EUOBSERVER / BUCHAREST - Washington continues to support the EU-backed Nabucco gas pipeline, but this project is "only a piece of the puzzle" when it comes to reducing Europe's reliance on Russian gas, US special envoy for Eurasian energy Richard Morningstar has said.

"We support Nabucco. We support the Southern Corridor. It's an important part of the puzzle, but it's only one piece," Mr Morningstar told EUobserver on Wednesday (30 September) in an interview on the margins of a Black Sea energy forum organised in Bucharest by the Atlantic Council, a Washington-based think tank.

Russia will continue to be a 'major player' in the gas field, says the US.

Alternative technologies and energy efficiency were also important in Europe's bid to reduce its reliance on Russian gas, he said.

"More interconnections between the countries in Europe, more storage facilities, terminals for liquified natural gas (LNG) - all will help reduce dependence on a sole supplier."

But at the same time, Russia will be a "major player over the coming years. That's a reality," he noted, while making clear that the US energy policy in the Caucasus and Central Asia was not 'anti-Russia.'

EUOBSERVER / BRUSSELS - The body responsible for managing the development of the internet, Icann, has cut its umbilical cord to the US government, a move the European Union has been demanding for four years.

The Internet Corporation for Assigned Names and Numbers, which oversees domain names - the .com, .eu, .org and so on at the end of a web address - as of 30 September will no longer be subject to review by the US Department of Commerce.

Brussels gave a qualified welcome to the US decision

Instead, independent review panels appointed by Icann Governmental Advisory Committee (Gac) and Icann itself with the involvement of governments around the world. will perform this task.

Since 2005, the EU has been calling for reform of the governance of the internet, saying that the internet is a global resource and should not be tied to one national government - a position echoed by many other countries and a number of companies.

Indicted war criminal and former Serb general Ratko Mladic has brazenly eluded capture for 13 years, living the comfortable life of a pensioner in Belgrade. Politicians, the army and -- it now appears -- Western intelligence services have been helping him the whole time.

The Luda Kuca café is located on Yuri Gagarin Street in New Belgrade, a satellite town of concrete high-rise apartment blocks. Luda Kuca means "crazy house" -- a fitting name for the café. Until recently, one of its regulars was a bearded faith-healer with a penchant for singing Serb hymns late at night as he sat at one of the café's three tables. The singer's name was Radovan Karadzic. Today the former leader of the Bosnian Serbs is in jail in The Hague facing trial for war crimes.

Nothing has changed in Luda Kuca since Karadzic stopped coming. His picture still hangs on the wall alongside portraits of Serbian ex-president Slobodan Milosevic and Ratko Mladic, the former Bosnian Serb military chief who has been on the run since 1995, when an international warrant was issued for his arrest. Mladic stands accused of crimes against humanity for the slaughter of thousands of Muslims during the Bosnian War. The stocky former general was once hailed as a hero. Today most Serbs would rather see him in the dock alongside Karadzic and all the others.

With coalition negotiations set to begin on Monday, Chancellor Angela Merkel's Christian Democrats have made it clear that their new coalition partners, the Free Democrats under Guido Westerwelle, will have to scale back their demands.

It was a sentence that Guido Westerwelle, head of the pro-business Free Democrats and soon to be the junior coalition partner in Germany's next government, couldn't repeat often enough.

"I won't sign any coalition agreement that doesn't include a simple, low and fair tax system," he would say whenever he got the chance. It was a cornerstone of his campaign -- and it seems to have worked. His FDP raked in 14.6 percent of the vote, the party's best result ever.

But when asked to repeat the promise on Monday, the day after the general elections that secured a second term for Chancellor Angela Merkel, Westerwelle suddenly got cold feet. He said only, "I am not going to repeat that sentence again. I have said it often enough."

Not Up for Debate

The cat that suddenly got Westerwelle's tongue has a name: Angela Merkel. The two will meet on Monday to begin the process of hammering out a coalition agreement that will guide the next four years of German governance -- and Westerwelle knows that Merkel's Christian Democrats, which got 33.8 percent of the vote on Sunday, will not accept many of the policy proposals that his party holds dear. Radical tax cuts are among them.

Romania's coalition government has collapsed after the Social Democrat Party (PSD) resigned, officials say.

The leftist coalition partner said it had pulled out in protest against the sacking of the interior minister.

The PSD's Dan Nica was this week fired by centrist PM Emil Boc after he made comments about the potential for fraud in presidential elections next month.

Party leader Mircea Geoana said all PSD ministers in government were resigning to protest against his dismissal.

EUOBSERVER / BRUSSELS - Lithuanian foreign minister Vyguadas Usackas has said the EU made a mistake in setting up the enquiry into the Georgia war, amid Russian claims that the investigation has proved it right.

"If I had been in the [EU] Council at the time, I would not have supported this idea," Mr Usackas said in a phone interview with EUobserver on Wednesday (30 September).

A statue of the early Georgian king, Vakhtang I, in Tbilisi. Mr Usackas' trip is designed to show "solidarity"

"The wounds are too sensitive to open. I don't think it's useful from a pragmatic point of view, just one year after the conflict, to engage in a not very helpful debate about who should be blamed."

The minister made the remarks on the eve of a trip to Tbilisi for meetings with President Mikheil Saakashvili and opposition figures, designed "to show solidarity with the Georgian people."

The judges of the UK's new Supreme Court, designed to replace the Law Lords (pictured), were sworn in on Thursday. The court's creation is a key step in reforming the UK's unwritten constitution, a process launched under former PM Tony Blair.

AFP - British constitutional history was made Thursday as judges in a new Supreme Court were sworn in, replacing the House of Lords as Britain's highest appeal tribunal.

Ending an ancient judicial quirk, 11 new Justices took their oaths of office in the new Supreme Court of the United Kingdom, housed in a gothic building just across from the Houses of Parliament.

"This is the last step in the separation of powers in this country," said Lord Nicholas Phillips, president of the new court which will also break ground by allowing live television coverage for the first time.

The French government has distanced itself from film director Roman Polanski. It had originally protested the arrest of the Oscar winning film director, but following a backlash the government has changed its tune.

Reuters - France's government changed its tone on Wednesday on the arrest of Roman Polanski for having sex with a 13-year-old girl, describing the charges as serious after initially rushing to the film director's defence. 

France and Poland, where the 76-year-old Oscar-winning director spent his childhood, at first loudly protested against Polanski's arrest last weekend.  

But U.S. Secretary of State Hillary Clinton said on Wednesday that it was for judges, not diplomats, to handle the  case which dates back to 1977. 

After French politicians across the spectrum initially voiced strong unease over the arrest, a government spokesman modified the official line on Wednesday, saying that Polanski was "neither above nor below the law". 

The Dutch military presence in Afghanistan will almost certainly end next year. Coalition partners Labour and ChristenUnie will block any move to extend the mission.

The surprise motion by coalition partners Labour and the orthodox Christian ChristenUnie was tabled late on Wednesday night at the end of a debate in parliament about the Dutch participation in the Nato mission in Afghanistan. A vote will follow later this week.

Prime minister Jan Peter Balkenende (Christian Democrats) had come to parliament together with foreign minister Maxime Verhagen (Labour) and defence minister Eimert van Middelkoop (ChristenUnie) to explain the government position about Afghanistan. The Netherlands currently has around 1,450 troops in Uruzgan province in Afghanistan. Confusion had risen in the past months over the future of the Uruzgan mission. The Netherlands joined the Nato mission in Afghanistan in 2006 for what was supposed to be a two-year operation. When the mission was extended for another two years the government said Dutch troops would definitely be out of Afghanistan by the end of 2010.

More than two hundred female Dutch professionals have signed a manifesto demanding a quota for women in top positions.

It was with mixed feelings, Bercan Günel admits, that she and 214 other female professionals decided to sign a manifesto demanding a quota for women in top positions in both private companies and public institutions. "It is after all a desperate measure," says the director of the headhunting agency Woman Capital.

For years the women's lobby has opposed legislation to enforce equal opportunities in the top echelons of the private and public sector. Günel: "We thought voluntary initiatives would be enough to bring about the cultural shift." But despite all the promises the percentage of women hired for top jobs remained disappointing. According to Woman Capital it is currently at 6 percent, and it is not expected to rise above 12 percent for 25 years.

France and Germany are planning a new treaty of friendship and an array of other joint schemes that could push Britain to the sidelines in Europe, according to sources close to President Sarkozy.

The plan to put Paris and Berlin back at the heart of the stalled European Union covers defence, immigration, a new industrial policy and a drive to loosen what the pair see as Britain's grip on the European Commission.

The revamped Franco-German axis may include the permanent assignment of ministers in each other's Cabinets. The initiative would exploit Britain's situation, with Gordon Brown weakened and distracted by next year's general election and the decision by the Conservatives to quit Europe's main centre-right grouping, the European People's Party.

Paris and Berlin, reverting to the old idea of a two-speed Europe, aim to push ahead with a separate headquarters for European defence and the promotion of industrial champions. Britain wants none of that. The scheme, already far advanced, will follow this week's repeat referendum in the Irish Republic on the Lisbon treaty, whether the vote is "yes" or "no".

September 28, 2009:

October 1, 2009:

More than 300 families were warned last night that they may never know whether their children fell prey to a female nursery worker who sexually abused babies in her care and swapped sickening images of the acts with two other paedophiles she met on Facebook. <...>

Many of the images were classified at the most serious level and showed terrible sexual assaults on the victims, most of whom were Little Ted's pupils under 18 months old. Blanchard, a businessman from Smallbridge, Rochdale, and Allen, of Nottingham, also admitted to using text messages and the internet to share and create images with George who, until her arrest in June, was regarded as a "warm and bubbly" nursery worker.

Their confessions have shocked the communities of Efford and Laira - two quiet Plymouth suburbs whose working families relied on Little Ted's nursery, where George was employed without suspicion for three years. ...

A second credit squeeze and a £200bn national "funding gap" threatens to sabotage the recovery in the British economy, the IMF warned yesterday.

In its latest Global Financial Stability Report, the fund said that a combination of a soaring government deficit and the borrowing needs of British companies and consumers - coupled with a still broken banking system - would leave the UK with a national "funding gap" of 15 per cent of GDP, or around £200bn next year, much higher than in either the US or the euro area.

The IMF also pointed out that the UK's continuing need to borrow from abroad to plug this gap leaves the nation exposed to sharp changes in investment sentiment. Should such a change occur, says the IMF, then sterling could fall even further and interest rates would have to rise before the recovery had been fully secured. UK banks are also exposed to relatively large foreign loan books.

There was clearly a danger that the dispute could have been diverted into a chauvinistic blind alley, but it didn't happen. Union activists gave short shrift to far-right British National Party infiltrators. The strikers didn't scapegoat the foreign workers; they blamed the government and the employers. And the real nature of the strikes was driven home by the hundreds of Polish migrant workers who joined the walkouts at Langage power station in Plymouth: this was a campaign not for privileges for indigenous over foreign workers, but against the use of foreign-based contract Labor to exclude or undercut all workers in Britain.

But the narratives of a protectionist threat and working class racism are so ingrained in the mainstream British media that news reports simply adjusted reality accordingly. In the BBC's main evening TV news bulletin, one striker was shown saying, "we can't work alongside of them", in a reference to Italian and Portuguese workers. The second part of the sentence - "we're segregated from them" - was cut, turning the meaning of what the man was saying on its head and giving the false impression that local workers were refusing to work with foreigners. Meanwhile, tabloid newspaper journalists tried to convince picketing workers to be photographed with Union Jack flags.

"The reporting of the strikes was based on a massive misconception," Paul McDowall, Unite shop steward at the Lindsey site, insists. "The real purpose of our action was quite simply to protect the terms and conditions, pay, welfare and health and safety that we've built up over many years - and that remains the case. It had nothing to do with xenophobia."

ATHENS (Reuters) - Greece must shame corrupt politicians, cap immigration and be tougher on Turkey, far-right leader George Karatzaferis said ahead of an October 4 election where he is seen gaining support.

Karatzaferis' Popular Orthodox Alarm party (LA.O.S) has ridden a wave of discontent with corruption and economic hardships to win up to 6.4 percent of support in opinion polls, after becoming in 2007 the first far-right group to enter Greek parliament since the return to democracy in 1974.

"People are angry ... we are heading to elections and no one has been punished, or at least, exposed," the former bodybuilder and journalist told Reuters in an interview. "The most constructive way would be to reveal the names. If names were revealed, the rest would be afraid of the public humiliation."

After coming to power in 2004 on a promise to clean up Greek politics after decades of socialist graft, the outgoing conservatives have themselves been shaken by scandals, an issue much highlighted by LA.O.S in election pamphlets.

Greek elections have traditionally been raucous, ebullient affairs, a true celebration of democracy in the country that gave birth to the concept. This year, the mood is noticeably more sombre ahead of Sunday's vote. Colourful elections kiosks at main squares stand nearly empty, attracting few voters. The chat at cafes and on the Internet usually centres on voters' disappointment with politics as a whole for failing to fight corruption and put the economy on a steady growth path.

"Our expectations were dashed," said financial analyst George Kaisarios on the NewsTime blog. "The three pylons of our development strategy in the last decade, euro zone entry, Olympic Games and credit expansion, have been wasted. And unfortunately for all of us, there is nothing on the horizon to replace them."

One mood damper for Greek voters is that Oct 4 election is another big battle between the political dynasties trapped in an endlessly revolving door of political rule, with few fresh faces to excite the crowds.

The heirs to Greece's two most prominent political families are facing off for the third time. Socialist opposition leader George Papandreou seems set to wrestle power back from conservative New Democracy Prime Minister Costas Karamanlis after 5 years, according to the last published opinion polls.

Europe is watching Ireland anxiously on the eve of the second referendum. And while the "yes" camp seemed to be in the lead for weeks, the aggressive campaign against the Lisbon Treaty now appears to be swaying undecided voters.

Niamh is 19 years old. She studies Design, wears green chucks, heavy mascara, and a nose ring. She could not care less about politics but she has just been approached by an old man on Grafton Street. "He was so nice," she says. "Beforehand, I actually wanted to vote 'no,' but maybe now I'll be voting 'yes.'"

She doesn't know him. "Is he famous?" she asks. The man is Eamon Gilmore, leader of the Irish Labour Party. He's trudging through Dublin in a last ditch attempt to prevent a second calamity in Europe. On Friday the Irish will be voting for the second time on the treaty that hopes to reform the European Union. This time around nothing is supposed to go wrong.

PERHAPS ONE of the most interesting features of the latest Irish Times /TNSmrbi poll on attitudes to the Lisbon Treaty is the doubling in a year, from 9 to 18 per cent, in the number of those who say that it would be better not to be part of the European Union. Forty-three per cent of No supporters are of this view.

Although most No campaigners, from Declan Ganley to Joe Higgins, profess to be strong supporters of the idea of a European union, albeit very different models, one result of their campaign has in fact been to push very significant numbers into the ranks of outright Euroscepticism. In the face of such a reality those making the case for Lisbon have again found it necessary to go back to basics to remind voters of the case for EU membership itself.

The treaty defines the nature of our membership and of our relationship with our partners in what has been and remains for this State an enormously important and beneficial common project. The EU has helped to lay the basis of our economic and social transformation and has brought down barriers across a continent, opening extraordinary opportunities for travel and education of our young and for business. It has provided an international platform for Ireland to find its "place among the nations", to establish a separate identity from the British, and in the process has contributed significantly to peace on this island. In the wake of a century marked by Europe's bloodiest wars, it seems extraordinary to have to restate that the EU provides a unique, first-of-its-kind, democratic model for peaceful reconciliation, balancing the interests of sovereign nations large and small, an important counterweight economically and politically to great power rivalry.

Democracy, cross-border crime and climate change are issues that resonate with young Irish people, a 'yes' campaigner says, which is why people should vote for the EU reform Lisbon treaty in a referendum on 2 October

`Jesus, it's about time.' That was how one of the first people I canvassed responded when asked if he would like some information on the Lisbon treaty. At a time when lies and misinformation are flooding the public stage, Irish people are crying out for real information. The political establishment is too discredited to do this effectively, and so it falls to grassroots civil society organisations to provide the facts and honest analysis that people need to make an informed decision on an issue of critical importance for the future of our country. Important for young people

That's why I started working with Generation YES, an independent campaign set up in December 2008 by young people who were dismayed by the prospects for our jobs and futures if we rejected Lisbon again, and by the failure of the mainstream campaigns to address these issues from the perspective of young people. Fuelled by the energy of our volunteers we have grown into a force to be reckoned with. We have harnessed the power of social networking to build up by far the largest online fanbase of any Lisbon campaign group. Armed with the certainty that Lisbon is a good treaty which will be good for Ireland, we now have to go out and argue the case with our peers around the country.

The world's economy will begin recovering from a deep recession starting next year, but progress will be slow, according to a revised economic forecast released by the International Monetary Fund (IMF).  

Private demand remains weak and unemployment will continue to rise in 2010, according to the IMF's semi-annual World Economic Outlook, which was released Thursday. Yet things are looking a little better than they did this summer, according to the IMF.

"The recovery has started. Financial markets are healing," IMF chief economist Olivier Blanchard told reporters in Istanbul, where leaders from the IMF and World Bank are gathering for annual meetings.

The global economy will contract 1.1 percent this year, but will grow 3.1 percent in 2010, according to the IMF. That is better than figures released by the IMF in July, in which it forecast a 1.4-percent contraction in 2009 and 2.5-percent growth in 2010.

The popular deals are known as "re-remic," which stands for resecuritization of real-estate mortgage investment conduits. The way it works is that insurers and banks that hold battered securities on their books have Wall Street firms separate the good from the bad. The good mortgages are bundled together and create a security designed to get a higher rating. The weaker securities get low ratings.
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A hypothetical example cited in research by Barclays Capital said that a $100 million asset that required $2 million in capital at a triple-A rating may require $35 million if downgraded to double-B-minus. At triple-C, the capital requirement might rise to 100%, or $100 million.

In a re-remic, three-fourths of the same asset may regain a triple-A rating, requiring just $1.5 million in capital, Barclays said. The remaining one-quarter may require 100% capital, but the total capital requirement would fall to $26.5 million.
...
"There is $350 billion to $400 billion in market value of securities with no natural buyer due to their rating," Barclays said in a June report. "The re-remic market provides a way out of this gridlock by creating new AAA securities, which are likely to be viewed as attractively priced."

Eurozone unemployment has edged up to its highest level for more than 10 years but the rate of increase has slowed noticeably, in the latest sign that government policies are curbing steep rises in job losses.

Seasonally adjusted unemployment in the 16-country region rose in August by 165,000 to 15.2m, reported Eurostat, the European Union's statistical office. The latest increase was similar to those seen since May but sharply lower than earlier in the year, when monthly increases were averaging about 400,000.

At 9.6 per cent of the workforce, however, the eurozone unemployment rate was the highest since March 1999.

Unemployment rates also vary markedly between eurozone countries. Joblessness remains by far the worst in Spain, where the unemployment rate leapt from 18.5 per cent in July to 18.9 per cent in August. In contrast, the Netherlands reported a rate of just 3.5 per cent in August, the lowest rate in the European Union.

Large financial institutions should face a costly combination of higher capital requirements, tougher regulation and higher insurance premiums "making it less profitable to be `too big to fail'", Ben Bernanke told Congress on Thursday.

The chairman of the Federal Reserve said there was a case for levying higher premiums on the largest interconnected companies, amplifying the risk adjustment made by the Federal Deposit Insurance Corporation. "The FDIC risk adjusts the premiums they charge to banks for deposit insurance," he told the House financial services committee. "Perhaps it's time to revisit that."

Data has long been the big hurdle to obtaining precise estimates of fiscal multipliers. In CEPR Policy Insight No. 39, we present our estimates of the fiscal multipliers for developed and emerging economies using new quarterly data for 45 countries (20 high-income and 25 developing) spanning 1960 through 2007. Using this, we estimated fiscal multipliers for different groups of countries.¹ The main results are presented in more detail in our Policy Insight. Here is a brief summary of the highlights:

• The response of output to increases in government spending is smaller on impact and considerably less persistent in developing countries than in high-income countries.
• Fiscal multipliers are much larger in economies operating under predetermined exchange rate regimes than under flexible exchange rates.
• Relatively closed economies have much larger multipliers than relatively open economies.
• The output response to increases in government spending is short-lived and much less persistent in highly indebted countries than in countries with a low debt to GDP ratio.
• The multipliers for the US in the post-1980 period are small both in the short and long-run. On the other hand, multipliers for government investment are large.

What entered the crisis was, we now know, an ill-managed, irresponsible, highly concentrated and undercapitalised financial sector, riddled with conflicts of interest and benefiting from implicit state guarantees. What is emerging is a slightly better capitalised financial sector, but one even more concentrated and benefiting from explicit state guarantees. This is not progress: it has to mean still more and bigger crises in the years ahead.
...
So what is the answer? Division of banking into a "utility" and a "casino" is Mr Kay's answer. The big idea is that insured deposits should be backed by "genuinely safe liquid assets" - known as 100 per cent reserve banking. In practice, these assets would be government bonds. This is the most rigorous form of narrow banking.
...
In practice, however, we have gone much further than this. We have also explicitly guaranteed many deposits and implicitly guaranteed many more liabilities. Indeed, in the crisis, policymakers guaranteed all the liabilities of institutions deemed systemically significant. Today, the core financial institutions are, beyond doubt, a part of the state. Mr Kay's proposal is, in sum, to end the fraud: banks would be forced to hold assets as safe and liquid as their liabilities.
...
The most important point is that where we are now is intolerable. Today's concentrations of state-insured private wealth and power must surely go. At present, the official sector believes tighter regulation, particularly higher capital requirements, can contain these risks. But this is likely to fail. If it does, we will need to be radical. Yet narrow banking would still not be enough. We would need to rule out quasi-banking. Otherwise, we would soon return to the world of fragility and bail-outs. Funds that replace banks would have to pass the risks directly on to the outside investors.

The authorities will not entertain such radical ideas right now. But the financial system is so inherently fragile that radical reform cannot be pronounced dead. It is only dormant.

Not only that, but imagine the situation of the chief risk manager of a bank in, say, 2004. As Andrew Lo has argued, if he attempted to reduce his bank's exposure to structured securities such as CDOs, he would be out of a job; VaR gave him a handy tool to rationalize a situation that defied common sense but that made his bosses only too happy. And at the top levels, CEOs and directors who probably did not understand the shortcomings of VaR were biased in its favor because it told them a story they wanted to hear.

In other words, models succeed because they meet the needs of real human beings, and VaR was just what they needed during the boom. And we should assume that a profit-seeking financial sector will continue to invent models that further the objectives of the individuals and institutions that use them. The implication is that regulators need to resist the group think of large financial institutions.  If everyone involved is using the same roadmap of risks, we will all drive off the cliff again together. 

As a matter of national accounting, the domestic private sector cannot net save unless and until foreign or government sectors net deficit spend. Call this the tyranny of double entry bookkeeping:  the government's deficit equals by identity the non-government's surplus.

Hence, if the US private sector is to rebuild its balance sheet by spending less than its income, the government will have to spend more than its tax revenue. The only other possibility is that the rest of the world begins to dis-save massively--letting the US run a current account surplus--but that is highly implausible, and socially undesirable, since it means we export our economic output, rather than consume it domestically. And if the government deficit does not grow fast enough to meet the saving needs of the private domestic sector, national income will decline, which, given the size of the private sector's debt problem, will generate a huge debt deflation.

This is the foundation of modern monetary theory.  Would that the IMF and the G20 understood these basic facts.  The anodyne communiqué from last weekend's Pittsburgh summit makes clear that this is not the case.  Western policy makers appear determined to consign us to years of additional economic misery because of the continued embrace of a flawed market fundamentalist economic paradigm.

So far, instead of trying to revive the productive economy, most of the G20's resources have consisted of mouth-to-mouth resuscitation for a dying financial sector.  This has not "worked" to the extent that last weekend's communiqué advertised.  The best analogy to describe the current state of our financial system is that we have placed scaffolding over a decaying building, but done little to repair the underlying structure.  What happens when the economic scaffolding is removed via "exit strategies", as the G20 participants have advocated?

...

For many generations, we didn't face the unprecedented financial fragility we are experiencing today. But there are good reasons why we avoided this until recently.  We have spent the past quarter century eviscerating what was fundamentally a robust structure originally devised during New Deal, a system which basically saved the US capitalist system and served the interests of its citizens very well until it was hijacked by a bunch of corporate predators under the guise of deregulation and neo-liberalism.

Alan Greenspan, former Federal Reserve chairman, continues to argue that even financial products that led to the economic crisis should not be banned, affirming his belief that markets should be the final arbiter over which tools work.

Mr Greenspan, who has faced criticism for making decisions that allowed the economic crisis, maintains that the market should judge these products. He disagrees with those, such as George Soros, who has called for an outright ban on tools that may have led to the crisis, and Dominique Strauss-Kahn, director of the International Monetary Fund, who has called for tougher regulation.

Video: Greenspan and Strauss-Kahn on financial regulation
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Mr Greenspan's remarks came almost a year after he acknowledged at a Congressional hearing that he had "found a flaw" in his thinking and that he was wrong to assume that banks would protect themselves from financial market chaos.

The World Bank group is set to launch a $5.5bn initiative to raise funds to buy distressed assets from banks in emerging and developing markets in a bid to clean up their balance sheets and free up credit flows.

The move came as the International Monetary Fund warned on Wednesday that rising losses on loans were likely to strain bank balance sheets in emerging Europe "for years to come", saying non-performing loan ratios could peak as high as double their current level.

The International Finance Corporation - the World Bank's private sector arm - will commit $1.5bn (€1bn, £940m) of its own money to the scheme and hopes to raise $4bn from partners including private sector investors and other development institutions.

The idea is to mimic the functions of a "bad bank" at an international level through a number of platforms rather than a single global investment vehicle.

"A year ago," said law professor Ross Buckley on Australia's ABC News last week, "nobody wanted to know the International Monetary Fund. Now it's the organiser for the international stimulus package which has been sold as a stimulus package for poor countries."

The IMF may have catapulted to a more exalted status than that. According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week's G20 Summit in Pittsburgh was that "the IMF is being anointed as the global central bank." Rickards said in a CNBC interview on September 25 that the plan is for the IMF to issue a global reserve currency that can replace the dollar.

"They've issued debt for the first time in history," said Rickards. "They're issuing SDRs. The last SDRs came out around 1980 or '81, $30 billion. Now they're issuing $300 billion. When I say issuing, it's printing money; there's nothing behind these SDRs."

SDRs, or Special Drawing Rights, are a synthetic currency originally created by the IMF to replace gold and silver in large international transactions. But they have been little used until now. Why does the world suddenly need a new global fiat currency and global central bank? Rickards says it because of "Triffin's Dilemma," a problem first noted by economist Robert Triffin in the 1960s. When the world went off the gold standard, a reserve currency had to be provided by some large-currency country to service global trade. But leaving its currency out there for international purposes meant that the country would have to continually buy more than it sold, running large deficits; and that meant it would eventually go broke. The U.S. has fueled the world economy for the last 50 years, but now it is going broke. The U.S. can settle its debts and get its own house in order, but that would cause world trade to contract. A substitute global reserve currency is needed to fuel the global economy while the U.S. solves its debt problems, and that new currency is to be the IMF's SDRs.

Video: Joseph Stiglitz

James Surowiecki spoke with Professor Joseph Stiglitz, the Nobel Prize-winning economist, about the mishandling of the financial crisis, the relationship between government and markets, and the future of capitalism around the world. They met last month at Stiglitz's office at Columbia University.

Employers cut more jobs than forecast last month and the unemployment rate rose to a 26-year high, calling into question the sustainability of the economic recovery.

The unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was less than previously reported.

Federal Reserve Chairman Ben S. Bernanke yesterday said the expansion may not be strong enough to "substantially" bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it's pumped into the economy.
...
September's losses bring total jobs lost since the recession began in December 2007 to 7.2 million, the biggest decline since the Great Depression.
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Today's report also showed the average work week shrank to 33 hours in September, matching a record low, from 33.1 hours in the prior month. Average weekly hours worked by production workers dipped to 39.8 hours from 39.9 hours, while overtime decreased to 2.8 hours from 2.9 hours. That brought the average weekly earnings to $616.11 from $617.65.  

A stress test of the European Union's biggest banks showed they could withstand an even deeper recession, though with almost 400 billion euros ($581 billion) in losses, according to a report to EU finance chiefs.

Under current EU economic forecasts for 2009 and 2010, the largest banks in the region would maintain an average Tier 1 capital ratio "well above" 9 percent, the officials said yesterday in a statement after meeting in Gothenburg, Sweden. A "more adverse" scenario would boost losses and cut the average ratio to about 8 percent.

China has celebrated the 60th anniversary of Communist rule with a huge military parade featuring hundreds of thousands of soldiers marching in lockstep, tanks, missiles and fighter jets. The Communist Party was sending an important message to the world -- and to the Chinese population.

The new China looked a lot like the old China on Thursday. The Communist Party celebrated the 60th anniversary of the founding of the People's Republic with a massive military display and a parade of more than 200,000 flag-waving people.

It's a nation marching in lockstep into the future. Endless rows of students, railroad workers and nurses marched along the Avenue of Eternal Peace, after the military had passed. They held banners featuring slogans like: "The whole country builds prosperity."

At least 770 people are now known to have died in a powerful quake that struck the Indonesian island of Sumatra on Wednesday, ministries say.

Rescuers struggled on Thursday to find survivors in the rubble of hundreds of collapsed buildings.

Almost 2,400 people have been injured, and the death toll is expected to rise further, officials say.

The 7.6-magnitude quake struck close to the city of Padang, the capital of West Sumatra province.

The earthquake brought down hospitals, schools and shopping malls, cut power lines and triggered landslides.

"I came to the conclusion very soon that this probably wasn't the right way to go. Probably before I left Guantanamo, I was of the opinion it needed to go away as soon as possible. I think we lost the moral high ground." These are the words of Marine Major General Michael Lehnert, the man who, as it turns out, built the special prison at Guantánamo, delivered in an interview last week just before his retirement. Lehnert is hardly an outlier among the brass on this issue. Increasingly, senior retired military leaders are speaking out against former Vice President Dick Cheney and his daughter, Liz, for their fact-free fear-mongering about Gitmo. At a forum on Capitol Hill on Tuesday, a group of more than two dozen retired generals and admirals took on Cheney's claim that Gitmo should be kept open, and some had harsh words for the former defense secretary. They also had a simple message to President Obama: Stick to your guns and shut down Gitmo as quickly as possible.

Iran agreed in principle to send "most" of its known stockpile of enriched uranium for processing abroad to make fuel rods for a medical research reactor, in what U.S. and European officials said Thursday after day long talks in Geneva would be a significant move that would delay Iran's potential to build a nuclear weapon.

While diplomats were cautious about the outcome of the talks, held in an 18th century villa on Lake Geneva, they said that if carried through the deal to transfer enriched uranium could go a long way to establishing confidence in Iran's intentions and reassuring concerns in the region.

A Texas judge cleared the way for two Dallas men to get a divorce, ruling Thursday that Texas' ban on same-sex marriage violates the constitutional guarantee to equal protection under the law.

Texas Attorney General Greg Abbott said he'd appeal the ruling, which he labeled an attempt to strike down the ban approved by voters in 2005.

"The laws and constitution of the State of Texas define marriage as an institution involving one man and one woman," Abbott said in a written statement. "Today's ruling purports to strike down that constitutional definition -- despite the fact that it was recently adopted by 75 percent of Texas voters."

Abbott has argued that because the state doesn't recognize gay marriage, its courts can't dissolve one through divorce.

Children who eat sweets and chocolate every day are more likely to be violent as adults, according to UK researchers.

The Cardiff University study involving 17,500 people is the first into effects of childhood diet on adult violence.

It found 10-year-olds who ate sweets daily were significantly more likely to have a violence conviction by age 34.

Researchers suggested they had not learnt to delay gratification, but other experts said already "difficult" children might be given more sweets.

The researchers looked at data on around 17,500 people and found that 69% of the participants who were violent at the age of 34 had eaten sweets and chocolate nearly every day during childhood, compared to 42% who were non-violent.

In an effort to raise nuclear power production, energy companies are building a new reactor and power line in Normandy in northern France. The plans have attracted strong opposition from local residents.  

A region better known for camembert cheese, lush rolling hills and apples, Normandy has become an unlikely battleground for France's efforts to boost nuclear energy production.

 

State-controlled energy company EDF is building France's first ever third generation nuclear reactor (termed a European Pressurized Reactor) in the town of Flamanville. And RTE, the electricity transmission network operator, is constructing a new overhead power line in the region. Work on the Flamanville reactor is set to be complete by 2012.  

 

The plans have angered local residents who fear the high-voltage cables could lead to dangerous health and environmental effects.

Jean-Claude Bossard, mayor of the Normandy town of Le Chefresne, represents one of the 64 communities protesting the Contentin-Maine line -- a163-kilometer-long stretch of overhead power lines that will transport electricity from the Flamanville nuclear reactor.

A 2005-2007 dry spell in the southeastern United States destroyed billions of dollars of crops, drained municipal reservoirs and sparked legal wars among a half-dozen states--but the havoc came not from exceptional dryness but booming population and bad planning, says a new study. Researchers from Columbia University's Lamont-Doherty Earth Observatory defied conventional wisdom about the drought by showing that it was mild compared to many others, and in fact no worse than one just a decade ago. According to the study, climate change has so far played no detectable role in the frequency or severity of droughts in the region, and its future effects there are uncertain; but droughts there are essentially unpredictable, and could strike again at any time. The study appears in the October edition of the Journal of Climate.

"The drought that caused so much trouble was pathetically normal and short, far less than what the climate system is capable of generating," said lead author Richard Seager, a climate modeler at Lamont. "People were saying that this was a 100-year drought, but it was pretty run-of-the-mill. The problem is, in the last 10 years population has grown phenomenally, and hardly anyone, including the politicians, has been paying any attention."

Region wide, the drought ran from late 2005 to winter 2007-2008, though many areas in the south were still dry until last week, when the weather turned conclusively, and flooding killed at least eight people. During the height of the dry period, Atlanta's main reservoir sank more than 14 feet, usage restrictions were declared in many areas, and states became embroiled in lawsuits among themselves and with the federal government over use of water in rivers and reservoirs.

Things would really get interesting when climate change no longer can be scapegoated for the bigger elephant in the room...

The French government Thursday said it plans to spend €1.5 billion (about $2.2 billion) on creating a battery-charging network for electric vehicles as part of a broader state plan to encourage the development of clean vehicle technology and battery manufacturing.
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The government will make the installation of charging sockets obligatory in office parking lots by 2015, and new apartment blocks with parking lots will have to include charging stations starting in 2012.

Chamber backtracks on climate change as resignations mount

Athletic footwear maker Nike has resigned from its position on the board of the US Chamber of Commerce, the latest sign that a major rift has formed within the US's preeminent business group over climate change legislation expected this fall.
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Nike is the latest and most high-profile company to publicly distance itself from the Chamber of Commerce, which has taken an active stance against proposed climate-change legislation.

Last week, two major utilities, the Public Service Company of New Mexico and California's Pacific Gas and Electric, left the chamber. PG&E said it was leaving because of the chamber's "extreme" position on climate change, the Associated Press reported.

Nowhere has the greening message had a bigger impact than in the building industry. Green or sustainable architecture is all the rage--as well it should be, because buildings use a lot of energy. The construction and operation of residential and commercial buildings consume as much as 40 percent of the energy used in the United States today.

The calculation of a building's total environmental impact must factor in everything from annual energy consumption to how and where building materials are manufactured and the handling of storm water. This requires some sort of rating system, and there are currently more than 40 of them in use around the world. Most, like LEED (Leadership in Energy and Environmental Design), which has become the standard in the United States, award points based on a checklist--daylighting, water recycling, solar panels, bicycle racks, and so on.

Over the past 60 years farmers have seen competition in the market place steadily disappear as corporate mergers concentrated all aspects of agriculture into the hands of a few multinational corporations.

Their profit comes at the expense of the farmer, the farm worker, consumer safety and the environment.

While farmers defend themselves against what they see as an attack by Pollan, they are really defending agribusiness. When they say they love their Roundup Ready corn, the hormones and the chemicals they are promoting the corporations that always make a profit whether the farmers win or lose.

When farmers disparage small-scale ecological agriculture because it "will never feed the world" they conveniently forget that conventional agriculture has not fed the world either, despite 60 years of promises to do so. They also ignore the findings of IAASTD that indicate the old paradigm of industrial agriculture is a thing of the past.

The industrial model sources food from the world, pits farmer against farmer in a race to the bottom. Globalized commodities converted into processed nutritionally empty foods, make corporations rich, Americans obese, and developing countries destitute .

Pollan just wants farmers and consumers to think. Agribusiness is rich and persuasive, they own both ends of the market place and they want to keep it that way. When people think about what they eat and what they grow, chances are, eventually, they will make the right choice.

The 10 nominations for this year's Sakharov prize for democracy and human rights campaigning were unveiled in the European Parliament on Wednesday (30 September).

Each of the candidates put forward at a joint meeting of the foreign affairs, development and human rights committees has the support of a political group in the parliament or at least 40 MEPs.

Last year's winner, Hu Jia, is celebrated in the European Parliament

The prize is named after Andrei Sakharov, the Soviet physicist and political dissident who advocated civil liberties and reforms in the Soviet Union.

Mr Sakharov, who died 20 years ago this December, was awarded the Nobel Peace Prize in 1975.

This year's candidates include Izzeldin Abuelaish, a Palestinian gynaecologist and resident of the Gaza Strip, who has campaigned for peace with Israel despite losing his three daughters in the bombardment of the strip in January.

An exclamation mark cannot be registered as a trade mark, European judges have ruled.

Joop!, a German clothing and perfume company, had applied to register two versions of the punctuation mark, one for a simple exclamation mark, the other inside a rectangular frame.

The Court of First Instance in Luxembourg said that the public would see the symbols as simply "an eye-catching gimmick".

I just got my Google Wave invite. No, I'm already out, so I can't send one to you, sorry.

But this service is way overhyped and as people start to use it they will realize it brings the worst of email and IM together: unproductivity.

See, the first thing you notice is that you can see people chatting live in Google Wave.

That's really cool if you are working on something together, like a spreadsheet or a Word document.

But it's a productivity sink if you are trying to just communicate with other people.

It also ignores the productivity gains that we've gotten from RSS feeds, Twitter, and FriendFeed.

One of next year's most eagerly anticipated films, a star-studded thriller featuring a thinly disguised version of Tony Blair, is in jeopardy because of the arrest of Roman Polanski.

The Oscar-winning director had recently finished filming The Ghost, his adaptation of the bestselling novel of the same name starring Pierce Brosnan. But the film is without a musical score and needs sound mixing and extra dialogue before a distributor can be found. With Polanski, who is in Switzerland, awaiting extradition proceedings to the US for having sex with a 13-year-old girl, there are fears that the negative publicity will ruin the film's chances at the box office.

Polanski co-wrote the script with the book's author Robert Harris.

Sources on the production of The Ghost, about a British prime minister facing indictment for war crimes, played by Brosnan, told The Times that they were determined to complete the final steps of the production process.

Just by writing this blogpost, I will probably damage my chances in Bracknell. Some will say 'if you can't take the heat...'. But I am damned if I am going to stay silent when I see a national newspaper indulge in a homophobic attack on me. A year ago, the Richard Kay column in the Daily Mail printed a fairly vile column about my civil partnership - full of innuendo and just plain nastiness. Today, the Ephraim Hardcastle column goes one better. Here's what they had to say about Bracknell...

A rare gemstone valued at £11m that helped to underpin the finances of a UK-based construction company could be almost worthless, reports suggest.

Known as the Gem of Tanzania, the 2.1kg (4.6lb) ruby appeared in accounts of the now collapsed Wrekin Construction.

Administrators Ernst & Young are now trying to sell the stone through the November issue of RocknGem Magazine and Colored Stone Magazine in the US.

Experts suggest it could be worth just £100, the Financial Times says.

The so-called "Wrekin Ruby" was used to revive the company's balance sheet and was listed in the accounts at £11m, despite being valued by a previous owner at £300,000, the paper adds.