The global economy could be a very difficult environment in which to find shelter. For starters, the eurozone crisis is worsening, as the euro remains too strong, front-loaded austerity deepens recession in many member countries, and a credit cruch in the periphery and high oil prices undermine prospects of recovery. The eurozone banking system is becoming balkanized, as cross-border and interbank credit lines are cut off, and capital flight could turn into a full run on periphery banks if, Greece stages a disorderly euro exit in the next few months.

The lobbying world is no longer confined to influencing legislation and regulations. Increasingly lobbying firms are offering 'Political Intelligence' services.

France's zero growth for the second quarter means that its economy is at a standstill. In other words it is marked by economic stagnation. Zero growth means continued high joblessness that will lead to decreased expectations on the part of the wage earners and a feeling of helplessness, as opportunities for personal improvement and wealth creation evaporate. As millions French people remain among the ranks of the unemployed, the drag on economic activity will continue. This dire scenario will have a marked effect on the French public.

Conventional wisdom holds that Spain must rescue its banks from its tens of billions of euro worth of bad property loans. If Spanish banks failed, the thinking goes, Spain itself would be plunged into depression, the euro itself would face heightened risk of breakup imperiling the rest of Europe's economy too.

In the worst case scenario, Greece's Euro Exit starts off messy. The government resurrects the Greek currency, the drachma. In this case, salaries and prices within Greece would be converted from euros to drachma, and the drachma would be allowed to depreciate to make the Greek economy more competitive. But currency markets would treat it differently. Banks' foreign exchange experts expect the drachma would plunge to half the value of the europ soon after its debut.

Young people continue to bear the brunt of the job crisis, with neraly 11 million 15 to 24 year-olds out of work in OECD countries.  More than one in five young people in the labour market in France, the United Kingdom, Sweden, Poland, Ireland and Italy are out of work. In Spain, youth unemployment reached 51.1% in March 2012.

Youth unemployment is more than double the unemployment rate affecting the general population across the OECD. In some countries such as Greece and Spain,it's three times higher.

The European Commission is investigating possible manipulation of the Euro Interbank Offered Rate (EURIBOR) benchmark rate at which banks lend in euros to each other. The EURIBOR is used as a reference for trillions of euros in euro-denominated loans and debt instruments.

A total of 43 banks sit on the EURIBOR panel, which is hosted by the European Banking Federation. The EURIBOR panel banks are the banks with the highest volume of business in the euro zone market. They claim to have a first class credit standing (?), high ethical standards (?) and an excellent reputation (?).

By: Jose M. de Areilza & Jose Ignacio Torreblanca- 26 June 2012 Published on European Council on Foreign Relations Website

Extract

Banks in Europe are technically insolvent. They have huge debts that they cannot pay and governments are doing the bidding of the banks by transferring these debts to the public and then imposing austerity measures. Banks have found innovative ways to sell their debt back and forth to each other without having to increase their reserve requirements in any way. For example, Deutsche Bank has three trillion euros in debt that is supported by less than one and half percent of tier one capital. (Tier 1 capital is the core measure of bank's financial strenghth from a regulator's point of view.

At the end of July Greece had completed only about 100 out of more than 300 reform benchmark set by international lenders. Greece has legislated plenty of reforms but failed to implement many of them. The stakes are higher than ever. Greece will not receive any more rescue funding until the medium-term package is in place. Without that money, the Greek government will run out of cash to pay pensions and public-sector salaries in September, if not sooner.