Euro zone finance ministers are expected to approve a second bailout for Greece on Monday to try to draw a line under months of uncertainty that has shaken the currency bloc, although work remains to be done to make the numbers add up.   Diplomats and economists say they do not expect the package to resolve Greece's economic problems. That could take a decade or more, a bleak prospect that brought thousands of Greeks onto the streets to protest against austerity measures on Sunday.   French Finance Minister Francois Baroin said all the elements were in place to reach an agreement and Greek Finance Minister Evangelos Venizelos said he expected a deal. The finance ministers are scheduled to meet at around 1500 GMT.   Euro zone ministers need to agree new measures to make the financing work, given the ever-worsening state of the Greek economy. But they say an agreement on Monday will help restructure Athens' vast debts, put it on a more stable financial footing and keep it inside the 17-country euro zone.

Germany has indicated it remains against boosting the eurozone's bail-out funds, despite it being the expected quid pro quo after 24 other EU member states signed up to the Berlin-pushed 'fiscal compact treaty - but its position may change after a key vote in the Bundestag end of February.

Eurozone finance ministers meeting in Brussels on Monday (20 February) are set to discuss the possibility of raising the ceilings of two bail-out funds, the temporary European Financial Stability Facility (EFSF) and the upcoming permanent European Stability Mechanism (ESM).

EU leaders in December agreed to come back to the issue on 1-2 March during a summit, pending the agreement on an inter-governmental treaty on fiscal discipline, demanded by Germany.

EUobserver understands that Germany is still against expanding the funds and is saying it will maintain this position in March, arguing that "market conditions have improved" since December and there is no need to increase the funds' firepower.

A meeting of finance ministers in Brussels will see France and Germany present plans to align their national corporate tax regimes, as the European Commission's own attempt at EU-level harmonisation has so far failed to garner the required unanimity among the 27 member states.

France and Germany have taken the lead on fiscal convergence in the eurozone by announcing in August their joint plans to establish a common corporate tax between themselves, as of January 2013.

François Baroin and Wolfgang Schäuble, the two finance ministers, will report progress on those plans at a meeting of the EU's 27 finance ministers in Brussels on Tuesday (21 February).

"Europe goes forward at 27 but it is not forbidden to have smaller groups that go a little bit faster," argues a national diplomat in Brussels, explaining that "the Franco-German couple is bringing forward a number of technical solutions to overcome divergences in fiscal regimes."

The diplomat said the initiative, although bilateral for now, could be seen as a Franco-German contribution to an EU attempt to introduce a Common Consolidated Corporate Tax Base (CCCTB), hoping it will inspire others.

"From this presentation we are expecting to create a dynamic on the issue of fiscal convergence on a subject which requires unanimity," the diplomat said, adding that a European consensus on tax issues was "sometimes difficult to find."

Britain is the staunchest opponent to a European Commission proposal, presented in March last year, to introduce a CCCTB. Ireland has also rejected any change to the corporate tax rate for companies on its soil, which at 12.5% is among the lowest in Europe, but said it was ready to "participate constructively in discussions on the CCCTB and fiscal policy in the framework of the Euro Plus Pact," adopted last March

Optimism has not been an emotion experienced by too many Europeans of late. Yet that positive feeling is creeping into the markets. The big stock exchanges in Europe are all off to strong starts this year: The Dax index of German stocks is up 16 percent. Even the Athens stock exchange is up 21 percent. The bond markets, meanwhile, are easing borrowing costs for Spain and Italy, with yields below 6 percent on 10-year bonds. An impressive performance, considering the euro crisis is far from over and a risk still exists that Greece won't have the money to pay bondholders come March 20.

So why the sunnier feelings? Investors have a lot of reasons, some of them contradictory. They all show how far Europe's markets have come since the onset of the crisis in late 2009. There are five in particular:

• Despite the risks, the odds are mounting that Greece will get its 130 billion euro ($170 billion) bailout before March 20. The Germans, long the heavies in talks with the Greeks, have signaled a willingness to get the deal done. Angela Merkel's government is showing signs of flexibility on the aid and the writedown of Greek debt by private bondholders. If the Germans sign off, the Greeks get the rescue and a default is avoided. That's no guarantee Greece will crawl out of its hole. But avoiding a default for now means all kinds of unforeseen consequences are avoided as well.
• The European Central Bank's newfound willingness to lend banks as much money as they want for three years is proving very effective in supplying Europe's financial system with extra liquidity. The longer-term refinancing operations (LTROs) allow Europe's banks to post iffy collateral--like the banks' holdings of Greek sovereign debt--with the ECB, which provides cheap loans in return. The three years are long enough to bridge the crisis, and the money gives the banks time to improve their balance sheets and boost their own lending, the ECB hopes.

Apple is facing a "Nike moment" which hit the shoe company in the 1990s when its use of cheap labour in the Far East was revealed, one of the inspectors of Apple's Chinese suppliers has said.

Speaking to ABC News' Nightline program, Ines Kaempfer of the US Fair Labor Association, which is inspecting the Foxconn assembly plants used by Apple in China, said that "There was a moment for Nike in the '90s, when they got a lot of publicity, negative publicity. And they weren't the worst. It's probably like Apple. They're not necessarily the worst, it's just that the publicity is starting to build up." Kaempfer said "We call it the 'Nike moment' in the industry."

Foxconn, the Taiwan-owned manufacturer which is one of Apple's main contractors, said on Monday it has raised wages by up to 25% after a spate of suicides last year and reports of long hours for the hundreds of thousands of staff.

It is the second significant salary increase in less than two years at the world's largest electronics contract manufacturer, where workers' conditions have come under intense scrutiny. The inspection by a team from the US Fair Labor Association came at the prompting of Apple, the first technology company to join it. The FLA's stated aim is to end sweatshop conditions in factories.

Japan has posted a record trade deficit in January, as fuel imports rose sharply following last year's Fukushima nuclear disaster and exports were hit by a stronger yen and a slump in demand in Europe.

According to data released on Monday, the January deficit touched 1,475bn yen ($18.5bn), the highest since the nation began record-keeping in 1979, the finance ministry said.

The latest figure was more than triple the year-before shortfall of 479.4bn yen and far exceeded the previous monthly record of 967.9bn yen in January 2009 during the financial crisis.

The record figure comes after Tokyo registered an annual trade deficit in 2011, its first in 31 years.

"We expect this trend of deficit to continue until early 2013" as fuel demand for thermal power generation remains strong while slow global demand and the high yen hurts exports, said Yuichiro Nagai, an economist at Barclays Capital.

The case for ECB debt certificates

FT Alphaville has a very interesting technical article referencing a comment by Guy Mandy of Nomura, who makes the case for ECB debt certificates. Mandy says that LTRO's have given rise to excess liquidity that is seeking some long-term returns. The ECB's reverse liquidity operations to sterlise the SMP are subject to significant overbidding. If the ECB were to introduce debt certificates at varying maturities, it would be able to stabilise the money market situation, which has still not recovered, since banks now have the choice a riskless ECB deposit facility, as opposed to risky lending in the interbanking-market. Debt certificates would provide a useful collateral for use in inter-bank repo operations.

1. compete with German Bunds in the bond markets; Financially, since Germany intends to shrink its outstanding debt (since it intends to run a balanced budget) this might be a good thing. Politically, I would expect some hysterics from Germany.
   
2. drain cash from the financial system. What is the point of loaning out wads of cash at the LTROs just to take it back with debt certificates? The net effect on the private banks' balance sheets is a swap of the toxic waste collateral of the LTROs for pristine ECB debt certificates.
   
3. compete with "productive investment into the real economy" if you believe in loanable funds.

Pretend you're a three-year-old, exploring an exciting new room full of toys. You and another child come up to a large machine that has some marbles inside, which you can see.  There's a rope running through the machine and the two ends of the rope hang out of the front, five feet apart. If you or your partner pulls on the rope alone, you just get more rope. But if you both pull at the same time, the rope dislodges some marbles, which you each get to keep. The marbles roll down a chute, and then they divide: one rolls into the cup in front of you, three roll into the cup in front of your partner.