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European Sovereign Debt - Can't We All Just 'Net' Along?

It is seemingly clearer and clearer that with the current structure and membership, the Euro does not work. The market seems to be driving the change in the direction of membership changes (via restructurings and temporary devaluations - e.g. GRE CDS and WI Drachma) while the euro-zone-'management' seem prone to structural changes (i.e. EFSF umbrella, Euro-bonds, and fiscal union). While the cost of either approach is likely extremely high, some research from early Summer by ESCP Europe suggests a non-trivial approach that reduces aggregate debt for the European sovereign complex by almost 64% is possible. The solution:- bi- & tri-lateral netting, and free-trading.

Clearly, there will be winners and losers in this 'free exchange', and the game-theoretical bargaining process of 17 self-indulgent, self-interested career politicians is unlikely to resolve in an optimal direction. However, if nothing else, it is evident just how Gordian-knot-like any resolution is likely to be.

No Entry

Israel rejects French compromise on Palestinian state

palestinians,un
© AFPPalestinians in Beirut demonstrate outside the European Union representation office.

Israel on Friday rejected a proposal by French President Nicolas Sarkozy to upgrade the Palestinians' UN status and admit them as a non-member state, a foreign ministry spokesman said.

"This may seem like a good idea on the surface but in reality you can't cut corners by giving the Palestinians a state, however you describe it, which does not come from an agreement with Israel," Yigal Palmor told AFP.

Palestinian president Mahmud Abbas was just hours from submitting a historic request to the United Nations to admit Palestine as a member state despite fierce Israeli and US opposition.

Bad Guys

US to expand drone hits with secret new bases

  Washington's decision to develop new bases will greatly expand the drone's strike range
© GETTYWashington's decision to develop new bases will greatly expand the drone's strike range

'Ring of steel' around terror groups revealed in leaked cables

The US is building a ring of secret military bases in the Horn of Africa and the Arabian peninsula as it steps up the use of unmanned drone aircraft to strike at groups linked to al-Qa'ida.

A base has been built on the Indian Ocean island chain of the Seychelles, according to leaked diplomatic cables. Another is being established in Ethiopia, The Washington Post reported.

The US has been launching assassination missions in Somalia targeting the Islamic militant group al-Shabaab, which publicly supports al-Qa'ida, for some time. Washington already has a base in neighbouring Djibouti. Drones were used in two days of attacks near the Shabaab-controlled port city of Kismayo in southern Somalia last week. Unconfirmed reports suggest that up to 26 people were killed.

Bad Guys

US: Exxon Mobil To Restart Montana Pipeline

Billings - A failed Exxon Mobil pipeline that spilled an estimated 42,000 gallons of oil into the Yellowstone River was expected to restart operations on Saturday after federal officials approved repairs meant to prevent another accident.






A quarter-mile segment of the 12-inch pipeline was replaced by drilling a new passage an estimated 60 to 70 feet beneath the riverbed. That change makes it far less likely that the Silvertip pipeline will fail a second time, Montana Department of Environmental Quality Director Richard Opper said.

"There were a lot of eyes on this from our federal partners," Opper said of repairs to the line. "It was done right. It's a lot safer pipeline now, at least crossing the river."

The 20-year-old line broke near Laurel on July 1 after flooding scoured the river bottom and exposed the pipe, which had been buried just five feet deep in some areas. Released oil fouled dozens of miles of riverbank, contaminated crops and pastureland and was blamed for killing birds, reptiles and other wildlife.

Coffee

Global Shares Fall Sharply on Economy Fears

traders
© Reuters
World stock markets have dropped sharply after a series of grim warnings over prospects for the global economy.

Christine Lagarde, head of the International Monetary Fund, said the economic situation was entering a "dangerous place".

Earlier, the president of the World Bank, Robert Zoellick, said the world's economy was "in a danger zone".

The comments came after the Federal Reserve warned that the US economy faced "significant downside risks".

In Europe, the UK FTSE 100 closed down 4.7%, while France's Cac 40 fell 5.25% and Germany's Dax ended 5% lower. In the US, the Dow Jones was 4.3% in afternoon trading.

Comment: Seems the time is now ripe to push the global economy over the edge. Markets and individuals will mechanically react to what they hear coming from Lagarde, Zoellick, Geithner and the like. Their unified scripted message of "danger" perfectly timed to create a definite effect - such words are not used by chance. And you can be sure that the desired effect in this case is one that serves purely the interests of the bankers.


Syringe

For-Profit Company Oversaw Davis's Execution, Had Prompted Complaint for Illegal Purchase of Lethal Injection Drugs

The tragic debacle that has been the Troy Davis execution has another dimension to it beyond racism, classism, and the miscarriage of justice in a flawed system. That dimension is capitalism: specifically, the corporatization of the prison-industrial complex. If you've noticed some angry tweets directed at @correcthealth in the past day, that's because "CorrectHealth" is the Orwellian-named "medical company" that, according to the ACLU, "oversees all executions in Georgia" including last night's. It is a for-profit company that stands to make a pile money off of every execution.

Bad Guys

China Headed for a "Class War"?

Us versus Them
© Minyanville

While "conspicuous luxury consumption may not be on its deathbed quite yet in China," Avery Booker of Jing Daily suggests that "social tensions" over a widening wealth gap "may ultimately put the last nails in bling's coffin."

"In education, recruitment, employment and various other sectors, the pattern of power-retention by the powerful is solidifying, yet the rights of the lower classes often suffer encroachment," Dai Zhiyong of Southern Weekend newspaper wrote last year. "The hardening of the hierarchy is right before our eyes. The channel of upward mobility for the lower classes is narrowing by the day."

And though Forbes says that "financial turmoil gripping the world has had little effect on wealth in China, where an ongoing economic boom keeps creating new U.S. dollar billionaires," Taiwan's Want China Times says "the rich in China are ... vulnerable to threats, physical violence and blackmail."

Is China ready to boil over?

"The Gini coefficient in China has been continuously rising after it reached the alarming 0.4-level 10 years ago," researcher Chang Xiuze told the Economic Information Daily in 2010. With 0.5 being the point at which income inequality is thought to lead to social unrest, China is dangerously close the the precipice.

And Jonathan Manthorpe of the Vancouver Sun notes that rank-and-file Chinese "are not responding meekly to revived servitude," creating a "seething undercurrent of discontent" and leading to an estimated 180,000 "strikes, demonstrations, and riots involving over 1,000 people," or, 493 each day, taking place around the country last year.

Gear

Yahoo! Appears To Be Censoring Email Messages About Wall Street Protests

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© UnknownYahoo blocks users from sending e-mails about the OccupyWallSt.org website with a message claiming "suspicious activity"
Yahoo! blocks users from sending e-mails about the Occupy Wall Street website with a message claiming "suspicious activity"

Thinking about e-mailing your friends and neighbors about the protests against Wall Street happening right now? If you have a Yahoo e-mail account, think again. ThinkProgress has reviewed claims that Yahoo is censoring e-mails relating to the protest and found that after several attempts on multiple accounts, we too were prevented from sending messages about the "Occupy Wall Street" demonstrations.

Over the weekend, thousands gathered for a "Tahrir Square"-style protest of Wall Street's domination of American politics. The protesters, organized online and by organizations like Adbusters, have called their effort "Occupy Wall Street" and have set up the website: Occupy Wall Street. However, several YouTube users posted videos of themselves trying to email a message inviting their friends to visit the Occupy Wall St campaign website, only to be blocked repeatedly by Yahoo. View a video of ThinkProgress making the attempt with the same blocked message experienced by others

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US: Recession's second act would be worse than the first

Fresh evidence of a global economic slowdown has raised fears that governments around the world may be powerless to reverse it. If the world does fall into back into recession, it could be much harder to escape than the contraction that ended in 2009.

With banks still recovering from a decade-long credit bubble, governments slashing spending to cope with unsustainable debt, and unemployment at levels not seen in decades, a new recession would be "disastrous," according to Roger Altman, a senior Treasury official in the Clinton administration.


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"Dangerous New Phase" of the World Economy - IMF Downgrades US Outlook