Bikers Patch

Barclays chief executive Bob Diamond has resigned with immediate effect. The move comes less than a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates. Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise". Chairman Marcus Agius, who said on Monday he was stepping down, will take over the running of Barclays until a replacement is found. "I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth," Mr Diamond said in a statement. He will still appear before MPs on the Treasury Committee to answer questions about the Libor affair on Wednesday. "I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question," Mr Diamond said. Last week, regulators in the US and UK fined Barclays £290m ($450m) for attempting to rig Libor and Euribor, the interest rates at which banks lend to each other, which underpin trillions of pounds worth of financial transactions. Staff did this over a number of years, trying to raise them for profit and then, during the financial crisis, lowering them to hide the level to which Barclays was under financial stress. Prime Minister David Cameron has described the rigging of Libor rates as "a scandal". The Serious Fraud Office is also considering whether to bring criminal charges.

Even by the standards of euro-zone bailouts, which usually are greeted with applause but swiftly fizzle, the rescue of Spain’s banks, announced on June 9, was a disappointment. Relief in the markets lasted only hours. Yields on Spanish bonds soon started to rise. Within days they had reached their highest point since the introduction of the euro, a level that, if sustained, would tip Spain into insolvency. Ominously, yields also rose on German bonds, the euro area’s haven. Investors are wondering whether the euro itself will survive. The package has some good points. Compared with previous bailouts — of Greece, Ireland and Portugal — the rescuers acted early. Spain’s government was offered money to fix its banks before it was shut off from financial markets. The sum offered is big: Madrid has been promised loans of as much as $125 billion, enough to shore up its banks even if the economy shrinks a good bit further. Though no details have yet been agreed on, the interest rate on the rescue funds will doubtless be well below the 6.7 per cent that Spanish 10-year bonds reached this week. And, unlike earlier rescues, this one comes without toxic demands for yet more austerity. A year ago a proper cleanup of Spain’s banks, with this kind of outside support, might have been enough. Not now. The country’s property and bank bust has been compounded by a massive loss of investor confidence. Capital has drained from Spain at an accelerating pace in recent months, for two reasons. First, investors are worried by the vicious spiral of a weakening economy, tottering banks and worsening government finances. Second, they are losing confidence in the single currency and Spain’s place within it. This bank rescue does too little to assuage the first worry and nothing to deal with the second. That is why it won’t work. Begin with the poisonous links between the banks and the budget. Rather than injecting the funds straight into the banking system, Spain’s rescuers are lending them to the government. That could raise its debt by as much as 10 percentage points of GDP. Moreover, if the money comes from the European Stability Mechanism, the EU’s permanent rescue fund, it will be prioritized above ordinary government bonds. As a result, Spain’s borrowing costs could rise further as investors fret both about the government’s solvency and about their place in the creditors’ priorities. There is good reason to fear that the second problem, the lack of confidence in the single currency, is going to get still worse. Today Greece goes to the polls again. If it elects a government determined to rip up the conditions of its bailout, it could be out of the euro soon. That would exacerbate concerns not only about Spain’s future, but also about Italy’s. The yields on Italian bonds shot up this week because of fears of contagion. The real source of uncertainty about the euro’s future is not what is happening in these countries, but rather the failure of Germany and its European partners to commit themselves to the level of integration needed to hold the single currency together. Country-by-country rescues will not be enough. Systemic reforms will be needed, including some mutualization of debts and a move toward a banking union, with euro-wide oversight and responsibility for banks. Spain’s bank rescue could have been a down payment on such a solution. By injecting their funds directly into Spain’s banks, European rescuers could have taken a first step toward a banking union. Instead they chose a mildly improved version of the old approach. It is a bandage, not a cure.

The focus of the G20 summit in Mexico next week will inevitably be the fate of the eurozone, and that will be true whatever the Greek electorate does or does not decide. For the problem has gone far beyond Greece. There has been a sudden deterioration in economic activity across the region in the past few weeks and that is starting to affect the rest of the world. One instance has been the sharp fall in UK exports to Europe in the latest figures, another the fall in internal trade within the eurozone itself. Unsurprisingly the non-eurozone countries at the summit will be pressing its leaders to do something, anything, to stop the eurozone undermining the rest of the world economy. In the short term, the central banks can and will step in to provide liquidity. The new lending programme of the Bank of England is one example of that. There is now a widespread expectation that the Federal Reserve will pump more funds into the US economy next week, while the European Central Bank will probably wait until the European summit at the end of the month to see what it can do to support whatever decisions are taken by the governments to support the eurozone in the longer term. And there lies the problem. Until eurozone leaders have a coherent plan that will enable the weaker countries to fund themselves at an acceptable rate, injections of liquidity from the central banks provide only the most temporary of relief. At the present interest rates, approaching 7 per cent for 10-year funds, neither the Spanish nor the Italian government can afford to borrow. They are running out of money. Spain has acknowledged that it cannot guarantee paying pensions after July, thereby tacitly admitting that its problem is not just one of recapitalising its banks: it needs a sovereign bailout too. Italy's situation is slightly less pressing, but its overall debt is larger, at some 120 per cent of GDP. Among the major nations, only Japan has higher debt and it has been able to rely on domestic savers to buy its bonds. By contrast, both Spain and Italy have to borrow from abroad. So what should we expect from the G20 meeting? Well, we have the full weight of the world's largest economic powers. They represent more than 80 per cent of global GDP. They have, when they act together, huge firepower. As past experience has shown, notably after the collapse of Lehman Brothers, they can stitch together a package that restores confidence and enables the world's business and financial communities to crank up trade and investment. In an emergency, they can be very effective. But what the G20 cannot do is tackle structural problems within a particular region. So it cannot fix the problems of the eurozone. Only Europe can do that. And within Europe, only Germany is both a large enough economy and a sufficiently credit-worthy nation to be able to think of assembling the finance necessary to enable the eurozone's weaker members to pay their bills.

The latest data from the Bank of England reveals that UK lenders are exposed to the tune of $142.5bn (£91.3bn) in both Italy and Spain, spelling potentially disastrous consequences for British banks should these European economies collapse. Of the total, British banks have $83.1bn tied up in Spain’s public and private sector, including its banking system, and a further $59.4bn exposure to Italy. UK banks are relatively insulated to the sovereign debt of the weakest European economies compared to other lenders in the eurozone, including those in Germany and France. But they remain highly vulnerable to private sector debt in Italy and Spain, the Bank said, and have significant money locked up in major European banking systems, resulting in “indirect” exposure to the public sector debt crisis. As at the end of December, the period for which the latest figures are available, UK banks exposure to Italy was $59.4bn. Of this, $44bn was private sector debt and just $8.4bn was sovereign debt.

Bank of England policymakers meet today to decide whether to change interest rates or to pump in more money into the ailing economy, with leading economist saying they may opt to inject a further £50bn of stimulus.

Global capital markets, now the most powerful force on earth, are rapidly losing confidence in the financial coherence of the 17-nation euro zone. A market implosion there, like that triggered by Lehman Brothers collapse in 2008, may not be far off. Not only would that dismantle the euro zone, but it could also usher in another global economic slump: in effect, a second leg of the Great Recession, analogous to that of 1937. This risk is evident in the structure of global interest rates. At one level, U.S. Treasury bonds are now carrying the lowest yields in history, as gigantic sums of money seek a safe haven from this crisis. At another level, the weaker euro-zone countries, such as Spain and Italy, are paying stratospheric rates because investors are increasingly questioning their solvency. And there’s Greece, whose even higher rates signify its bankrupt condition. In addition, larger businesses and wealthy individuals are moving all of their cash and securities out of banks in these weakening countries. This undermines their financial systems. 423 Comments Weigh InCorrections? Personal Post The reason markets are battering the euro zone is that its hesitant leaders have not developed the tools for countering such pressures. The U.S. response to the 2008 credit market collapse is instructive. The Federal Reserve and Treasury took a series of huge and swift steps to avert a systemic meltdown. The Fed provided an astonishing $13 trillion of support for the credit system, including special facilities for money market funds, consumer finance, commercial paper and other sectors. Treasury implemented the $700 billion Troubled Assets Relief Program, which infused equity into countless banks to stabilize them. The euro-zone leaders have discussed implementing comparable rescue capabilities. But, as yet, they have not fully designed or structured them. Why they haven’t done this is mystifying. They’d better go on with it right now. Europe has entered this danger zone because monetary union — covering 17 very different nations with a single currency — works only if fiscal union, banking union and economic policy union accompany it. Otherwise, differences among the member-states in competitiveness, budget deficits, national debt and banking soundness can cause severe financial imbalances. This was widely discussed when the monetary treaty was forged in 1992, but such further integration has not occurred. How can Europe pull back from this brink? It needs to immediately install a series of emergency financial tools to prevent an implosion; and put forward a detailed, public plan to achieve full integration within six to 12 months. The required crisis tools are three: ●First, a larger and instantly available sovereign rescue fund that could temporarily finance Spain, Italy or others if those nations lose access to financing markets. Right now, the proposed European Stability Mechanism is too small and not ready for deployment. ●Second, a central mechanism to insure all deposits in euro-zone banks. National governments should provide such insurance to their own depositors first. But backup insurance is necessary to prevent a disastrous bank run, which is a serious risk today. ●Third, a unit like TARP, capable of injecting equity into shaky banks and forcing them to recapitalize. These are the equivalent of bridge financing to buy time for reform. Permanent stability will come only from full union across the board. And markets will support the simple currency structure only if they see a true plan for promptly achieving this. The 17 member-states must jointly put one forward. Both the rescue tools and the full integration plan require Germany, Europe’s strongest country, to put its balance sheet squarely behind the euro zone. That is an unpopular idea in Germany today, which is why Chancellor Angela Merkel has been dragging her feet. But Germany will suffer a severe economic blow if this single-currency experiment fails. A restored German mark would soar in value, like the Swiss franc, and damage German exports and employment. The time for Germany and all euro-zone members to get the emergency measures in place and commit to full integration is now. Global capital markets may not give them another month. The world needs these leaders to step up.

A crime linked to Facebook  is reported to police every  40 minutes. Last year, officers logged 12,300 alleged offences involving the vastly popular social networking site. Facebook was referenced in investigations of murder, rape, child sex offences, assault, kidnap, death threats, witness intimidation and fraud.

The Duke of Edinburgh has been taken to hospital with a bladder infection and will miss the rest of the Diamond Jubilee celebrations. Buckingham Palace said Prince Philip, 90, had been taken to the King Edward VII Hospital in London from Windsor Castle as a "precautionary measure". The Queen is still expected to join 12,000 others at the Jubilee concert which is under way at the palace. The prince will remain in hospital under observation for a few days. The prince had appeared to be in good health when he accompanied the Queen on Sunday on the royal barge the Spirit of Chartwell, which formed part of the rain-drenched Jubilee river pageant. He and the Queen stood for most of the 80-minute journey, as they were accompanied by 1,000 boats travelling seven miles down the river to Tower Bridge.

Luka Rocco Magnotta was arrested in Berlin Monday after a four-day international manhunt that spanned three countries. The 29-year-old Canadian wanted over a horrific Montreal ice pick murder and decapitation of a Chinese student that he allegedly filmed and posted to the Internet, was arrested in or near an Internet cafe, Berlin police said. Montreal police confirmed they are aware of the reports that Magnotta was arrested, but said they are still in the process of contacting their Berlin counterparts. The arrest comes after French authorities said they were investigating a tip that Magnotta travelled from Paris to Berlin via bus on the weekend. “Somebody recognized him and (then) all the police recognized him,” Berlin police spokesperson Stefan Redlich told CP24 Monday. Handout (Click to enlarge) Magnotta's alleged victim is Lin Jun, a 33-year-old Concordia University student from Wuhan, Hubei, China. He was last seen on May 24, police said, and reported missing on May 29. Redlich said police were called in by a civilian who spotted Magnotta and he was arrested after police asked for his identification at about 2:00 p.m. local time in Berlin. Reuters is reporting it was an employee of the cafe, Kadir Anlayisli, that recognized Magnotta. The cafe is on Karl Marx Strasse, a busy shopping street filled with Turkish and Lebanese shops and cafes in the Neukoelln district of Berlin. German television quoted the owner of the cafe saying Magnotta was surfing the Internet for about an hour before his arrest. Redlich said Magnotta has been taken into custody without incident and will go in front of a judge Tuesday. Canadian officials are expected to start the extradition process for Magnotta in the near future.

US benchmark borrowing costs plunged to levels last seen in 1946 and those for Germany and the UK hit all-time lows as investors took fright at what they see as a disjointed policy response to the debt crisis in Spain and Italy. In a striking sign of the flight to haven assets, German two-year bond yields fell to zero for the first time, below the equivalent rate for Japan, meaning investors are willing to lend to Berlin for no return. US 10-year yields fell as low as 1.62 per cent, a level last reached in March 1946, according to Global Financial Data. German benchmark yields reached 1.26 per cent while Denmark's came close to breaching the 1 per cent level, hitting 1.09 per cent. UK rates fell to 1.64 per cent, the lowest since records for benchmark borrowing costs began in 1703. "They are extreme levels because we are in an extremely perilous situation. People just want to put their money somewhere where they think they will get it back. People may soon be paying Germany or the US to look after their money," said Gary Jenkins, head of Swordfish Research, an independent credit analysis company. The flight to safety came as the situation in Italy and Spain, the eurozone's third- and fourth-largest economies, deteriorated further. Italy held a disappointing debt auction and saw its benchmark borrowing costs rise above 6 per cent for the first time since January. The euro fell 0.8 per cent against the dollar to under $1.24 for the first time in two years. Confusion over how the Spanish government's rescue of Bankia, the stricken lender, will be structured led the premium Madrid pays over Berlin to borrow to hit fresh highs for the euro era at 540 basis points. Analysts said the elevated level meant that clearing houses could soon raise the amount of margin, or collateral, that traders need to post against Spanish debt, a move that led to the escalation of crises in Portugal and Ireland. The European Central Bank has made clear to Spain that it cannot use the bank's liquidity operations as part of a recapitalision of Bankia. However, the central bank said on Wednesday it had not been officially consulted on the plans. Equity markets globally fell on the eurozone fears with bourses in Paris, Frankfurt and London all dropping 2 per cent. But Nick Gartside, international chief investment officer for JPMorgan Asset Management, noted that while US bond yields had halved since April last year the S&P 500 equity market was at the same level. "One of those two markets is mispriced. Core government bonds are an efficient market and they are ahead," he added. Investors said borrowing costs for the US, UK and Germany were likely to continue to fall amid a worsening economic backdrop and the threat of more central bank intervention. Wealth managers have been moving client assets into currency havens in recent weeks, with the Swiss franc and the US dollar among the biggest beneficiaries "Risk aversion, a rapidly slowing global economy and unusually low policy rates will pin these short and intermediate maturity bonds at unprecedented low levels for quite a while," said Mohamed El-Erian, chief executive of Pimco, one of the world's largest bond investors. Mr Gartside said he could easily see German rates going below 1 per cent, following a path that only Japan and Switzerland have taken among major economies, while the US and UK could dip under 1.5 per cent. Markets are increasingly resigned to more turmoil until policy makers take more radical action. The two most popular plans of action for investors are for the ECB to buy Spanish and Italian bonds in unlimited size or for eurozone countries to agree on a fiscal union involving the pooling of debt. "You have to throw everything at it. Spain is just too big for half measures. The next intervention has to be not just massive in size but it has to show a total commitment," said Mr Jenkins. He recommends that the ECB set targets either for the premium Spain and Italy pay to borrow over Germany or for their yields.

Property prices in the capital’s most sought-after postcodes have been driven up by investors moving funds out of assets held in euros to buy into what is seen as a “safe haven” alternative. Foreign money seeking a refuge from the wider economic turmoil accounted for 60pc of acquisitions of prime central London property between 2007 and 2011, according to a report by Fathom Consulting for Development Securities. If the shared currency broke up completely, London property would initially be boosted by the continued flight towards a safe haven, the report predicts. But, once the break-up had taken place, demand for these assets as an insurance against this event would start to ebb. “Although fears about a messy end to the euro debt crisis may account for much of the gain in prime central London (PCL) prices that has taken place over the past two years, we find that a break-up of the single currency area is also the single greatest threat to PCL,” said researchers.

The director of the Vatican Bank, Ettore Gotti Tedeschi, has been removed from his post for dereliction of duty, the Vatican says. The bank's board of directors unanimously passed a no-confidence vote in Mr Gotti Tedeschi, a statement said. It said he had failed "to carry out duties of primary importance", but it did not elaborate. In 2010 Italian police launched an investigation against Mr Gotti Tedeschi as part of a money-laundering inquiry. Members of the board believed his dismissal was needed to "maintain the vitality of the bank", the Vatican statement said. The board will now look for a new director to restore relations with the international financial community, "based on mutual respect for accepted international banking standards". Mr Gotti Tedeschi declined to comment on his dismissal. He told journalists: "I'd rather say nothing, otherwise I'd say ugly things." Transparency But in remarks to the Reuters news agency, he said: "I have paid for my transparency." The moves comes as Moneyval, the Council of Europe body tasked with counteracting money laundering, prepares to rule at the beginning of July on whether the Vatican meets international standards on financial transactions. Memos leaked earlier this year suggest there are serious differences among Vatican officials over how far to go in ensuring financial transparency, according to media reports. The Vatican Bank, known officially as the Institute for Religious Works (IOR), was created during World War II to administer accounts held by religious orders, cardinals, bishops and priests. It lost £250m in a scandal involving the collapse of one of Italy's biggest private banks - the Banco Ambrosiano - in 1982, with which it had close ties. The Vatican Bank has been headed by Mr Gotti Tedeschi, 62, a trained economist, since 2009. When Mr Gotti Tedeschi was placed under investigation in 2010, the Vatican said it was "perplexed and astonished", and expressed full confidence in him. It said the matter was the result of a misunderstanding, and that none of its employees was involved in any wrongdoing. As part of the inquiry, Italian tax police seized 23m euros ($29m, £18.4m) that the Vatican Bank had tried to transfer from a small Italian bank called Credito Artigiano. A month later, the Vatican set up a new financial authority to combat money laundering and make its financial operations more transparent, ahead of an EU deadline. The move was aimed at winning inclusion in the European Commission's "white list" of states which comply with international standards against tax fraud and money-laundering.

Three people have been killed in a 5.9-magnitude earthquake that struck northern Italy near Bologna, according to reports. The quake that struck at just after 4am local time was centred 21.75 miles north-northwest of Bologna at a relatively shallow depth of six miles, the US Geological Survey said. Italian news agency Ansa, citing emergency services, said two people were killed in Sant'Agostino di Ferrara when a ceramics factory collapsed. Another person was killed in Ponte Rodoni do Bondeno. In late January, A 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. The tremor was one of the strongest to shake the region, seismologists said. Initial television footage indicated that older buildings had suffered damage. Roofs collapsed, church towers showed cracks and the bricks of some stone walls tumbled into the street during the quake. As dawn broke over the region, residents milled about the streets inspecting the damage. Italy's Sky TG24 showed images of the collapsed ceramics factory in Sant'Agostino di Ferrara where the two workers were reportedly killed. The structure, which appeared to be a hangar of sorts, had twisted metal supports jutting out at odd angles amid the mangled collapsed roof. The quake “was a strong one, and it lasted quite a long time”, said Emilio Bianco, receptionist at Modena's Canalgrande hotel, housed in an ornate 18th century palazzo. The hotel suffered no damage and Modena itself was spared, but guests spilled into the streets as soon as the quake hit, he said. Many people were still awake in the town since it was a “white night”, with shops and restaurants open all night. Museums were supposed to have remained open as well but closed following the bombing of a school in southern Italy that killed one person. The quake epicentre was between the towns of Finale Emilia, San Felice sul Panaro and Sermide, but was felt as far away as Tuscany and northern Alto Adige. The initial quake was followed about an hour later by a 5.1-magnitude aftershock, USGS said. And it was preceded by a 4.1-magnitude tremor. In late January, a 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. In 2009, a devastating tremor killed more than 300 people in the central city of L'Aquila.

In a sweeping reassessment, ratings agency Moody’s announced in Madrid that it is downgrading 16 Spanish banks because it could not be sure of the ability of the country’s government to provide the necessary support.

Santander UK was among the banks highlighted after the ratings agency took aim at its parent Banco Santander, based in Spain. 

The Spanish banking crisis has hit the British high street, with the news that Santander has had its credit rating cut

Santander is one of the biggest players in UK retail banking, having taken over the former Abbey National, Alliance & Leicester, Bradford & Bingley and most recently the English branches of the Royal Bank of Scotland.

The new lower A2 credit rating is certain to be a cause of anxiety to Santander UK’s millions of British customers. 

Nevertheless, they can be confident that their deposits up to £85,000 are guaranteed by the British government should there be a loss of confidence.

The 63-year-old singer, who had hits including Hot Stuff, Love to Love You, Baby and I Feel Love, died in Florida on Thursday morning. She had largely kept her battle with lung cancer out of the public eye. But the website TMZ reported that the singer had told friends she believed her illness was the result of inhaling toxic dust from the collapsed Twin Towers. On Thursday night tributes were paid to the singer, considered by many to be the voice of the 1970s. A statement released on behalf of her family — husband Bruce Sudano, their daughters Brooklyn and Amanda, her daughter, Mimi from a previous marriage and four grandchildren — read: “Early this morning, surrounded by family, we lost Donna Summer Sudano, a woman of many gifts, the greatest being her faith. "While we grieve her passing, we are at peace celebrating her extraordinary life and her continued legacy.

The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses. When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank. A spokeswoman for the bank declined to comment, although Mr. Dimon has said the total paper trading losses will be volatile depending on day-to-day market fluctuations. The Federal Reserve is examining the scope of the growing losses and the original bet, along with whether JPMorgan’s chief investment office took risks that were inappropriate for a federally insured depository institution, according to several people with knowledge of the examination. They spoke on the condition of anonymity because the investigation is still under way. The overall health of the bank remains strong, even with the additional losses, and JPMorgan has been able to increase its stock dividend faster than its rivals because of stronger earnings and a more solid capital buffer. Still, the huge trading losses rocked Wall Street and reignited the debate over how tightly giant financial institutions should be regulated. Bank analysts say that while the bank’s stability is not threatened, if the losses continue to mount, the outlook for the bank’s dividend will grow uncertain. The bank’s leadership has discussed the impact of the losses on future earnings, although a dividend cut remains highly unlikely for now. In March, the company raised the quarterly dividend by 5 cents, to 30 cents, which will cost the bank about $190 million more this quarter. A spokeswoman for the bank said a dividend cut has not been discussed internally. At the bank’s annual meeting in Tampa, Fla., on Tuesday, Mr. Dimon did not definitively rule out cutting the dividend, although he said that he “hoped” it would not be cut. John Lackey, a shareholder from Richmond, Va., who attended the meeting precisely to ask about the dividend, was not reassured. “That wasn’t a very clear answer,” he said of Mr. Dimon’s response. “I expect that shareholders are going to suffer because of this.” Analysts expect the bank to earn $4 billion in the second quarter, factoring in the original estimated loss of $2 billion. Even if the additional trading losses were to double, the bank could still earn a profit of $2 billion. And many analysts and investors remain optimistic about the bank’s long-term prospects. Glenn Schorr, a widely followed analyst with Nomura, reiterated on Wednesday his buy rating on JPMorgan shares, which are down more than 10 percent since the trading loss became public last week. What’s more, the chief investment office earned more than $5 billion in the last three years, which leaves it ahead over all, even given the added red ink. But the underlying problem is that while these sharp swings are expected at a big hedge fund, they should not be occurring at a bank whose deposits are government-backed and which has access to ultralow cost capital from the Federal Reserve, experts said. “JPMorgan Chase has a big hedge fund inside a commercial bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner. “They should be taking in deposits and making loans, not taking large speculative bets.” Not long after Mr. Dimon’s announcement of a dividend increase in March, the notorious bet by JPMorgan’s chief investment office began to fall apart. Traders at the unit’s London desk and elsewhere are now frantically trying to defuse the huge bet that was built up over years, but started generating erratic returns in late March. After a brief pause, the losses began to mount again in late April, prompting Mr. Dimon’s announcement on May 10. Beginning on Friday, the same trends that had been causing the losses for six weeks accelerated, since traders on the opposite side of the bet knew the bank was under pressure to unwind the losing trade and could not double down in any way. Another issue is that the trader who executed the complex wager, Bruno Iksil, is no longer on the trading desk. Nicknamed the London Whale, Mr. Iksil had a firm grasp on the trade — knowledge that is hard to replace, even though his anticipated departure is seen as sign of the bank’s taking responsibility for the debacle. “They were caught short,” said one experienced credit trader who spoke on the condition of anonymity because the situation is still fluid. The market player, who does not stand to gain from JPMorgan’s losses and is not involved in the trade, added, “this is a very hard trade to get out of because it’s so big.” He estimated that the initial loss of just over $2 billion was caused by a move of a quarter percentage point, or 25 basis points, on a portfolio with a notional value of $150 billion to $200 billion — in other words, the total value of the contracts traded, not JPMorgan’s exposure. In the four trading days since Mr. Dimon’s disclosure, the market has moved at least 15 to 20 basis points more against JPMorgan, he said. The overall losses are not directly proportional to the move in basis points because of the complexity of the trade. Many of the positions are highly illiquid, making them difficult to value for regulators and the bank itself. In its simplest form, traders said, the complex position assembled by the bank included a bullish bet on an index of investment-grade corporate debt, later paired with a bearish bet on high-yield securities, achieved by selling insurance contracts known as credit-default swaps. A big move in the interest rate spread between the investment grade securities and risk-free government bonds in recent months hurt the first part of the bet, and was not offset by equally large moves in the price of the insurance on the high yield bonds. As the credit yield curve steepened, the losses piled up on the corporate grade index, overwhelming gains elsewhere on the trades. Making matters worse, there was a mismatch between the expiration of different instruments within the trade, increasing losses. The additional losses represent a worsening of what is already the most embarrassing misstep for JPMorgan since Mr. Dimon became chief executive in 2005. No one has blamed Mr. Dimon for the trade, which was under the oversight of the head of the chief investment office, Ina Drew, but he has repeatedly apologized, calling it “stupid” and “sloppy.” Ms. Drew resigned Monday and more departures are anticipated.

At night, the streets leading to Omonoia Square are empty. That wasn't always the case. The area was the premier multicultural neighborhood of Athens and one of the first quarters to be gentrified. Jazz bars and Indian restaurants lined the streets, separated by the occasional rooms-by-the-hour hotel. It was a quarter full of immigrants, drug addicts and African prostitutes, but also of journalists, ambitious young artists and teenagers from private schools. Today, the immigrants stay home once night falls. They are afraid of groups belonging to the "angry citizens," a kind of militia that beats up foreigners and claims to help the elderly withdraw money from cash machines without being robbed. Such groups are the product of an initiative started by the neo-Nazi Chrysi Avgi -- Golden Dawn -- the party which has perpetrated pogroms in Agios Panteleimon, another Athens neighborhood with a large immigrant population. There are now three outwardly xenophobic parties in Greece. According to recent surveys, together they could garner up to 20 percent of the vote in elections on Sunday: the anti-Semitic party LAOS stands to win 4 percent; the nationalist party Independent Greeks -- a splinter group of the conservative Nea Dimokratia party -- is forecast to win 11 percent; and the right extremists of Golden Dawn could end up with between 5 and 7 percent. My name is Xenia, the hospitable. Greece itself should really be called Xenia: Tourism, emigration and immigration are important elements of our history. But hospitality is no longer a priority in our country, a fact which the ugly presence of Golden Dawn makes clear. A Personal Attack Shaved heads, military uniforms, Nazi chants, Hitler greetings: How should a Greek journalist deal with such people? Should one just ignore them and leave them unmentioned? Should one denounce them and demand that they be banned? One shouldn't forget that they are violent and have perpetrated several attacks against foreigners and leftists. I thought long and hard about how to write about Golden Dawn so that my article was in no way beneficial to the party. On April 12, the daily Kathimerini ran my story under the headline "Banality of Evil." In the piece, I carefully explained why it was impossible to carry on a dialogue with such people and why I thought the neo-Nazi party should disappear from media coverage and be banned. Five days later, an anonymous reply to my article appeared on the Golden Dawn website. It was a 2,500-word-long personal attack in which the fascists recounted my entire career, mocked my alleged foreign roots (I was born in Hamburg) and even, for no apparent reason, mentioned my 13-year-old daughter. The unnamed authors indirectly threatened me as well: "To put it in the mother tongue of foreign Xenia: 'Kommt Zeit, kommt Rat, kommt Attentat!'" In other words, watch your back. Most Greeks believe that Golden Dawn has connections to both the police and to the country's secret service. Nevertheless, I went to the authorities to ask what I should do. I was told that I should be careful. They told me that party thugs could harass me, beat me or terrorize me over the phone. It would be better, they said, if I stopped writing about them. If I wished to react to the threats, they suggested I file a complaint against Golden Dawn's service provider. That, however, would be difficult given that the domain is based somewhere in the United States. Like Weimar Germany A friend told me that I should avoid wearing headphones on the street so that I can hear what is going on around me. My daughter now has nightmares about being confronted by members of Golden Dawn. Three of her classmates belong to the party. The three boys have posted pictures of party events on their Facebook pages. For their profile image, they have chosen the ancient Greek Meandros symbol, which, in the red-on-black manifestation used by Golden Dawn, resembles a swastika. The group's slogans include "Foreigners Out!" and "The Garbage Should Leave the Country!" The fact that immigration has become such an issue in the worst year of the ongoing economic crisis in the country can be blamed on the two parties in government. The Socialist PASOK and the conservative Nea Dimokratia (New Democracy, or ND) are running xenophobic campaigns. ND has said it intends to repeal a law which grants Greek citizenship to children born in Greece to immigrant parents. And cabinet member Michalis Chrysochoidis, of PASOK, has announced "clean up operations" whereby illegal immigrants are to be rounded up in encampments and then deported. When he recently took a stroll through the center of Athens to collect accolades for his commitment to the cause, some called out to him: "Golden Dawn has cleaned up Athens!" Yet, Chrysochoidis is the best loved PASOK politician in his Athens district, in part because of his xenophobic sentiments. His party comrade, Health Minister Andreas Loverdos, is just as popular. Loverdos has warned Greek men not to sleep with foreign prostitutes for fear of contracting HIV and thus endangering the Greek family. High unemployment of roughly 22 percent, a lack of hope, a tendency toward violence and the search for scapegoats: Analyses in the Greek press compare today's Greece with Germany at the end of the Weimar Republic. "We didn't know," said many Germans when confronted with the truth of the Holocaust after Nazi rule came to an end. After elections on May 6, no Greeks should be able to make the same claim.

Low fare carrier bmibaby is set to close later this year, threatening the loss of hundreds of jobs and the ending of its flights. The carrier transferred to International Airlines Group, the owners of British Airways, last month, but consultations have now started with unions about its closure in September. The GMB union said it was "devastating" news, especially for the East Midlands, where hundreds of jobs are now threatened with the axe. With bmi Regional, bmibaby transferred to International Airlines Group ownership on completion of the purchase from Lufthansa. IAG has consistently said that bmibaby and bmi Regional are not part of its long-term plans. A statement said: "Progress has been made with a potential buyer for bmi Regional, but so far this has not been possible for bmibaby, despite attempts over many months by both Lufthansa and IAG. Bmibaby has therefore started consultation to look at future options including, subject to that consultation, a proposal to close in September this year." Peter Simpson, bmi interim managing director, said: "We recognise that these are unsettling times for bmibaby employees, who have worked tirelessly during a long period of uncertainty. Bmibaby has delivered high levels of operational performance and customer service, but has continued to struggle financially, losing more than £100 million in the last four years. In the consultation process, we will need to be realistic about our options. "To help stem losses as quickly as possible and as a preliminary measure, we will be making reductions to bmibaby's flying programme from June. We sincerely apologise to all customers affected and will be providing full refunds and doing all we can with other airlines to mitigate the impact of these changes." Jim McAuslan, general secretary of the pilots' union Balpa, said: "This is bad news for jobs. Bmibaby pilots are disappointed and frustrated that, even though there appears to be potential buyers, we are prevented from speaking with them to explore how we can contribute to developing a successful business plan. "The frustration has now turned to anger following the news that Flybe (which is part owned by BA) has moved onto many of these bmibaby routes without any opportunity for staff to look at options and alternatives. Balpa's priority is to protect jobs; and we will use whatever means we can to do so." The changes mean that all bmibaby flights to and from Belfast will cease from June 11, although this will not affect bmi mainline's services to London Heathrow. Bmibaby services from East Midlands to Amsterdam, Paris, Geneva, Nice, Edinburgh, Glasgow and Newquay, and from Birmingham to Knock and Amsterdam, will end on the same date.

Greece should not have joined the euro, a former head of the German central bank, who was central to eurozone policymaking at the time, has said. But Ernst Welteke, who was Bundesbank president from 1999-2004, told the BBC that none of the eurozone's problems would be solved if Greece left. He added there should be greater transfer of wealth from richer parts of the eurozone to poorer parts. He said he was confident measures were in place to ensure the euro's survival. "The euro is not in as big a danger as is often recorded," Mr Welteke told Business Daily on the BBC's World Service. "The euro has been stable [for] 10 years, inside and outside the European Monetary Union (EMU)."

Meet Amun 3554. Doesn’t look like much, right? Little more than a mile wide, it’s one of the smallest M-class (metal-bearing) asteroids yet discovered. Unless it ever decides to smash into us — a theoretical possibility, but extremely unlikely over the next few centuries — it will continue orbiting the sun, unknown and unmolested.

That is, unless Planetary Resources has its way. Planetary Resources is the asteroid-mining company launched Tuesday in Seattle, with backing from Microsoft and Google billionaires, along with the equally prominent James Cameron and Ross Perot Jr.

Its object is to completely dismember poor little rocks like Amun.

That’s because Amun is a goldmine — well, not gold so much. But it does contain a cool $8 trillion worth of platinum, an essential precious metal used in everything from jewelry to fuel cells to computers (and one that’s currently trading at the same rate as gold — $1500 an ounce.) On Earth, only a few hundred tonnes of the stuff are produced every year.

The $8 trillion figure is an estimate based on observations by John S. Lewis, professor of planetary science, author of Mining the Sky: Untold Riches from the Asteroids, Comets, and Planets, and now a consultant to Planetary Resources. He also found 3554 Amun to contain another $8 trillion in iron and nickel, and a mere $6 trillion worth of cobalt.

So, the total payout from one unassuming asteroid? $20,000,000,000,000.

That’s what got Planetary Resources co-founder Peter Diamandis so excited. “There are $20 trillion checks up there waiting to be cashed,” he enthused at a space development conference in 2006.

Trillions and Trillions

And 3554 Amun is hardly alone; it’s just one of the few asteroids that has been submitted to rigorous chemical analysis. Another mile-wide Near-Earth Asteroid, known as 1986 DA, is said to contain 100,000 tonnes of platinum and 10,000 tonnes of gold. That’s worth another couple of trillion. Not too shabby.

How many of these mile-wide metal paydays are up there? We have only a vague idea. Nearly 9,000 Near-Earth Asteroids have been discovered so far. Planetary Resources’ best guess is that represents just 1% of the total.

That’s why the company is focusing its efforts on launching space telescopes first; they’ll do the prospecting, then report back on the lowest-hanging fruit. It’s not inconceivable that Amun could be worth pennies compared to its compadres. Then the asteroid retrieval and mining process — all done by robotic spacecraft — can begin in earnest.

Beating Apple with Ease?

To become the wealthiest company in the world, Planetary Resources need only capture one rock. Less than that, in fact.

Apple, currently the world’s most valuable company, has a market cap of $500 billion. To match that in resources, let alone market cap, Planetary Resources need only mine one-fortieth of 3554 Amun.

Of course, there’s a catch. You couldn’t offload all those metals on the world market at once, for fear of crashing their prices. But the company would still own that much in equity, which would allow them to borrow against it. They would be that wealthy, to all intents and purposes. That’s just how capitalism works.

Still, for all this wealth, platinum and gold may not be the most important thing the asteroid miners are hunting. The water on some ice-bound asteroids could count for more in the long run. Not only does it make the existence of life in space that much easier, but it can also be broken down into the perfect rocket fuels: hydrogen and oxygen.

The more Planetary Resources starts a gold rush, the more important water in space becomes. No wonder the company is already talking about building a chain of orbital and space-bound refueling stations. Ice from asteroids and comets could be the next oil industry.

Check out these interviews with the Planetary Resources team, and let us know in the comments: have they got what it takes to make it?

British police are still trying to trace £18m allegedly stolen by the Liberal Democrats' fugitive donor Michael Brown, who is expected to be extradited to Britain within the next 10 days. Brown, 46, was in a holding cell near Madrid airport on Sunday, having been deported from the Dominican Republic, where he had been on the run from UK authorities for three years. Brown, who gave £2.4m to the Liberal Democrats before the 2005 general election, is not expected to challenge a formal move to extradite him to London which has already been set in motion. He was convicted of theft and false accounting in his absence in Britain in 2008 and sentenced to seven years in jail. Detectives are still trying to trace around £18m of Brown's stolen money, which had been moved between his accounts in the US, Britain and Switzerland, the Guardian understands. Brown was estimated to have stolen more than £60m in a number of frauds. Most of his assets have been accounted for in property deals, a Bentley, a yacht and the private jet once used to fly senior Lib Dems across the UK. However, more than £18m has not yet been accounted for. "The file at Interpol on Brown and his associates remains open," a source told the Guardian. Brown's return will be another embarrassing development in the long-running saga over the Lib Dems' biggest single donation. The party has refused to compensate any of Brown's victims, claiming it received the money in good faith and spent it on the 2005 election campaign. Lib Dem leader Nick Clegg welcomed Brown's return to Britain but said on Sunday that the party would not be returning his donation because the Electoral Commission had concluded the money had been received in good faith. The deputy prime minister, who pointed out that the donation was made before he was elected to Westminster, told BBC1's Sunday Politics: "I'm very pleased he's coming back to serve his sentence. This is a convicted fraudster. "I should stress that this is something which happened as far as the Liberal Democrats are concerned before I was even an MP, yet alone leader of the Liberal Democrats. What I've been told is that the Electoral Commission in 2009 looked at this exhaustively – as far as the receipt of that money by the Liberal Democrats from one of his companies. They categorically concluded that the money was received in good faith and all the controls, all the checks that should have been made were reasonably made by the Liberal Democrats at the time. If we'd been shown wanting on those accounts then of course we should pay the money back." But Brown's return will increase focus on the Electoral Commission inquiry into Brown's donations. The inquiry failed to call the Lib Dems' former treasurer, Reg Clark, who resigned over Brown in 2005 and warned advisers to the former Lib Dem leader Charles Kennedy that Brown should be treated with extreme caution. One of Brown's victims said the Lib Dems should return the money. Tony Brown, managing partner at law firm Bivonas which represents US attorney Robert Mann who lost more than $5m (£3m), said Brown may be asked to give evidence as part of his client's claim against the Lib Dems. "The Lib Dems have refused to repay this money to our client even though they know that this is the proceeds of crime. The Electoral Commission has failed to investigate this properly in our view. So now that Brown is returning to the jurisdiction, we can investigate again and establish the basis on which the Lib Dems received this money." Brown is expected to appear before a Spanish court to confirm his name and will then appear before an extradition hearing within 10 days. City of London police, who first uncovered Brown's fraud, confirmed his deportation. Detective Superintendent Bob Wishart said: "We hope that him facing justice will bring some closure to the victims who suffered as a result of his frauds." A close friend of Brown's told the Guardian on Sunday that he had arrived in Spain on Saturday after "volunteering" for deportation from the Dominican Republic, where he has been hiding for three years under the name of Darren Nally. "He asked to return to Britain. He is going home to face the music," the friend said. Brown appeared to come from nowhere when the party was paid £2.4m in the runup to the 2005 election from his company 5th Avenue Partners. A fast-talking and brash Glaswegian, he had walked into the party's then headquarters in Cowley Street and offered it money. He was not registered to vote, had no interest in politics and had never been a party member, but said he was giving the money to create an even playing field. Brown wined and dined with Charles Kennedy and other party grandees, and used his private jet to fly Kennedy across the country during the election campaign. Former Lib Dem insiders say he dazzled them with stories of Gordonstoun public school, St Andrews University and his connections with royalty and the US government. The truth was that he had attended his local school and completed a City and Guilds in catering at Glasgow College of Food Technology. He had no US government links – although he was wanted in Florida for cheque fraud. He was arrested in late 2005 after four former clients said he had duped them out of more than £40m in a high-yield fraud. His victims included Martin Edwards, the former Manchester United chairman, who had invested £8m with 5th Avenue Partners. The court would later be told that 5th Avenue Partners was wholly fraudulent and Brown had given money to the Lib Dems to give himself an air of respectability while duping his victims. The party had been used as part of his cover story, a judge said. In June 2008, while awaiting trial, Brown fled and a warrant was issued for his arrest. In the weeks before he disappeared, from his Hampstead bail address in north London, he changed his name on the electoral roll to Campbell-Brown and allowed his hair to turn grey. He travelled to the Dominican Republic where he enjoyed a millionaire's lifestyle while on the run. He lived in gated communities yards from some of the most pristine beaches in the Caribbean, drove a series of 4x4 vehicles and was a regular at exclusive golf courses. In Punta Cana, an exclusive resort on the eastern tip of the island, he could often be seen walking his dog – named Charles, after the former Lib Dem leader. He was arrested in Punta Cana in January on unrelated fraud allegations.

 A SUSPECTED drug trafficker was found by police hiding in a farmhouse loft in Scotland with a bag stuffed with £70,000, a Spanish court was told last week. Ian Donaldson, 32, is accused of helping fund an international drugs ring smuggling cocaine and speed from Spain to Scotland The former amateur racing driver – who drove a Lamborghini with the distinctive Lambo 88 plate – was tracked down to the farm by officers from the Scottish Crime and Drugs Enforcement Agency. Donaldson – who enjoyed a lavish lifestyle in Marbella and Tenerife– is one of six Brits facing court in Madrid accused of making millions from the drugs trade. Detective Inspector James Wallace of the SCDEA told the court: “I arrested him on February 27, 2009. He was hiding in a loft area in a farm building. We also found £70,000 hidden in a bag.” Eight SCDEA detectives gave evidence to the National Court in the Spanish capital last week via a video link from Edinburgh. The court heard Scottish police mounted a surveillance operation after Donaldson, from Renton, Dunbartonshire, was released on bail. Detectives watched him in a series of meetings in Glasgow and Hamilton in April 2009, as he tried to hide the origins of his fortune, prosecutors allege. Donaldson met with fellow accused Mary Hendry and Joseph Campbell and was observed discussing large sums of money and swapping paperwork for a nightclub in Gran Canaria. It was alleged they were secretly plotting to make it look like Donaldson had made some of his wealth from the club. Meetings took place at supermarkets in Glasgow and Hamilton and the Mitchell Library in Glasgow. DI Wallace told the court: “We saw he (Donaldson) was creating a defence for the Spanish charges. “I believe they (Hendry and Campbell) were both subservient to Donaldson, who instructed them on what to do.” The detective said Donaldson and his company IRD Services were also investigated for money- laundering in Scotland. He added: “There is evidence he purchased seven vehicles in Scotland, worth up to £900,000, between 2006 and 2008.” Mary Hendry told the court she only met Donaldson twice for legitimate business meetings. She said: “Joseph Campbell introduced me to Ian Donaldson because I was trying to sell my restaurant. “I met him the next day and he said he was not interested. I never saw him again.” It is alleged Donaldson was the money man for a gang of drug smugglers based in Tenerife and Marbella, led by Glaswegian Ronald O’Dea, 45. The gang are alleged to have spent millions on luxury villas, fast cars and yachts. In October 2008, police seized a a haul of amphetamines worth £660,000 heading to Scotland after stopping a lorry in Oxfordshire. Donaldson, Hendry and O’Dea share the dock in Madrid with fellow Scot James MacDonald, 62, and Londoners Steve Brown, 45, and Deborah Learmouth, 49. The gang face charges ranging from drug-trafficking to money-laundering. They deny all charges. Two other defendants – Brian Rawlings and Joseph Campbell – failed to show up at the trial. The judges will give their verdict at a later date.

Wayne Rooney and England rugby union World Cup winner Matt Dawson are among the new wave of high-profile figures suing Rupert Murdoch's News International over alleged News of the World phone hacking. The England and Manchester United football star, his agent Paul Stretford, Dawson, now a BBC rugby commentator and Question of Sport team captain, actor James Nesbitt and Sir John Major's former daughter-in-law, Emma Noble, are among 46 new phone-hacking cases filed at the high court in London. Times Newspapers, the News International subsidiary that publishes the Times and Sunday Times, is also facing its first civil damages claim, from Northern Ireland human rights campaigner Jane Winter, who is also suing NoW publisher, News Group Newspapers. Winter's claim is related to an article in the Sunday Times in August 2006, her solicitor confirmed. A reference to the article was made in a witness statement she submitted to the Leveson inquiry in February. Winter alleged in evidence to the inquiry that her emails to the former British army intelligence officer Ian Hurst were hacked by NoW. A News International spokeswoman said Winter's case would be "defended vigorously". Others who have filed claims in the past few days seeking damages for alleged invasion of privacy from News Group, the News International subsidiary that published the now-closed Sunday tabloid, include former Conservative cabinet minister and chief whip Lord Blencathra and former Fire Brigades Union general secretary Andy Gilchrist. The list of new claimants also features Michelle Bayford, the former girlfriend of the victim of the 2006 so-called "elephant man" drug trial case. Her then boyfriend, Ryan Wilson, spent three weeks in a coma and lost all his toes and parts of his fingers to gangrene. Another claimant, Anne Colvin, was a witness in the Tommy Sheridan perjury trial. At a case management conference at the high court in London , Hugh Tomlinson QC, representing victims of alleged phone hacking, told Mr Justice Vos that he had 44 new cases filed while two others had submitted their claims via another legal representative. The court also heard that law firm Harbottle & Lewis has a number of "sensitive clients" who wish to remain anonymous. It is expected that up to 200 new claims will be filed over the coming months, Tomlinson told the court in a previous hearing. Claims filed in the past week bring the number of new cases against News International to 46. This figure includes earlier claims filed by public figures including Cherie Booth, Alex Best, the former wife of the late footballer George Best, and Colin Stagg, the man wrongly accused of murdering Rachel Nickell. Others who have filed claims include comedian Bobby Davro, actor Tina Hobley's former husband Steve Wallington, TV personalities Jamie Theakston and Jeff Brazier, the former boxer Chris Eubank, and footballers Peter Crouch, Kieron Dyer and Jermaine Jenas. The cases are part of a second wave of civil actions which Vos is managing following the settlement of more than 50 cases earlier this year including claims by Jude Law, Charlotte Church and Lord Prescott. Tomlinson did not disclose the names of the claimants on Friday, but court documents show that new cases submitted to the high court in the past week bring the number of new actions faced by News International to nearly 50, a number that is expected to rise considerably. Tomlinson told the court that News International had received 100 requests for discovery of preliminary disclosure. He said there were 4,791 potential phone-hacking victims, of which 1,892 had been contacted by the police. The police believed 1,174 were "likely victims". Court 30 in the Rolls Building of the high court was packed, with more than 50 law firms acting for victims. Vos said there were 58 firms of solicitors representing only 100 victims, which he told Tomlinson was "unbelievable". The judge added that he wanted to ensure costs are reduced for claimants. "Many of them have seen the light and have instructed lawyers who have specialist knowledge of this case," said Vos. He suggested possible tariffs of costs for each element of the legal action. This would mean fresh claimants could access to information relating to the News of the World's phone-hacking activity already produced on discovery in earlier cases, without incurring the costs associated with a full action. "I will have no sympathy for outrageous cost estimates," he said. "A claimant is entitled to have a solicitor, but what he is not entitled to have is a solicitor who knows nothing about the case and charges the defendant for that."

 The European Parliament has passed a resolution condemning a nationalisation that has strained relations between Spain and Argentina. Argentina has nationalised YPF, wiping out the Spanish firm Repsol's controlling-stake in the oil firm. The resolution asks the European Commission to consider a "partial suspension" of tariffs that benefit Argentine exports into the EU. Shares in Repsol has another decline, falling 2.3% on Friday. Over the week, Repsol stock has lost almost a fifth of its value. MEPs in the European Parliament said the institution "deplores" the decision taken by Argentina and describes it as an "attack on the exercise of free enterprise". Decisions such as that taken by the Argentine authorities "can put a strain on the climate of understanding and friendship needed to reach" a trade agreement between a South American bloc and the EU, it said. The resolution, which is non-binding, received 458 votes in favour, 71 against and 16 abstentions. 'Not valid' It also emerged that Repsol may be obliged to buy a minority shareholder's YPF stake if it ever lost majority control, which Repsol denied. Twenty-five percent of YPF is owned by Argentina's Eskenazi family through its firm, Peterson. Continue reading the main story Nationalising YPF Spain's Repsol has hitherto owned 57.4% of shares with 25.5% belonging to Argentina's Petersen, 0.02% to the Argentine government and 17% traded on stock exchanges The Argentine government proposes to seize 51% of the shares, all of which will be taken from Repsol's stake, leaving the Spanish firm with 6.4% The expropriated shares will in turn be divided between the Argentine government and provincial governors Following the expropriation, Petersen will retain its 25.5% stake and 17% of the shares will continue to be traded Argentina's risky energy seizure According to regulator filings of a 2008 agreement, Repsol must "maintain directly or indirectly through controlled companies an ownership interest greater than or equal to 50.1%". If it does not, Repsol is obliged to buy back the loans used to secure the Eskenazis' shares. But Repsol told the BBC that the expropriation of its stake in YPF had invalidated the agreement. "The agreement is not valid under Spanish law in these conditions," said Kristian Rix, a Repsol spokesman. "The law is unequivocal, there is no debate." Trade war brewing? Spain has threatened retaliation against Argentina over the forced nationalisation of oil firm YPF, raising the prospects of a trade war between the nations. Spanish Trade Secretary Jaime Garcia Legaz said the European Union would intervene over Argentina's seizure of YPF. Argentina is taking over 51% of YPF, wiping out Repsol's 57.4% majority stake. The move has wide support in Argentina but has provoked outrage in Spain. Spain's Foreign Minister Jose Manuel Garcia-Margallo said US Secretary of State Hillary Clinton had also offered support. Repsol has said it wants around $10bn (£6.2bn) for its stake in YPF, but Argentina has said it does not accept that valuation. YPF, Argentina's biggest oil company, was privatised in 1993. Last year it announced huge new finds of shale oil and gas.

 Rupert Murdoch's grip on his media empire was dramatically challenged yesterday after his company was labelled a "toxic shadow state" which launched a dirty tricks campaign against MPs and now faces a salvo of phone-hacking claims in the United States. On a tumultuous day for the media mogul, the lawyer who brought the first damages claims against the News of the World in Britain said he had uncovered new allegations of the use of "dark arts" by News Corp in America and was ready to file at least three phone-hacking lawsuits in the company's backyard. The sense of a legal net tightening around Mr Murdoch and News Corp was heightened by the announcement that he and his son James will testify separately next week before the Leveson Inquiry into press standards during three days of what is likely to be uncomfortable scrutiny of alleged widespread criminality in their British tabloid newspapers. In a separate development, the royal editor of The Sun became the latest journalist on the paper to be arrested on suspicion of making corrupt payments to public officials. The arrest coincided with the publication of an incendiary book on the scandal which levelled new accusations that the NOTW set out on an extraordinary campaign of intimidation of MPs to try to blunt their investigations into its alleged law breaking. Last night senior MPs called for News International (NI) to be investigated by the Commons for potential contempt of Parliament over the claims that members of the House of Commons Culture, Media and Sport Select Committee were targeted by attempts to dig dirt on their private lives. Dial M for Murdoch, written by the Labour MP Tom Watson and The Independent's Martin Hickman, also alleges that: l Rebekah Brooks, the former chief executive of NI, was bugged in her own office shortly before she resigned last summer over the phone hacking of Milly Dowler, the murdered schoolgirl. l On his release from prison, Glenn Mulcaire, the convicted NOTW hacker, allegedly was contracted to give security advice to a private security company, Quest, whose chairman is Lord Stevens, a former Commissioner of the Metropolitan Police. l NI intermediaries approached Mr Watson with a "deal" to "give him" former NOTW editor and Downing Street press chief Andy Coulson but that Ms Brooks was "sacred". NI, which runs Mr Murdoch's British newspapers, said it had no comment to make on the book. At a packed Westminster press conference, Mr Watson, who is a member of the Culture, Media and Sport committee, said the claim that the NOTW set out in 2009 to undermine the MPs investigating it came from Neville Thurlbeck, the NOTW's former chief reporter. In the book, Mr Thurlbeck, who has been arrested in connection with phone hacking, says: "An edict came down... and it was find out every single thing you can about every single member: who was gay, who had affairs, anything we can use." Mr Thurlbeck told The Independent last night that the order to target the MPs, which involved assigning two politicians each to a group of six reporters, had not originated from inside the paper but instead came from "elsewhere inside News International". He insisted that NOTW staff had been reluctant and there was a "degree of procrastination" before the plan was "suddenly and unexpectedly halted about 10 days later". Mr Watson, who has received an apology from NI after he was placed under surveillance, said he believed the campaign was nonetheless successful and had contributed to a decision by the media committee not to demand that Ms Brooks give evidence to it in 2010. He added: "Parliament was, in effect, intimidated. News International thought they could do this, that they could get away with it, that no one could touch them; and they actually did it, and it worked." Labelling News Corp a "toxic institution", he added: "We conclude that the web of influence which News Corporation spun in Britain, which effectively bent politicians, police and many others in public life to its will, amounted to a shadow state." Former Plaid Cymru MP Adam Price, who is gay and was a member of the DCMS committee, is described in the book as having been warned by a Conservative colleague that their private lives would be raked over if they called Ms Brooks to give evidence – "effectively they would delve into our personal lives in order to punish us". Hours after publication of the book, Mark Lewis, the lawyer who has doggedly pursued hacking claims, told a press conference in New York that he was investigating allegations of impropriety at Mr Murdoch's US media companies, including Fox News. He said a high-profile trip to America to prepare claims on behalf of victims whose phones were allegedly hacked on US soil had generated a slew of new allegations about wider use of "dark arts" to obtain private information. He said: "The investigation in the UK began with one claim by one client and look where it is now. While it starts in America with three cases, it seems likely it might end up with more." The allegations will provide an awkward backdrop for the Murdochs to their appearances before the Leveson Inquiry. Rupert Murdoch, who is the first witness before the inquiry to be scheduled for two days of testimony, will be questioned about practices in his British newspapers and whether he had knowledge of those activities. Chris Bryant last night confirmed that he would be asking Parliament to investigate the claims that NI carried out targeted intimidation. Royal editor of The Sun arrested The royal editor of The Sun was arrested yesterday after News Corp handed over information to detectives investigating alleged illegal payments to public officials. Duncan Larcombe, 36, who had previously worked as the newspaper's defence editor, was arrested during an early morning raid at his home in Kent on suspicion of conspiracy to corrupt and conspiracy to cause misconduct in a public office. Officers from Scotland Yard's Operation Elveden also arrested a 42-year-old former member of the armed forces and a woman, 38, at their home in Lancashire. All three were later released on bail. Mr Larcombe was the paper's royal correspondent from 2005 to 2009 before being appointed defence editor for 14 months. He returned to the royal beat last year and led the newspaper's coverage of the wedding of Kate Middleton and Prince William. He was the second Sun defence editor to be arrested during the police inquiry.

British police arrested three people, including the royal editor of Rupert Murdoch's Sun tabloid, a source familiar with the situation said, in an escalation of a long-running phone hacking scandal which reaches into Britain's political establishment.

Thursday's arrests and the fact they stemmed from information given to the police by Murdoch's company itself is likely to reignite tensions within the media group, just days before parliament gives its verdict on how the culture of illegality came about.

Next week Rupert Murdoch and son James will also appear before a judicial inquiry to answer questions over the conduct of the press, which will focus on the close ties between Murdoch, his executives and the political establishment.

James Murdoch will appear in court room 73 at the Royal Courts of Justice on Tuesday while lawyers at the inquiry have cleared a day and a half to grill the 81-year-old Rupert on Wednesday and Thursday.

"This was always going to be an important six weeks in this affair, with the Murdochs and politicians going before the Leveson judicial inquiry, but it will be exacerbated by the arrests and the imminent committee report," said Steven Barnett, communications professor at the University of Westminster.

Police made the arrests one day after prosecutors confirmed they had started to examine the police case against four journalists and seven others to establish whether they should be charged with a range of offences including perverting the course of justice.

Press reports have speculated that one of those named in the files is Rebekah Brooks, a former editor of the News of the World and Sun tabloids and a close friend of both Murdochs and Prime Minister David Cameron.

Brooks has been arrested twice, once for corruption and intercepting communications, and more recently for perverting the course of justice, along with her husband, Charlie Brooks.

The three arrested on Thursday were detained at dawn and questioned over inappropriate payments made to police and public officials.

The source familiar with the situation said one of those was Duncan Larcombe, royal editor and a former defence correspondent at the Sun, Britain's biggest selling daily newspaper.

A spokeswoman for Murdoch's British newspaper arm News International confirmed that one of those arrested was a Sun journalist but declined to give further details.

Larcombe was previously a defence correspondent at the Sun and another person arrested on Thursday was described by police as a 42-year-old former member of the armed forces. A woman aged 38 has also been arrested on suspicion of aiding and abetting misconduct in a public office.

ROUTINE HACKING

Murdoch's British newspaper arm has been rocked in the last year by allegations that journalists at the Sun's sister title, the News of the World, had routinely hacked into phones to generate salacious front-page stories.

The police investigation, which forced the closure of the 168-year-old News of the World, has since moved on to the Sun newspaper and whether its journalists paid police and public officials for stories.

While damaging the reputation of Murdoch, the intense spotlight has also revealed the extremely close links he and his executives have with politicians and senior police officers, embarrassing many with tales of horse rides and Christmas drinks between the upper echelons of Murdoch executives and politicians.

Police said the latest arrests were prompted by information provided by the Management and Standards Committee, a small team set up by Murdoch's News Corp to co-operate closely with the police in a move that has infuriated newspaper staff.

The 81-year-old Murdoch was forced to travel to London in February to reassure journalists of his commitment to the Sun after a string of earlier arrests caused a showdown at the paper by staff who felt they had been abandoned by their management.

Since then, the Sun has launched a Sunday version and both the Sun and Murdoch's Times newspaper have noticeably hardened their position towards the government, which turned on Murdoch at the height of the hacking scandal last year.

That antagonism is likely to be exacerbated in the coming weeks when the parliamentary select committee, which summoned James and Rupert Murdoch at the height of the scandal last year, publishes its findings.

The committee investigated allegations of phone hacking after they first surfaced in 2006 and it has since looked at whether it was misled in its initial inquiry by a host of News International executives who pleaded innocence.

Paul Farrelly, a leading member of the committee, told Reuters they hoped to publish the long-awaited report by May 1.

Tom Watson, a member of the committee who has campaigned against Murdoch, told reporters he thought News Corp had become a toxic institution which operated like a shadow state

77-year-old Greek man has committed suicide in central Athens by the nation’s parliament, shooting himself with a handgun in apparent financial desperation. Eyewitness reports say that the man shouted “So I won’t leave debts for my children” before turning the gun on himself. Others claimed he said nothing. Greek state media reports the man left a suicide note saying “The Tsolakoglou government has annihilated all traces for my survival. And since I cannot find justice, I cannot find another means to react besides putting a decent end [to my life], before I start searching the garbage for food." Georgios Tsolakoglou headed the Greek collaborationist government during the German occupation of Greece in the Second World War. The note has been widely regarded as drawing a parallel between Lucas Papademos’ current collaborationist government and Tsolakoglou’s regime because of the economic crisis in the country. The incident occurred around 9 am (local time) in Syntagma Square, just outside a metro station, when the area was filled with people and commuters. The man took his life behind a big tree, which concealed him from most eyes. Two people sitting on a bench some 10 meters away have been questioned by the police. An investigation into a motive has been opened. The pensioner, whose name is not yet released, appears to have been a pharmacist who owned a drugstore in Athens, which he later had to sell, Lourantos Costas, the head of the Attica Pharmacist’s Association told the Greek daily The City Press. The shocked Greek community is issuing calls for a "Syntagma afternoon" later on Wednesday. Motorcyclists are planning a protest ride around the capital starting at 17:30 local time (14:30 GMT). ‘Who’s next?’ People are bringing flowers to the tree under which the desperate old man took his own life. They also leave messages on the tree: "Austerity kills," "Not a suicide; a murder” or “Who’s gonna be next?” The number of suicides has dramatically increased in the country since the beginning of the economic crisis, shows data released by the Greek Health Ministry. Prior to the economic downturn Greece had the lowest suicide rate in Europe at 2.8 for every 100,000 inhabitants. Now, this figure has almost doubled, with police reporting over 600 suicide cases in 2010 and 2011 respectively. Attempted suicides are also on the up. Just on Tuesday, a 38-year-old Albanian man killed himself on the island of Crete. He had been unemployed for some time. The financial hardship made him jump off his second-floor balcony, reported local news. The private sector is proving to be no safe haven either, as in the last few months several businessmen have fatally shot themselves. To secure loan payments to foreign investors, Greece has been forced to drastically cut state spending by slashing public salaries and pensions by almost 40 per cent, while the unemployment rate has hit 21 per cent. But so far the Greek government has failed to pull the country out of its three-year economic downturn and continues to rack up austerity measures to qualify for EU bailout packages.