Vladimir Putin, the Russian president, has moved to inject some moral fibre into the country’s top-level bureaucrats and state employees by giving them a three-month deadline to close their foreign bank accounts and divest themselves of offshore assets – or face the sack.

According to a new presidential decree, signed on Tuesday, thousands of Russian civil servants have until July 1 to file declarations of income and assets, which will be subject to stringent checks. No one would be above the law, said Sergei Ivanov, Mr Putin’s chief of staff, and anyone caught still in possession of the prohibited assets would be instantly dismissed.

“There are no untouchables and there cannot be any,” he said.

The decree is the president’s latest move to “de-offshore” Russia’s economy, a mission he outlined last December in a major policy address. According to a number of policy makers, the aim is not just to tackle corruption among the political elite – famed for its ability to extract and squirrel away vast sums – but also to make its members less vulnerable to foreign influence. >> Read More

Plans to place all eurozone lenders under the supervision of the ECB, hailed as a cornerstone of future political union, will miss the deadline for implementation due to EU treaty restrictions, top officials said on Saturday.

 A first legislative draft unveiled just 72 hours earlier was left doomed after two days of talks between finance ministers and central bank governors in Cyprus, which drove a fresh wedge between the 17 eurozone partners and the other 10 European Union states.German Finance Minister Wolfgang Schaeuble said it became immediately clear during a feisty debate that the target-date for adoption of January 1, 2013, was no longer attainable. “January 1^st, that will not be possible,” Schaeuble said, adding that it was “not even worth having that discussion.”

Swedish Finance Minister Anders Borg had already broken away to dismiss as “completely unacceptable” the proposal unveiled by EU banking commissioner Michel Barnier. The nub of the breakdown was what Barnier called a “juridical problem.” >> Read More

Germany will block further aid to Greece should Athens fail to meet all conditions required by the bailout agreement,the deputy head of Chancellor Angela Merkel’s conservative parliamentary block, Michael Fuchs, told German daily Handelsblatt.

“Even if the glass is half-full, that is not enough for a new aid package,” he said in an interview published Monday. “Germany cannot and will not agree to that.”

A final report by European Union, International Monetary Fund and European Central Bank on Greece’s progress is expected by mid-September.

Even if other Eurozone states are ready to release further funds,Germany will block the transaction should it not be convinced that Greece has met all requirements, Fuchs told the paper.

Fuchs reminded that Germany has a veto right on EFSF aid and that “Germany will make use of that veto right” if not convinced Greece has reached its targets.

Fuchs advised against the European Central Bank stepping in with additional emergency loans. The ECB should not “open up detour possibilities and make money available that the Greeks could not
otherwise get from the rescue funds EFSF or ESM,” he argued.

The deputy head of Chancellor Angela Merkel’s conservative parliamentary bloc, Michael Fuchs, told business daily Handelsblatt that Berlin was ready to use its veto if it is unhappy with findings from the Greece creditors “troika”.

“You can quote me: even if the glass is half-full, that is not enough for a new aid package,” he said in an interview to appear in the paper’s Monday issue. “Germany cannot and will not agree to that.”

Germany, Europe’s biggest economy, is waiting with eurozone partners for the report on Greece from a so-called troika of inspectors from the European Union, International Monetary Fund and European Central Bank.

Their verdict, which is expected by mid-September, will determine if Athens receives the next installment of 31.5 billion euros ($36.6 billion) in rescue funds. >> Read More

Iran will attack any country whose territory is used by “enemies” of the Islamic state to launch a military strike against its soil, the deputy head of Iran’s elite Revolutionary Guards told the semi-official Fars news agency on Sunday.

“Any spot used by the enemy for hostile operations against Iran, will be subjected to retaliatory aggression by our armed forces,” Hossein Salami said, during military maneuvers.

The Revolutionary Guards began the two-day ground exercises on Saturday as a show of military might as tension rises between Tehran and the West over Iran’s disputed nuclear program.

Iranian media said it was a small-scale exercise in southern Iran.

The United States and Israel, Iran’s arch enemies, have not ruled out a military strike against the country if diplomacy fails to resolve the standoff. Iran says its nuclear program is purely peaceful, rather than aimed at developing weapons.

Iran has warned that its response to any such strike will be “painful,” threatening to target Israel, and U.S. bases in the Gulf, along with closing the vital oil shipping route of the Strait of Hormuz.

The decision by Standard & Poor’s to downgrade the U.S. credit rating leaves France as the AAA country most likely to lose its top grade, some investors and economists say.

France is more expensive to insure against default than lower-rated governments including Malaysia, Thailand, Japan, Mexico, Czech Republic, the State of Texas and the U.S.

“France is not, in my view, a AAA country,” said Paul Donovan, London-based deputy head of global economics at UBS AG. “France can’t print its own money, a critical distinction from the U.S. It is not treated as AAA by the markets.”

While all three major credit-rating companies have confirmed France’s top level in recent months, market measures indicate increasing investor skittishness over the country’s vulnerability to the European debt crisis. Euro-region central bank governors will hold emergency talks today over how to protect Spain and Italy and limit fallout from the U.S. cut.

“If Italy and Spain have difficulties, are we sure that, for instance, France can still be considered a ‘core’ country?” said Marco Valli, chief euro-area economist at UniCredit Global ‘Core’ is becoming a narrower group of countries.”

While France’s debt of 84.7 percent of gross domestic product is less than Italy’s 120.3 percent, as a percentage of economic output it has risen twice as fast as Italy’s since 2007. French government debt totaled 1.59 trillion euros ($2.3 trillion) at the end of 2010, according to the European Union; Italy’s was about 1.8 trillion euros. France has had a larger budget deficit than Italy every year since 2006. S&P rates Italy A+, four levels below France.

France’s rating at Standard & Poor’s is in a “stable perspective,” Jean-Michel Six, the firm’s chief economist for Europe, said in an interview with France Info radio today. >> Read More

Too bad there is no central bank to sell weather future puts and induce a “great moderation” in climatic conditions, which lately have seen volatility surge through the roof. The most recent example of why the CBOE needs a weather VIX is China, where following weeks of inflation spiking near-record drought conditions, the weather has flipped, and heavy rainfalls since June 3 have created floods that have killed at least 52 people led to 32 more missing, and much more is coming. According to Xinhua, “Heavy rains have inundated parts of 12 provinces in central and southern China and affected 4.81 million people so far since the flood season arrived, Shu Qingpeng, deputy head of the Office of State Flood Control and Drought Relief Headquarters, told a conference. Floods have destroyed 7,462 houses and submerged 255,000 hectares of farmland, incurring direct economic losses of 4.92 billion yuan (760 million U.S. dollars), he said. Heavy rainfalls since June 3 have drenched the previously parched lower and middle parts of the Yangtze River basin, increasing water of rivers to alert levels in the provinces of Jiangxi, Hunan and Guizhou.” The PBoC’s, which is preparing with spinning a record 5.5% CPI print imminently, just can’t catch a fair weather break.

From Xinhua:

 

 

Wangmo County in Qianxinan Autonomous Prefecture of Guizhou recorded maximum one-hour precipitation of 122.5 millimeters, the most in 200 years, he said.
>> Read More