Thursday, June 16, 2011

Opposition Tells Greek Prime Minister to Step Down; Papandreou Offers to Resign With Strings Attached

The crisis in Greece took another step forward today as opposition leader have asked Greek Prime Minister George Papandreou to step down.

In response, Papandreou offered to resign. Unfortunately, Papandreou placed strings on the offer.

Please consider Greek Prime Minister Papandreou said to be told by opposition to step down

Greek Prime Minister George Papandreou’s options narrowed as the opposition told him to resign, allies turned against him and police deployed tear gas to break up anti-government protests.

Papandreou, struggling to push through austerity measures demanded by international lenders, was told to step aside and let the president name a so-called technical government to renegotiate the terms of the nation’s rescue package, said an official in the opposition New Democracy Party.

The political turmoil came as European Union talks on forging a new bailout to prevent the first euro-area default stalled. The impasse over the aid formula and speculation of an impending government shakeup sent Greek bonds plunging and the euro weakening today.

“When a government has so profoundly misjudged the anger, frustration and disillusionment in the population it is a matter of time until changes have to set in,” Jens Bastian, a visiting economist at St. Antony’s College, Oxford University in England, said in an interview. “But before a prime minister resigns, he first looks at his cabinet and considers a reshuffle.”

Papandreou Offers to Resign With Strings Attached

Bloomberg reports Papandreou Offers to Quit for Unity Cabinet

Greek Prime Minister George Papandreou offered to step aside to permit the formation of a unity government, as long as all opposition parties agreed to cuts required by an international bailout, said a person with direct knowledge of the matter.

Papandreou’s bid, coming amid mounting popular protests and defections among his allies, countered a demand by the New Democracy opposition party that he quit and allow a so-called technical government renegotiate the terms of the rescue.

Party Defections Reduce Papandreou's Majority to 4 Votes

Papandreou's majority in parliament is a mere 4-5 votes out of 300. In recent days members of his socialist PASOK party have defected over austerity measures.

Please consider Greeks rage on austerity, aid deal seen delayed

Tens of thousands of angry Greeks massed in front of parliament on Wednesday in a sign of rising opposition to austerity and European officials said a new rescue deal for Athens might be delayed until next month.

Rising risks to the Greek budget plans and signs of deep divisions over the role private creditors should play in a new aid package pushed the euro to a two-week low against the dollar and sent bond yields of peripheral euro states spiraling up.

Doubts about the bloc's ability to solve its debt woes also hit European banking stocks.

Greek banks fell by as much as 7 percent on growing political uncertainty and shares in top French banks tumbled after credit ratings agency Moody's said it might downgrade them because of their exposure to Greece's debt-stricken economy.

Figures from the Bank for International Settlements to end-2010 show the exposure of French banks at 56.7 billion euros and those of German banks at roughly 34 billion euros when sovereign, bank and corporate debt holdings are included.

"Even if you look at the best case scenario, where we get parliamentary approval in Greece and the EU agrees a new aid package, you still have big medium-term issues," said Jacques Cailloux, an economist at RBS in London.

On Tuesday, a member of the prime minister's PASOK party defected over the plans, reducing his majority to 155 in the 300-seat parliament. Another party ally has promised to vote against the austerity.

Markets are overwhelmingly skeptical that Greece can ever repay its debt mountain, which has reached 340 billion euros or 150 percent of the country's annual economic output. Many expect a painful debt restructuring in the years ahead, regardless of what governments agree over the coming weeks.

With a slim and potentially vanishing majority, Papandreou is not in a position to be demanding much of anything. Indeed, his offer to resign with strings attached, increases the likelihood he will be forced out with no strings attached.

Much is happening in Europe today as the crisis escalates.

Emergency Session Fails: ECB Divorced From Reality; What is US Exposure to EU Mess?

Irish Finance Minister Flip-Flop: Yesterday Noonan Vowed to Screw Irish Taxpayers; Today Seeks Haircuts on Senior Irish Bonds; Lessons From Iceland

Mike "Mish" Shedlock

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Pasco County Government Slapping Panhandlers With $288 Fines

US Housing Crisis Is Now Worse Than Great Depression

It's official: The housing crisis that began in 2006 and has recently entered a double dip is now worse than the Great Depression.

Getty Images


Prices have fallen some 33 percent since the market began its collapse, greater than the 31 percent fall that began in the late 1920s and culminated in the early 1930s, according to Case-Shiller data.

The news comes as the Federal Reserve considers whether the economy has regained enough strength to stand on its own and as unemployment remains at a still-elevated 9.1 percent, throwing into question whether the recovery is real.

"The sharp fall in house prices in the first quarter provided further confirmation that this housing crash has been larger and faster than the one during the Great Depression," Paul Dales, senior economist at Capital Economics in Toronto, wrote in research for clients.


Current DateTime: 01:45:36 16 Jun 2011

LinksList Documentid: 43396299

New Push to Unload Bank-Owned Properties Squeezes Out InvestorsHealthiest Housing Markets'Meddling' Hurt Housing: Ross

According to Case-Shiller, which provides the most closely followed housing industry data, prices dropped 1.9 percent in the first quarter, a move that the firm interpreted as a clear double dip in prices.

Moreover, Dales said prices likely have not completed their downturn.

"The only comfort is that the latest monthly data show that towards the end of the first quarter prices started to fall at a more modest rate," he said. "Nonetheless, prices are likely to fall by a further 3 percent this year, resulting in a 5 percent drop over the year as a whole."

Prices continue to tumble despite affordability, which by most conventional metrics is near historic highs.

The rate for a 30-year conventional mortgage is around 4.5 percent, just above the historic low of 4.2 percent in October 2010. The ratio measuring mortgage costs to renting is 7 percent below its norm, while the price-to-income ratio is 23 percent below its average, Dale said.

Yet other factors are constraining the market.

After the fallout from the subprime debacle, in which millions lost their homes when they defaulted on loans they could not afford, banks changed underwriting standards.

More than four in every five mortgages now require a down payment of 20 percent, and credit history standards have tightened. At the same time, foreclosures continue at a brisk pace, pushing more supply onto the market and pressuring prices downward.

Then there is the issue of underwater homeowners—those who owe more than their house is worth—representing another 23 percent of homeowners who cannot leave or are in danger of mortgage default.

Indeed, the foreclosure problem is unlikely to get any better with 4.5 million households either three payments late or in foreclosure proceedings. The historical average is 1 million, according to Dales' research.

The only bright spot Dales found, aside from the slowing in price drop in March, was some isolated strength in states such as Nevada, Michigan, South Dakota, Alaska and Iowa.

© 2011

Inside Job Director Charles Ferguson With Charlie Rose: "It's A Wall Street Government"

Interview was recorded two days before the Oscar win for Inside Job.

PBS Video - Director Charles Ferguson with Charlie Rose - Feb. 25, 2011

■"The systemic corruption of the United States by the financial services industry..."

Though he's cognizant of the fraud, with measured stupidity Ferguson also buys into the Kanjorski-Paulson martial law, blood-in-the-streets, 17th-century-you'll-be-milling-your-own-wheat fear mongering, which as we've detailed and proven on multiple occasions was nothing more than highly granulated hyperbole meant to frighten a financially illiterate Congress and media corps into gentle acquiescence to the demands of their Sith Lords.

Goldman Bags Another Captured Senator

Goldman Sachs is a government agency masquerading as an investment bank, masquerading as a commercial bank to receive FDIC debt guarantees.

The beat goes on...uninterrupted.


Source - NPR

If you missed the announcement late last week that Goldman Sachs hired former Republican Sen. Judd Gregg to be an international advisor, don't blame yourself.

It came out Friday when most people were thinking more about the long holiday weekend ahead than the latest effort by the investment bank to add to its stable of worthies an influential former Capitol Hill lawmaker.

Anyway, the former senator from New Hampshire who, as you'll recall, turned down President Obama's offer of the Commerce Secretary's job, will join Goldman's board of international advisors, nearly 20 former corporate chief executives and government officials.


Source - Huff Po

In the wake of the financial crisis, which has been partly blamed on the excesses of Wall Street banks such as Goldman, Gregg was an outspoken critic of the Obama administration's effort to tighten oversight of the financial industry. He was also a defender of Goldman during the heated congressional debate over the $700 billion bank bailout.

Early last year, Gregg said that Democrats were overreacting to civil charges filed against Goldman for securities fraud by using the indictment to push regulatory reform. He noted at the time that the allegations had not yet been proven in court.

"It's really disingenuous for some people to pursue regulatory reform based off this one instance," the retired senator said on MSNBC. "This is a single event, we don't even know what the outcome will be."

America for Sale: Is Goldman Sachs Buying Your City?

In Chicago, it's the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In Indiana, it's the sale of the northern toll road to a Spanish and Australian joint venture. In Wisconsin it's public health and food programs, in California it's libraries. It's water treatment plants, schools, toll roads, airports, and power plants. It's Amtrak. There are revolving doors of corrupt politicians, big banks, and rating agencies. There are conflicts of interest. It's bipartisan.

And it's coming to a city near you -- it may already be there. We're talking about the sale of public assets to private investors. You may have heard of one-off deals, but what we'll be exploring with the Huffington Post is the scale and scope of what is a national and organized campaign to shift the way we govern ourselves. In an era of increasingly stretched local and state budgets, privatization of public assets may be so tempting to local politicians that the trend seems unstoppable. Yet, public outrage has stopped and slowed a number of initiatives.

While there are no televised debates around this issue, there is no polling, and there are no elections, who wins it will determine the literal shape of modern America. The Dylan Ratigan show is teaming up with the Huffington Post to do a three part series called "America for Sale", showing the pros and cons, and the politics and economics, of a new and far more privatized government.

On Wall Street, setting up and running "Infrastructure Funds" is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman's 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with "ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States." While the bank sees increased opportunity in "distressed assets" (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes "reputational concerns with the manner in which these assets are being operated or held."

The funds themselves are clear when communicating with investors about why they are good investments -- a public asset is usually a monopoly. Says Quadrant Real Estate Advisors: "Most assets are monopolistic in nature and have limited competitors, creating the opportunity for stable, long-term investment returns. Investment choices include economic assets and social assets." Quadrant notes that the market size is between $12-20 trillion, roughly the size of the American mortgage market. "Given the market and potential return opportunities, institutional investors should consider infrastructure a strategic investment allocation.
As with mortgage securitizations, the conflicts of interest are intense. Pennsylvania nearly privatized its turnpike, with Morgan Stanley on multiple sides of the deal as both an advisor to the state and a potential bidder. As you'll see, these deals are often profitable because they constrain the public's ability to govern, not because they are creating value. For instance, private infrastructure company Transurban, now attempting to privatize a section of the Beltway around DC, is ready to walk away if local governments insist on an environmental review of the project. Many of them have clauses enshrining their monopolistic positions, preventing states and localities from changing zoning, parking, or transportation options.

While the trend is worldwide, privatization of public infrastructure only came to America en masse in the 2000s. It is worth discussing, because where it has happened it has sparked deep and intense anger. In Chicago, protests flared as Mayor Richard Daley pushed the privatization deal through. In Wisconsin, recent protests and counter-protests around controversial Governor Scott Walker revolved around, among other issues, the privatization of state medical services. In Ohio, a controversy is swirling around the political proposal to put the turnpike up for sale, while in Indiana, the state toll road has been in private hands since 2006 (upsetting the truckers who are paying much higher tolls).

The political organizing is intense - on the Republican side, conservative groups are aggressively driving it as a strategy for fiscal prudence. The American Legislative Exchange Council (ALEC), the influential think tank that targets conservative state and local officials, has launched an initiative called "Publicopoly", a play on the board game Monopoly. "Select your game square", says the webpage, and ALEC will help you privatize one of seven sectors: government operations, education, transportation and infrastructure, public safety, environment, health, or telecommunications.

On the Democratic side, the Obama administration has been encouraging Chinese sovereign wealth funds to invest in American infrastructure as a way to bring in foreign capital. It was Chicago Mayor and Democratic icon Richard Daley who privatized Chicago's Midway Airport, Chicago's Skyway road, and Chicago's Parking Meters. Out of office after 22 years, he is now a paid advisor to the law firm that negotiated the parking meter sale.

Ratings agencies are also in the game, rating up municipalities willing to privatize assets, or even developing potential new profit centers around the trend (see the chapter titled "Significant Debt issuance Expected with the Privatization of Military Housing" from this September 2007 Moody's report).

Over the next three days, we will explore what it means to have a government for profit, whether we get better roads when Goldman Sachs determines how much we pay in tolls. As we explore this topic, I hope we as Americans will be able to decide if we truly want to see America for Sale.

Print More Money

Greg Hunter

USA Watchdog

The second round of quantitative easing (QE2) is scheduled to end June 30, and already there are calls for more financial stimulus to keep the economy from falling off a cliff. The latest call came from Larry Summers, former head of the Obama Administration’s financial team. In an Op-Ed piece that ran on Reuters last Sunday, Summers pitched the idea of a $200 billion cut in the payroll tax. The Reuter’s story said, “Fiscal support should be continued and indeed expanded by providing the payroll tax cut to employers as well as employees,” Summers wrote. “Raising the share of the payroll tax cut from 2 percent to 3 percent would be desirable as well.” . . . He also said the economy would benefit from an extra $100 billion in infrastructure spending over the next several years and recommended additional aid to states and cities.” (Click here for the complete Reuters story.) The way I see it, Mr. Summers is proposing another $300 billion be added to the national debt.

Summers is not the only high profile economist that wants to print more money. Nobel Prize winning economist Paul Krugman thinks the U.S. didn’t provide near enough financial stimulus back in 2009 when Congress passed more than $800 billion in new spending. In a recent New York Times Op-Ed piece, Mr. Krugman said, “In fact, in important ways we have already repeated the mistake of 1937. Call it the mistake of 2010: a “pivot” away from jobs to other concerns, whose wrongheadedness has been highlighted by recent economic data. . . . Back when the original 2009 Obama stimulus was enacted, some of us warned that it was both too small and too short-lived.

(Click here to read the complete NYT story.) Mr. Krugman implies that the money already spent to keep the economy from plunging (which in essence is more than $12 trillion including all Fed actions) has not really caused any problems. He wrote, “This consensus was fed by scare stories about an imminent loss of market confidence in U.S. debt. Every uptick in interest rates was interpreted as a sign that the “bond vigilantes” were on the attack, and this interpretation was often reported as a fact, not as a dubious hypothesis. . . Well, the bond vigilantes continue to exist only in the deficit hawks’ imagination. Long-term interest rates have fluctuated with optimism or pessimism about the economy; a recent spate of bad news has sent them down to about 3 percent, not far from historic lows.”

Mr. Krugman conveniently leaves out the fact the Federal Reserve has spent more than $600 billion in the past 8 months buying Treasuries that have artificially held rates down. I suspect interest rates would be much higher if quantitative easing (QE 2 or money printing) was not Fed policy. And what about the big increases across the board in food and energy? These are not scare stories but facts that are quite damaging to the economy, especially the unemployed. Still, economists like Krugman claim more money printing will save the day and create jobs. With the 2012 election looming, that will surely be the path taken—inflation be damned.

 Economist John Williams at thinks that is exactly what Fed Chief Ben Bernanke was signaling last week at the International Monetary Conference in Atlanta. In his remarks, Mr. Bernanke admitted, “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.” In a recent report, Williams said, “Despite the mixed language in his comments on how well Fed policy has been working, I take the more-negative economic tone as an early warning of an eventual QE3 (third-quarter 2011).” (Click here to visit the site.)

Renowned gold expert Jim Sinclair was one of many I polled at the beginning of the year (in a post titled “The Most Predictable Financial Calamity in History”) who predicted QE would not end on June 30. In an interview with King World News last week, Sinclair said, “We’ve come to a point now where you can actually predict that if QE was to be stopped, you would see an implosion in the general equity markets, and the wealth effect of that implosion on the decision making outlooks of business managers would be to restrict employment, restrict investment and to restrict earnings. . . . The impact of restricting monetary stimulation will open up a depression that will make the Great Depression look like kindergarten.” (Click here for the complete KWN interview.)

Sinclair expects gold to trade much higher this year and predicts after 2015, it will be priced at more than $12,500 an ounce. You should not take Sinclair’s predictions lightly. In 2002, he predicted gold (priced at around $350 an ounce) would trade at $1,650 an ounce by January 2011. Today, it is well over $1,500. In 1974, (the average price that year was $159.00 an ounce) Sinclair predicted gold would top out at $900 per ounce in 1980–it hit $887.50. Sinclair says, “If QE is even slowed down, the net result would be a public loss of control on the part of what is seen as the U.S. economic management.” So, he expects gold will rise because the powers that be will print more money.

RT crew caught in Athens tear gas chaos, slammed by Greek rioters

Beijing battling protest fires on all fronts

AFP photo

The Australian

An eruption of protests throughout China has sent armoured vehicles into town centres, prompted an internet blackout by the government and left thousands across the country blogging about "crazy" violence on the streets.

The summer surge of protests, which flared in the southern industrial hub of Zengcheng over the weekend, has been linked to a range of frustrations with modern China - furies that have drawn the government into crackdowns on activism and massive increases in the domestic security budget.

More than 1000 migrant workers went on the rampage in Zengcheng after a pregnant street vendor in her 20s was roughed up by security guards. Such incidents, while distressing, are not uncommon.

Witnesses said that the centre of town was bedlam, with smashed windows, blazing police vehicles and teargas explosions as rioters hurled missiles at an official building. One bank worker blogged that the Bank of China had ordered an immediate halt to all ATM transactions.

In central Hubei province armoured cars were used last week to quell a riot over the death of Ran Jianxin, an official who had led the fight against corruption in the town of Lichuan but died mysteriously in police custody.

The protests followed bomb attacks on government facilities in two other cities in the past three weeks, and ethnic unrest in the northern region of Inner Mongolia last month.

Although few see China as a likely arena for uprisings in the style of the Arab Spring, Beijing remains terrified that the fast-rising tally of localised protests could be linked via mobile social networking and Twitter-style websites.

Some Chinese academics believe that the true number of protests in the country last year was more than 180,000. After several big clashes in recent weeks the names of half a dozen big towns have been eradicated from the search engines of the country's most popular microblogging sites.

One of the "disappeared" cities, Dongguan, is the fourth-largest producer of exports in the country and has a population only slightly smaller than London's.

The recent violence, however, has exposed the limits of the government's ability to control the urban population using internet censorship what party leaders refer to as "social management".

Authorities have turned to displays of raw power, deploying paramilitary police and armoured vehicles in at least three cities in as many weeks to prevent violence from spiralling further as protesters have repeatedly directed their anger at government buildings, often ostentatious symbols of power. What connects the violence is the way a flashpoint - in Inner Mongolia, the death of a Mongol at the hands of a Han Chinese truck driver, and in southern China, the assault by security personnel on a pregnant migrant worker - sets off much wider conflagrations.

The disturbances could reflect badly on President Hu Jintao, who has tried to promote the concept of a "harmonious society" and who is due to retire as party chief next year.

"There's an increasing sense of frustration that (leaders) are unable to put out a consistent, unifying message, even within the party," said Kerry Brown, head of the Asia program at Chatham House, who met senior party officials last week. "Local officials are overreacting partly because of a lack of clear leadership at the top."

But the unrest is likely to strengthen the clout of Zhou Yongkang, who technically ranks ninth of nine on the Politburo Standing Committee but wields huge power as he oversees the police, intelligence agencies, prosecutors and courts.

Authorities have been careful to balance their use of force with conciliatory gestures, including the removal of some local officials. State media have also been reporting the unrest relatively quickly and openly, compared with previous years, in what some analysts see as an attempt by the government to take control of the narrative ahead of bloggers.

A Monday editorial in the Global Times, a tabloid linked to the Communist Party, warned against trying to connect the recent incidents of unrest and draw conclusions about China's social stability. "China is not a nation where public anger collectively seeks to topple the existing order. It is time to debunk this ludicrous lie," it said.

The Times

Contagion Risk Increases – Euro Falls as Moody’s May Cut Rating on 3 Large French Banks Exposed to Greece

Gold is trading at $1,519.33/oz, €1,062.32/oz and £934.40/oz.

The euro has fallen on international markets as the European sovereign debt crisis is deepening and appears to be reaching a dangerous denouement. European stock markets are also weaker due to serious divisions in Greece and in the EU as to how to resolve the Eurozone debt crisis and prevent contagion.

Moody's has placed three large French banks on negative review based on their exposure to Greece. The problem looks increasingly intractable meaning that contagion appears more likely every day.

Cross Currency Rates

Gold is higher against the euro, pound and Swiss franc and lower against the U.S. dollar, the yen, Kiwi and Aussie dollar. Demand continues to be very strong especially from China and India where the World Gold Council said that there is a “tidal wave” of “gold demand coming”.

The dollar is firmer despite yesterday’s stern warning from Bernanke that America’s credit rating is at risk. Bernanke urged policy makers to again increase the debt ceiling – this time to over $14.3 trillion – in the hope that this will prevent a U.S. downgrade.

U.S. Worse than Greece Due to $14.3 Trillion National Debt and $61.6 Trillion in Unfunded Liabilities

The humungous size of the real U.S. national debt including unfunded liabilities is now some $75.9 trillion ($14.3 trillion and $61.6 trillion) which means that the finances of the U.S. are not much better than that of insolvent Greece.

The $61.6 trillion in unfunded obligations (money guaranteed for Medicare, Medicaid and Social Security) amounts to $534,000 per household, more than five times what Americans borrowed for expenditures such as mortgages, car loans and other debt.

The U.S. is also confronted with the significant debts incurred in the programs related to the bailout of Wall Street banks following the crisis of 2008 and 2009.

U.S. Dollar Index – 30 Years (Monthly)

Thus, the U.S. is in a worse financial position than Greece and is inching closer towards default every day.

This has obvious ramifications for financial markets and especially currency markets. It could see further sharp falls in the value of the dollar and would likely result in selling of U.S. dollar denominated assets which will likely see U.S. equities and bonds come under pressure which would likely result in an increase in interest rates.

US Generic Govt 10 Year Yield - 45 Years (Quarterly)

Rising interest rates will bullish for gold as they were in the 1970s (see above) and it is only towards the end of the interest rate tightening cycle when positive real interest rates are achieved that gold will become vulnerable to a bear market.

Gold remains below its inflation adjusted high from 1980 and the conditions today are as favourable if not more so than those of the 1970s when gold rose 24 times in 9 years.

The U.S. was the largest creditor nation in the world in 1980 today it is the largest debtor nation. In the late 1970s there was stagflation and geopolitical risk but there were no developing world sovereign nations on the verge of bankruptcy.

Nor were there major “too big to fail” western banks that were seriously exposed to sovereign debt risk and a shadow banking system with over $600 trillion in derivatives and all the risk attendant with that.

Today there is significant geopolitical risk in the world, more than even in the late 1970s and governments internationally are debasing their currencies in a manner not seen in modern history.

Bloomberg Composite Gold Inflation Adjusted Spot Price – 1970 to June 2011

The deepening sovereign debt crisis in the EU and potentially soon in the U.S. is a fundamental reason that the majority of retail investors and savers should have an allocation to gold bullion.

Gold bullion will protect, preserve and grow wealth in the coming years as it has done in uncertain times throughout history.


Silver is trading at $35.22/oz,€24.63/oz and £21.66/oz.


Platinum is trading at $1,785.50/oz, palladium at $787/oz and rhodium at $1,925/oz.



‘Tidal Wave’ of Gold Demand Coming From China, India as Economies Expand


Gold extends gains as economy worries linger

(Wall Street Journal)

PRECIOUS METALS: Gold, Silver Up In Asia, Rangebound


Gold May Gain for Second Day on Greek Debt Crisis, Faster Global Inflation


Gold to Extend Gains as Buyers Seek ‘Safety’ Against Inflation, Fund Says


(Wall Street Journal)

Thomas Frank’s Gold Dis Misses the Mark


Standard Chartered: "Three Factors Will Drive Gold To $5,000"


The First Great Depression: Blow By Blow, From The BIS, And How It Mirrors Our Ongoing Second Great Depression


For First Time Total Comex Silver Drops Below 100 Million Ounces; Physical Deliverable Silver Under 28 Million Oz


Is Gold in Fort Knox Real? Ron Paul Wants to Know

Greek strikers hurl yoghurt and stones at Athens police

Greek police have fired teargas at protesters outside parliament as MPs prepared to debate new austerity measures required for the EU and IMF bail-out package.

Demonstrators who broke off from a strike rally in Athens responded by throwing yoghurt and stones.

Prime Minister George Papandreou faces the risk of a revolt in his Pasok party over the austerity package.

He has proposed a unity government to pass the measures, state TV reports.

He is seeking support for a new austerity programme of 28bn euros (£24.6bn; $40.5bn) in cuts to take effect from 2012 to 2015.

Continue reading the main story “

Start Quote

For all the leftist iconography plus the presence of that by now familiar demographic, the Facebook youth, or 'graduates with no future', this thing has gone beyond left and right - it's clear that for many people it is the Hellenic republic versus the rest of the world”

End Quote

Paul Mason

Economics editor, Newsnight

Greeks versus the world in Athens austerity protests

Thousands are taking part in a general strike, the third in Greece this year.

Ports, public transport and banks have been badly disrupted as the main public- and private-sector unions go out on strike.

State-run companies have also joined the walkout, while hospitals are only offering emergency care. However, airports are operating normally after air traffic controllers called off their strike.

A top credit agency has cut Greece's rating, making it the least credit-worthy nation out of 131 countries it monitors.

The Greek government said the downgrade by Standard & Poor's - from B to CCC - ignored its efforts to secure funding.

In order for the next tranche of rescue loans to go through, parliament must adopt the new austerity plan by the end of June.

'Fight the battle'

Police thwarted protesters who were attempting to blockade parliament and stop MPs getting in for the debate.

They sealed off the roads leading to Syntagma Square and created a pathway for deputies.

The Greek demonstrators are calling themselves the "indignants", linking themselves to Spanish anti-austerity protesters who set up camps in Madrid and Barcelona.

The square is awash with Greek and Spanish flags, as well as banners reading "Resist" and the battle cry from the Spanish civil war, "No pasaran" (they shall not pass), the AFP news agency reports.

Continue reading the main story

Greek bail-out timeline

May 2010: EU and IMF agree bail-out package to prevent Greece defaulting on its debts; in return, Greece agrees to make 30bn euros of budget cuts over the next three years

February 2011: EU and IMF experts tell Greece it must make further cuts to keep its recovery on track

April 2011: EU figures reveal Greek deficit revised up to 10.5%, worse than previously thought

May 2011: Greece begins privatisation programme but is warned the IMF may not release more funds because Athens cannot guarantee it will remain solvent for the next 12 months

29 June 2011: Deadline for Greece to agree new austerity package

One MP defected from Mr Papandreou's Pasok party on Tuesday, leaving it with only 155 of the chamber's 300 seats.

"You have to be as cruel as a tiger to vote for these measures. I am not," George Lianis, a former sports minister, said in a letter to parliament's speaker announcing his departure from the parliamentary group.

At least one other Pasok MP has threatened to vote against the new programme of cuts and privatisation of state assets.

Another 14 MPs are wavering in their support for the austerity plan, our correspondent says.

Mr Papandreou held talks on Wednesday with Greek President Karolos Papoulias, telling him that "a national effort" was required.

"We are at a historically crucial moment and a time of crucial decisions," Mr Papandreou said, according to a transcript released by his office.

"In any case, we will move forward with this sense of responsibility and the necessary decisions."

Possible contagion

Meanwhile, eurozone finance ministers have failed to agree on how to make private creditors contribute to a possible second Greek bail-out.

Ministers meeting in Brussels continued their discussions late into the night on Tuesday on ways of making private bondholders share the cost of a second rescue package without throwing financial markets into turmoil.

As a result of their failure to reach a deal, the cost of insuring Greek debt against default shot to an all-time high.

In a sign of possible contagion from the Greek crisis, credit rating agency Moody's said it might downgrade the three largest banks in France because of their exposure to Greek debt.

Share prices for BNP Paribas, Credit Agricole and Societe Generale all fell as a result.

France appealed for calm, saying it opposed a Greek restructuring which could entail write-offs for private banks.

"The French position is voluntary - no restructuring, no credit event and in line with the ECB," government spokesman Francois Baroin told reporters in Paris.

The EU and IMF are demanding the measures in return for the release of another 12bn euros in aid next month which Athens needs to pay off maturing debt.

Are you in Greece? What is your reaction to the latest general strike? Are you participating or is your business affected? Send us your comments and experiences using the form below.

IRS Releases Spring 2011 SOI Bulletin

The IRS's Statistics of Income Division yesterday released (IR-2011-67) the Spring 2011 SOI Bulletin (Vol. 30, No. 4), with these articles:

•High-Income Tax Returns for 2008 (p. 5), by Justin Bryan

•Individual Income Tax Returns, by Age of Primary Taxpayer, Tax Years 1997 and 2007 (p. 55), by Jeff Curry & Jonathan Dent

•Individual Income Tax Returns, by State, 2007 (p. 174), by Taquesha Cain

•Foreign Recipients of U.S. Income, 2008 (p. 235), by Scott Luttrell

•International Boycott Reports, 2007 and 2008 (p. 250), by Melissa Costa

•2008 Gifts (p. 255), by Melissa J. Belvedere

Bloomberg, High-Income, No-Tax Returns Almost Doubled in 2008, IRS Says:

The number of people who reported incomes of at least $200,000 and paid no U.S. taxes jumped 79.5% in 2008 from 2007, according to an IRS study.

In all, 18,783 people filed U.S. tax returns with adjusted gross incomes of at least $200,000 and used legal deductions, exemptions and credits to avoid owing any U.S. income taxes. That represents 0.43% of high-income taxpayers, the biggest percentage of non-payers in an IRS study released yesterday that includes data going back to 1977.

Even with the dollar threshold being held constant for inflation, the 2008 totals and percentages were the highest on record. The percentage of non-payers in 2008 almost doubled from the 0.23% of filers who reported no income tax liability in 2007, before a recession-fueled decline in tax revenue.