’s rate increases, returning its benchmark to 1 percent by the end of next year.
The economic threat is greater in Europe because consumers and companies are more reliant on banks for funding than their U.S. counterparts, said Tobias Blattner, a former ECB economist now at Daiwa Capital Markets Europe in London. He says the ECB should eventually try to hand over fire-fighting duties either to governments, who would then inject capital into financial firms, or national central banks, who could provide short-term loans to lenders.
‘Uncharted Territory’
Longer-term solutions may involve the restructuring the debt of cash-strapped nations in a way that doesn’t roil bank balance sheets, potentially in lockstep with a European version of the U.S.’s Troubled Asset Relief Program.
Lena Komileva, Group-of-10 strategy head at Brown Brothers Harriman & Co. in London, said the central bank may have no option but to extend the backstop role it is playing for periphery banks to lenders elsewhere. Refusal to do so would risk a European bank default by the end of the year, she said.
“Markets are back in uncharted territory,” said Komileva. “The crisis is a whole new story now.”

The euro zone's rescue plan to end its sovereign-debt crisis will weaken the foundations of the currency union and could increase states' tendency to build up debts, Germany's Bundesbank warned Monday, taking a hard stance against an agreement that German Chancellor Angela Merkel still has to persuade her government to support.

The deal, which euro-zone leaders agreed to at a summit on July 21 but requires the approval of euro-zone governments, represents "a big step towards sharing the risks of shaky state finances and economic mistakes" across the euro-zone, the Bundesbank said in its monthly report.

That "weakens the foundations of the currency union", which is based on "fiscal responsibility and discipline through the capital markets," the Bundesbank said. Without a fiscal or political union, July's deal could put pressure on the European Central Bank to "loosen the common monetary policy" and increase states' tendency to build up debts, the bank said.

In the agreement, European Union leaders approved expanding the size and powers of the EU's rescue fund, the European Financial Stability Facility. The Bundesbank said that since the deal doesn't offer donor countries much more influence over the fiscal policies of bailed-out states, it could increase states' tendency to build up debts.

Germany's central bank has long been a staunch opponent of loose monetary policy. Bundesbank President Jens Weidmann opposed the ECB's recent decision to reactivate its bond-buying program to buy Spanish and Italian debt, a person familiar with the matter said earlier this month. Mr. Weidmann's predecessor, Axel Weber, was an outspoken opponent of the ECB's bond purchases.

Ms. Merkel has resisted pressure from some EU officials and euro-zone countries to support euro-zone bonds, which have been suggested as a solution to the bloc's debt crisis. On Sunday, she warned that euro-zone bonds would collectivize debt without transferring national budget sovereignty to Europe. Such bonds would lead to a "debt union and not a stability union," she said.

Still, Ms. Merkel expressed confidence that her center-right coalition would approve the changes to the euro zone's rescue fund agreed in July. "I expect that we will get it [a majority]," Ms. Merkel said.

The Bundesbank's criticism of July's deal won't make that task any easier. Several lawmakers from Ms. Merkel's Christian Democratic Union party and from her junior coalition partner, the Free Democrats, have already announced they will vote against the changes. Ms. Merkel plans to hold an extraordinary meeting of CDU lawmakers Tuesday to try to approve the changes by the end of September.

Euro-zone governments are rushing changes to the EFSF through their parliaments, in order to take pressure off the European Central Bank, which has bought euro-zone government bonds worth about €36 billion ($51.82 billion) over the past two weeks after the debt crisis spread to Spain and Italy. The ECB is keen to hand responsibility for bond-buying to the EFSF, but can only do so once the fund is authorized to buy bonds in the secondary market.

The Bundesbank also reiterated its proposal for an automatic three-year extension clause for euro-zone government bonds, to be activated when a country seeks help from the European Stability Mechanism, a permanent rescue fund due to launch in 2013.

Still, despite the euro-zone's debt woes, Germany's economic recovery is likely to continue in the second half of 2011, albeit at a slower pace, the Bundesbank said.

The central bank confirmed that Germany's gross domestic product is likely to expand by around 3% this year, despite the sharp slowdown in the second quarter and risks from the euro-zone debt crisis.

Germany's economy grew by just 0.1% quarter-to-quarter in the April-June period, down from 1.3% in the previous quarter, the state statistics office said last week.

The second-quarter slowdown "is in itself no evidence that the German boom has softened due to weaker overseas demand and increased uncertainty," the Bundesbank said.

Italy’s austerity drive, enacted in exchange for European Central Bank bond purchases driving down borrowing costs, may backfire as it chokes the economic growth needed to ease Europe’s second-biggest debt burden.
Prime Minister Silvio Berlusconi’s Cabinet approved 45.5 billion euros ($66 billion) in deficit reductions in Rome on Aug. 12, the nation’s second austerity package in a month, to balance the budget in 2013 and convince investors that Italy can trim debt of about 120 percent of gross domestic product. That’s the biggest ratio in Europe after Greece, whose fiscal woes sparked the sovereign crisis last year.
While the back-to-back packages aim to eliminate Italy’s budget gap, spending cuts and tax increases risk damaging the economy at a time when the global recovery is stumbling. The measures, already in effect, require parliamentary approval that starts today as Senate committees review the law before both houses vote in September.
“There are clear downside risks to growth emanating from such a sharp fiscal tightening profile, which could tip Italy’s fragile economy into a recession,” said Vladimir Pillonca, an economist at Societe Generale SA in London. That could “weaken revenue growth and undermine the ongoing fiscal adjustment” in the face of other challenges, such as “shocks to risk premiums and/or interest rates.”
ECB Letter
Berlusconi rolled out the second package after ECB President Jean-Claude Trichet wrote to him demanding more deficit measures in return for supporting the country’s bonds. The ECB started buying Italian and Spanish bonds on Aug. 8, helping push 10-year yields below 5 percent after they had surged to euro-era records amid concern contagion from the debt crisis had infected both countries.
Italy’s 10-year bond yields about 4.95 percent, and has closed below 5 percent for four consecutive trading sessions. Investors demand 281 basis points of extra yield to own the debt rather than benchmark German bunds of similar maturity, down from a euro-era record of 416 on Aug. 4.
The success of Italy’s austerity drive, which is also expected to include structural moves to liberalize the labor and services markets, hinges on growth matching Berlusconi’s forecasts. That looks increasingly challenging as equity markets from Tokyo to Milan plunge and economists revise down growth predictions amid concern the global expansion is slowing and the debt crisis will further damage Europe’s banking system.
Creating Stagnation
The government is “doing everything to create stagnation -- all this austerity, all the cuts and little investment for the future,” Corrado Passera, chief executive officer of Intesa Sanpaolo SpA, the country’s second-biggest bank, said in a speech today in Rimini, Italy.
Italy’s government expects economic growth of 1.3 percent next year and 1.5 percent in 2013, according to the most recent forecast in May. Tremonti said on Aug. 13 the government stands by those targets, a view dismissed by several economists.
Giada Giani, an economist at Citigroup Inc. in London, said on Aug. 12 that GDP growth is likely “to slow to close to zero in 2012 and 2013” in Italy, an outlook shared by Pillonca of Societe Generale. Morgan Stanley analysts including Elga Bartsch in London expect the austerity plans, coupled with slowing global demand and tighter credit, to spark “an outright recession next year” in Italy, according to an Aug. 18 note to investors.
Rating Review
“If you go through this kind of fiscal adjustment, which is absolutely tough, you are going to see private consumption suffering,” said Fabio Fois, an economist at Barclays Capital in London. Lowering his Italian outlook, he said GDP is likely to advance 0.7 percent next year from the previous projected growth forecast of 1.1 percent.
Both Standard & Poor’s, which grades Italy at A+, and Moody’s Investors Service, which has an assessment of Aa2, warned that Italy’s weak growth prospects would make it difficult to cut a debt of 1.9 trillion euros in announcing rating reviews in May and June, respectively. Growth in the euro-region’s third-biggest economy has lagged behind the euro- region average every year since 1995.
The euro region’s economic growth slowed in the second quarter to 0.2 percent from the January-March period, when it increased 0.8 percent. That was the worst performance in two years. GDP in Germany, the region’s biggest economy, rose just 0.1 percent in the second quarter, missing analysts’ 0.5 percent estimate. Italy, the currency area’s third-biggest economy, grew 0.3 percent.
Primary Surplus
Stabilizing Italy’s debt ratio requires a primary surplus, or the budget surplus minus interest paid on debt, of at least 3 percent, assuming an average financing cost of 5.5 percent, according to Pillonca. The government’s forecast, which didn’t include the effects of the latest austerity plan, sees a primary surplus of 2.4 percent next year, which Bank of Italy Governor Mario Draghi said on July 13 would be Europe’s biggest.
The goal of balancing the budget in 2013 is “achievable, at least arithmetically,” when savings from the last austerity moves are included, Pillonca said. Still, amid slowing economic growth, “far-reaching structural reforms” will also be needed to maintain “a high primary surplus on a consistent basis” to begin driving down the debt ratio, he said.
Those overhauls, such as opening up closed professions and giving companies more leeway in negotiating job contracts, are “not ambitious enough” and may not be included in the final package amid intense “lobbying pressure” to amend them, Nomura International economists including Lavinia Santovetti in London wrote in a note on Aug. 19.
Under the government’s worst-case scenario, the economy will grow 0.8 percent in 2012 and 1 percent in 2013, with debt staying at around 120 percent of GDP, according to the document published in May. While Nomura still predicts marginal growth for those two years, public debt will “balloon to 137 percent” if Italy stops expanding in that period, Nomura said.
“Ultimately, all this means that one cannot rule out that Italy may be forced to enact further fiscal adjustments down the line,” Pillonca said.

Daniel Domscheit-Berg told the German Newspaper Der Spiegel that the documents included a copy of the complete US no-fly list.

He said he had "shredded" them to avoid their sources being compromised.

Mr Domscheit-Berg previously worked alongside Julian Assange until the pair had a high profile falling-out.

It is understood that he took the files off Wikileaks' servers at the time of his departure.

Wikileaks confirmed the claims on its Twitter feed, saying: "We can confirm that the DDB claimed destroyed data included a copy of the entire US no-fly list."

The list contains the names of individuals who are banned from boarding planes in the United States or bound for the US, based on suspected terrorist links or other security concerns.

Wikileaks' statement went on to state that Mr Domscheit-Berg had also deleted 5 gigabytes of data relating to Bank of America, the internal communications of 20 neo-Nazi organisations and US intercept information for "over a hundred internet companies."

Mr Domscheit-Berg has not confirmed those additional claims.

A statement, attributed to Julian Assange, accused the former volunteer of sabotage and attempted blackmail.

Personality clash
Daniel Domscheit-Berg worked with Wikileaks as a spokesman during 2010. Towards the end of the year, he left the organisation.

He subsequently published a book about his experiences in which he claims to have clashed with Mr Assange over his idiosyncratic running of Wikileaks.

Daniel Domscheit-Berg spoke to the BBC's Panorama programme in February 2011
In particular, he claims to have urged the founder to step back from his public role amid accusations of sexual misconduct.

In an interview with the BBC's Panorama programme, Mr Domscheit-Berg said he "felt that [Wikileaks] was crumbling apart because [Julian Assange] was so damn ignorant".

He also accused Mr Assange of "behaving like a child clutching on his toy."

After his departure from Wikileaks, Mr Domscheit-Berg set up a rival whistle-blowing site called the OpenLeaks project.

Many banks are still struggling to hit their targets to deal with payment protection insurance complaints, despite an extension from the Financial Services Authority (FSA).
Under traditional guidelines a complaint has to be handled within eight weeks but in June the FSA made a temporary agreement with Barclays, Lloyds and RBS to allow them more time to deal with the extraordinary number of complaints they've received.

The cost for European banks to
fund themselves in dollars in the foreign exchange market rose
back to their highest levels since 2008 on Monday as investors
continued to reduce loans to the region, causing them to seek
alternative ways to fund U.S. operations.
European banks have been squeezed for dollar funding as
U.S. investors, including money funds, let commercial paper
loans to banks that are exposed to peripheral Euro zone debt
roll off.
This has reduced the amount of dollar funding banks have to
run their U.S. branches, sending them scrambling to the foreign
exchange market to swap euros into dollars.
"It's getting more and more expensive for them to raise
those dollars," said Jens Nordvig, head of fixed income
research at Nomura in New York.
The three-month euro-dollar cross currency basis swap
EURCBS3M=ICAP, which falls when dollar funding costs for euro
zone banks rise, fell to minus 92.5 basis points on Monday from
minus 88 bps on Friday.
The swap looked set to retest the 2-1/2-year lows of minus
96 bps seen a week ago, but many analysts expect it to be
capped way off record lows of below minus 300 bps, hit at the
time of Lehman Brothers' collapse, supported by weekly dollar
loans provided by the European Central Bank.
London interbank offered rates for three-month dollars
USD3MFSR= also maintained an upward grind, rising to 0.30844
percent, their highest in five months. Forwards also implied
the rate will continue to rise to the 41-basis-point area by
mid-September.
"There's little to prompt improvements in money markets,"
said Commerzbank strategist Benjamin Schroeder. "For money
markets to improve you need some measures regarding the banking
system which would lead to some immediate improvement."
FOREIGN RESERVES AT FED RISE
In one potentially positive sign the amount of reserves
held by foreign banks at the U.S. Federal Reserve rose in the
latest week, stemming a decline that has seen about $131
billion withdrawn in the previous two weeks.
Foreign banks have built up a healthy buffer of dollar
reserves at the Fed, which in addition to liquidity offered by
swap facilities instituted by central banks, has reduced some
concerns that banks face the same risk of collapse as in 2008.
Investors will now closely watch the next Fed release, due
on Friday, for further signs of whether deposits have
stabilized, or are continuing to fall.
"I think we're close to getting the verdict here on whether
a 2008-type dynamic is a real risk or whether the funding
markets globally are just in a much more resilient state than
they were in 2008," said Nomura's Nordvig.
Fed data from the week ended Aug. 10 showed that deposits
rose to $813 billion from $758 billion the previous week.
It is hard to draw conclusions from the number, however,
due to the range of events driving investor behavior that
week.
Those events included the first downgrade of the U.S.
credit rating by Standard & Poor's and the introduction of a
new fee on deposits by Bank of New York Mellon Corp (BK.N) as
banks struggled to cope with the influx of deposits from
investors flooding perceived safe havens.
"We had so much going on in the week the data covered, it's
hard to say what was the dominant force," said Nordvig. "The
next datapoint is going to be more interesting because that was
more a clear-cut European-driven problem."

Japan will take decisive action against any speculative moves in the currency market, Finance Minister Yoshihiko Noda said, signaling Tokyo's readiness to intervene to stem further yen rises after its spike to a record high last week.

Noda said he saw recent yen rises as even more one-sided than before and that Tokyo would exchange information closely with other countries regarding currencies, suggesting it would stay in frequent contact with its Group of Seven partners.

"We will watch markets even more closely than before to see whether there is any speculative activity. We won't rule out any measures and will take decisive action when necessary," Noda told reporters on Monday.

Noda, Prime Minister Naoto Kan and top government spokesman Yukio Edano all repeated the phrase throughout the day, a sign that it has become the new line Tokyo would use to warn markets that intervention is an imminent possibility.

Market expectations of currency intervention briefly sent the dollar to a one-and-a-half week high of 77.23 yen on Monday, off the record low of 75.95 yen hit last Friday.

But prospects of intervention failed to offset stock market worries about slowing U.S. growth, pushing Tokyo's Nikkei average .N225 to a five-month closing low.

WARY OF ACTION

Tokyo intervened unilaterally in the currency market and eased monetary policy on August 4. But the steps have not stopped investors from seeking the yen as a safe haven against risk.

Trade Minister Banri Kaieda, who along with Noda is a contender to replace Kan when he steps down as early as the end of this month, said on Monday it would be best if Japan and the United States could jointly intervene in the currency market, according to Kyodo news agency.

"Intervention is aimed at teaching (market players) that if they buy the yen too much, they will get burned," he said.

But Kaieda does not have jurisdiction over currency policy, and was likely expressing his hope than signaling that any serious negotiation with Washington has taken place.

Markets are bracing for another round of intervention but doubt whether it will be effective in sustainably weakening the yen, particularly with little chance that Tokyo can persuade its G7 counterparts to act jointly in the currency market.

"I don't think Japan will intervene as long as the dollar stays around current levels above 76.50 yen. But if it falls back below 75, it may step in. The authorities are ready to act at any time and that's probably the message they are trying to send," said Naoki Iizuka, senior economist at Mizuho Securities.

"Stock prices may briefly rally if Tokyo intervenes. But it would be difficult to change the market's (weak-dollar) trend."

If the government were to intervene, the BOJ is ready to support the yen-weakening effort by holding off from draining the extra yen that flows to the markets via intervention, and possibly by easing monetary policy further.

The BOJ will consider loosening policy, possibly before its next rate review in September, if yen gains push down Tokyo stock prices enough to hit business sentiment, sources familiar with the central bank's thinking have said.

Policymakers, however, are caught in a dilemma. They know the limits of trying to stem yen rises with policy action. But if they hold off on meeting words with action for too long, the effect of verbal warnings will quickly fade.

Upcoming events that may drive down the dollar, such as Federal Reserve Chairman Ben Bernanke's speech on Friday in Jackson Hole, Wyoming, and U.S. payrolls data on September 2, may also wipe out any yen-weakening effect if Tokyo acts now.

Any currency intervention and monetary easing would thus be more of a symbolic attempt to show the authorities' determination to address yen rises, as Japanese companies complain about the pain from yen gains and threaten to shift production overseas, analysts say.

Political uncertainty may also delay policies to address the potential harm from a strong yen on the economy. Ruling party lawmakers are maneuvering to select a successor to Kan, which may slow progress in coming up with steps to support growth in a third extra budget.

Japanese rating agency Rating and Investment Information (R&I) said on Monday the country's political stalemate was a worry and warned that it looks increasingly hard for Japan to maintain its top sovereign credit rating.