Spain and Germany sought to reassure investors that Spain would not need a full international bailout, after its borrowing costs hit a record high.

German Finance Minister Wolfgang Schaeuble and his Spanish counterpart Luis de Guindos issued a statement.

They said Tuesday's record 7.6% yield on 10-year Spanish bonds - the government's implied borrowing costs - did not reflect economic fundamentals.

Mr Guindos will meet French Finance Minister Laurent Fabius on Wednesday.

The European Union has rejected a request by Israel to blacklist Hezbollah as a "terror group" after Tel Aviv blamed the Lebanese group for last week's deadly bombing in Bulgaria.

"There is no consensus for putting Hezbollah on the list of terrorist organisations," the Cypriot Foreign Minister Erato Kozakou-Marcoullis, whose country currently holds the EU presidency, said on Tuesday.

Israel accused Iran and Hezbollah, the Lebanese group, of carrying out Wednesday's suicide attack on a bus at the Black Sea airport of Burgas, Bulgaria, in which five Israelis and their Bulgarian driver died.

Hundreds of firefighters backed by water-bombing planes battled a wind-fuelled wildfire in northeast Spain that killed four people, including a teenage girl.

Another 23 people were injured, including eight who remained in hospital, the Catalan regional government said on Monday.

Labour leader Ed Miliband will join EU centre-left leaders at an autumn summit hosted by French Socialist president François Hollande to discuss measures to create jobs and growth in Europe.

Miliband said Hollande had agreed "in principle" to the meeting during face-to-face talks on Tuesday morning after the Labour leader became the first senior British politician to be invited for talks at the Elysée Palace since Hollande became France's first leftwing president in 17 years in May.

Speaking to journalists on his trip back to London on the Eurostar following a 24-hour visit to Paris packed with meetings, the Labour leader said the 35-minute session with Hollande involved discussions on the economy, the "emergency situation" in youth unemployment, Syria, and the prospect of the Tour de France coming to Yorkshire in future years for its Grand Depart.

Prosecutors in Palermo asked on Tuesday for former Italian interior minister Nicola Mancino to be tried in connection with alleged negotiations between the state and the Sicilian mafia in the early 1990s.

Mancino, a Christian Democrat, was accused of withholding evidence about the talks. The 81 year-old politician said he would prove his innocence "and my loyalty to the state".

Others charged included Marcello Dell'Utri, a senator who created the party with which Silvio Berlusconi launched himself into politics in 1994, and a second former minister, Calogero Mannino, who still holds a seat in the lower house of parliament. Both men were alleged to have been intermediaries in the talks, aimed at ending a campaign of bombings unleashed by the Cosa Nostra in 1992.

France's conservative opposition UMP party, defeated in May and June's presidential and parliamentary elections, is set for further upheavals this autumn when its members vote to choose a new leader. 

The election will take place in November when party members vote for a general secretary and two deputies.

While the position of general secretary does not automatically guarantee candidacy in the next presidential election, leadership of the party at this early stage is a strong indicator of who the next UMP presidential candidate might be.

Though the capital's transport plans appeared to be in need of some military precision yesterday, with hot weather blamed for some trains being unable to stop at the main station serving the Olympic park, Games chiefs said the number of troops was proof the security issue at least was under control.

[...]

Due to heat affecting the overhead power lines, Greater Anglia had to impose speed restrictions meaning nine services had to pass through the station at Stratford, the east London Olympic hub, without stopping.

The Spanish stock market lost 3.6% yesterday, as investors are betting on a Spanish ESM programme; ten-year yields reached 7.636%; at an auction Spain had to pay very high interest rates for 3 and 6-month T-bills; five-year Spanish yields are now above ten-year yields, which reflects market expectations that Spain will not make it; French foreign minister Laurent Fabius has called for an increase in the ESM's ceiling; Luis de Guindos has met Wolfgang Schäuble, and produced a statement calling for the speedy implementation of the summit decisions; Catalonia has become the next autonomous regions to consider tapping Spain's domestic bail-out fund; rating agency DBRS says Spain is on the brink; Suddeutsche Zeitung says Moody's downgrade threat would ultimately play into the hands of Angela Merkel; Die Welt says Moody's is part of an Anglo-Saxon conspiracy that wants to push Germany into debt mutualisation; Moody's put EFSF on negative outlook; Antonis Samaras attacks German politicians for undermining his efforts to save the Greek economy; the SPD calls for the economics minister's resignation, accusing him of risking taxpayers' money through his loose talk; the FDP's general secretary said Greece would do everyone a favour by leaving; the CSU helpfully suggests Greece should pay pensions in drachmas; EU officials told Reuters that Greece is far off target; Italian cities risk to write-down €580m in long outstanding revenues, worsening their financial situation; Portugal's PM says austerity programme more important than election victory; Italian Foreign Minister calls for more unity in Europe against market uncertainty; Adriana Cerretelli warns the eurozone has only 8 days to survive; Alan Beattie says the IMF should be wary of participating in a full-blown Spanish programme, Martin Feldstein, meanwhile, says a devaluation is a necessary and sufficient condition to save the eurozone.

The INET Council on the Euro Zone Crisis consists of 17 economists from Europe as well as an advisory board of distinguished thinkers from all over the world. It was formally launched in Brussels during a two-day meeting on June 26 and 27, in response to the dangerous and severe crisis that is now coming to a head in Europe. Since the group's first meeting, members have been engaged in vigorous discussions to continue the explorations of what can be done that is economically viable and politically feasible given the depressed state of many European economies and the distrust that has arisen within the system.

1. This dramatic situation is the result of a euro zone system that is thoroughly broken. This systemic failure exacerbated a boom in capital flows and credit, and complicated its aftermath after the boom turned to bust. 2. It is the responsibility of all European nations that were parties to the euro's flawed design, construction, and implementation to contribute to a solution. 3. Absent a collective effort the euro zone will disintegrate quickly. The stresses have been building for a long time and conditions in several countries are not socially or politically sustainable much longer.

It is still possible -­‐-­‐ economically and politically - to find a way out of the euro zone crisis if policy makers separately address two problems: dealing with the legacy costs of the initially flawed design of the euro zone, and fixing the design itself. The former requires significant burden sharing and an economic strategy that focuses on stabilising the countries that are suffering from recession and capital flight. In contrast, fixing the design requires a financial (banking) union with strong euro-­‐area institutions and a minimal fiscal backstop.

The former head of Anglo Irish Bank, Sean FitzPatrick, has been arrested by Irish police in connection with alleged financial irregularities at the bank.

Mr FitzPatrick has been appearing in court in Dublin.

He is the third former senior executive from Anglo Irish Bank to appear in court within the past 24 hours.

All three men face 16 charges in relation to an alleged failed attempt to prop up Anglo's share price after a stock market collapse.

U.S. stocks slid for the third straight session on Tuesday as concerns over Europe and some weak earnings continued to weigh on the market.

When the market closed, the Dow Jones industrial average lost 104.14 points, or 0.82 percent, to 12,617.32. The Standard & Poor' s 500 was down 12.21 points, or 0.90 percent, to 1,338.31. The Nasdaq Composite Index declined 27.16 points, or 0.94 percent, to 2,862.99.

Worries over European debt woes and the continent's bleaker economic outlook continued to plague the market.

The World Trade Organization (WTO) on Monday established a panel to consider China's exports of Rare Earths, Tungsten and Molybdenum at the requests of the United States, the European Union (EU) and Japan.

The United States, the EU and Japan brought similar complaints to the WTO on March 13 this year, claiming that China has put up improper export restrictions of various raw materials including rare earths.

Formal consultations were held afterwards under the WTO dispute settlement framework, but failed.

In my first post on the heterodox/mainstream divide, I suggested that there sometimes seemed to be a blanket rejection of mainstream economics by the heterodox, equivalent to the de facto rejection of heterodox economists by most of the mainstream. As someone who is both supportive and critical of mainstream macroeconomics (i.e. I believe it has strengths and weaknesses), I found this attitude disconcerting.

But impressions can be wrong, so in a second post I presented a simple piece of analysis, that used both a representative agent and rational expectations, and I asked heterodox economists how their own analysis would differ. I repeated the challenge in a subsequent post, redoing my analysis using sector financial balances. Unless I've missed something, no one has - in my view at least - provided an answer. (However comments on these posts have seen some welcome interchanges between the two points of view on other issues, for which I am grateful.)

...

The point to all this is my belief that mainstream macro is not some kind of inevitably interlinked construct, that you either have to buy into completely or reject completely. I believe using a representative agent is OK for some questions, but not for others. I think it's appropriate to assume rational expectations some of the time, but not all of the time. Any analysis has to make assumptions, and it is not clear to me why the assumptions I have made are worse than others. If you think this belief is wrong, the best way to convince me is to give an alternative story of how a temporary tax financed increase in government spending would work. But of course if you are happy to just give lectures about the evils of mainstream economics, then no response is necessary.

The UK economy is still in recession, after official data showed that the UK economy contracted for the third month in a row.

The output of the UK, known as GDP, shrank by 0.7% between April and June, the Office for National Statistics said.

This is a much larger-than-expected fall and follows a 0.3% drop in the first three months of the year.

The figure is a first estimate and could be revised in the coming months

Pro-government forces have hit back after rebels seized parts of Syria's economic capital, Aleppo, and tried to move into its historic old city.

Fighter jets and helicopters attacked targets in the east of the city and reports said thousands of troops were being moved to counter the threat.

A general and former aide to President Assad has appeared publicly for the first time since he fled this month.

Brig-Gen Manaf Tlas confirmed he had abandoned the Syrian government.

Ghana's President John Atta Mills, who was suffering from throat cancer, has died in hospital in the capital, Accra.

A statement from his office said the 68-year-old died a few hours after being taken ill, but did not give details.

John Dramani Mahama, his vice-president, has been sworn in as his replacement in a ceremony in the capital.

Mr Atta Mills had ruled the West African country since 2009.

At least 42 people including 12 soldiers and 30 rebels have been killed in fighting in the remote Tajik region of Gorno-Badakhshan, state television has reported.

Some unconfirmed reports speak of a far higher level of casualties, with dozens of people being killed in the violence.

It follows the fatal stabbing of a top security forces official on Saturday.

That led to military action against local opposition strongman Tolib Ayombekov, reports say.

Egyptian President Mohammed Mursi has appointed Water Minister Hisham Qandil as prime minister and asked him to form a new government, state TV says.

There has been much speculation over how Mr Mursi will allot cabinet posts.

The army officially transferred power to President Mursi on 30 June, but retains some significant prerogatives.

On 10 July, the Supreme Constitutional Court (SCC) suspended a decision by Mr Mursi to reinstate the Islamist-dominated lower house of parliament.

Thousands of people have fled their homes in India's northeastern Assam state after fighting between indigenous tribes and Muslim settlers killed at least 19 people, wounded many more, and left villages in flames, police said.

Security forces fired warning shots to disperse armed groups that were moving between jungle hamlets on Monday, setting fire to bamboo houses, police and aid workers in the area told the Reuters news agency.

Soldiers and federal paramilitary forces were patrolling remote districts.

"We saw miscreants burning down village after village on Monday," a senior police officer who asked not to be identified said.

United Nations helicopters have fired on rebel positions in eastern Democratic Republic of Congo after new clashes broke out between rebel fighters and loyalist troops, officials have said.

Tuesday's airbourne action followed renewed clashes that broke out between M23 rebel fighters and loyalist troops, north of the regional capital Goma.

The second such UN action against rebels came in response to a rebel offensive "against the civilian population", Mamodj Munubai, a spokesman for MONUSCO, the UN mission in DR Congo, said on Tuesday.

A credible referendum on Zimbabwe's new constitution will be "an important milestone" toward the suspension of sanctions targeting many leaders and businesses linked to long-time ruler Robert Mugabe, the European Union said.

EU ambassador to Zimbabwe Aldo Dell Ariccia said on Monday in Harare that the 27-nation bloc was encouraged by reforms in Zimbabwe after years of violence and economic turmoil.

Zimbabwe needs to be rewarded to maintain the pace of reforms, but individual travel, banking and business bans imposed in reaction to violations of human and democratic rights will stay in effect at least until after a referendum, he said.

Presumed U.S. Republican presidential nominee Mitt Romney on Tuesday laid out his foreign policy plans before a week-long visit to Europe and Israel, saying there must be full suspension of enrichment activity in Iran, while revising his stand on condition-based withdrawal of U.S. troops from Afghanistan to full security responsibility transition in that Central Asian country.

Speaking to Veterans of Foreign Wars national convention in Reno, Nevada, Romney said "there must be a full suspension of any enrichment, period," in regard to his position on Iran, insisting "America cannot be neutral in the outcome" of the Middle East, and must clearly stand for Israel, its main ally in the region, while opposing Iran and other adversaries there.

Madagascar's deposed ex-president Marc Ravalomanana arrived in the Seychelles Tuesday, ahead of landmark talks with current leader and rival Andry Rajoelina, officials said.

"The former Madagascan president Marc Ravalomanana has arrived in the Seychelles," the Seychelles Foreign Ministry told AFP.

Rajoelina arrived on the main island of Mahe on Monday morning, and was immediately transferred to Desroches, a private island 230 kilometres (140 miles) away where the talks will be held.

It's an audiotape the New York Police Department hoped you would never hear.

A building superintendent at an apartment complex just off the Rutgers University campus called the New Brunswick Police 911 line in June 2009. He said his staff had been conducting a routine inspection and came across something suspicious.

"What's suspicious?" the dispatcher asked.

The Supreme Court in India has ordered a ban on tourism in "core zones" of more than 40 of the country's central government-run tiger reserves.

In a landmark ruling, it warned that states that fail to implement the ban face contempt proceedings and fines.

The court imposed fines of 10,000 rupees each ($178;£115) on six states for not complying with its earlier tiger protection directives.

Tiger numbers have shrunk alarmingly in India in recent decades.

The Greenland ice sheet melted at a faster rate this month than at any other time in recorded history, with virtually the entire ice sheet showing signs of thaw.

The rapid melting over just four days was captured by three satellites. It has stunned and alarmed scientists, and deepened fears about the pace and future consequences of climate change.

In a statement posted on Nasa's website on Tuesday, scientists admitted the satellite data was so striking they thought at first there had to be a mistake.

A bitter row between the Treasury and the energy department over subsidies for wind energy has ended in a victory for the Lib Dem energy secretary, Ed Davey.

The row centred on the level of support channelled to companies providing wind energy to the grid and had escalated into a bruising confrontation between the chancellor, George Osborne, and the Liberal Democrats, which threatened to derail the coalition's environmental and energy agendas. On Monday, there were calls for the prime minister to intervene in the row because of the impact that uncertainty over energy policy was having on investor confidence.

The Guardian has learned that the coalition will announce on Wednesday that onshore wind subsidies, paid for through energy bills, will be cut by 10% and not by the 25% that Osborne had been demanding.

Thirteen optical disc drive resellers are being investigated by the EU on its suspicions that the firms may have broken antitrust laws and artificially suppressed the price they paid for the drives.

The resellers are suspected of acting as a worldwide cartel for at least five years, the EU Commission said, laying out its case that the resellers had been "bid-rigging" - collaborating with each other to control the prices of the drives they bought in from the two main drive manufacturers.

The US Department of Justice has hit back at criticisms of its ebook case against Apple and five major publishers, saying its critics either don't understand or are just looking out for themselves.

The DoJ filed a case in April accusing Apple and five publishing houses of colluding on ebook prices in their attempt to counteract the growing dominance of Amazon in the market.

Three of the publishers have already settled the case, agreeing to rip up the contracts that contained agency agreements between themselves and Apple, thus once again allowing retailers to discount books as much as they want and ditch most-favoured nation clauses.

Mark Zuckerberg cares about your Facebook privacy settings. He cares about them so much, in fact, that he's patented a method of finding out what they are.

The patent, number 8,225,376, was filed six years ago but only approved last week, and is attributed to Zuckerberg and former Facebook chief privacy officer Chris Kelly.

SLOVAK officials discovered a 700-metre tunnel complete with its own train used to smuggle goods and maybe people from neighbouring Ukraine into the European Union (EU). They seized some 13,100 boxes of cigarettes and arrested a pair of men caught in the act. This has never happened before. "It is as if this has been cut out of a movie from the Mexican-American border," Peter Kažimír, the finance minister, said.

The bust came as a joint effort between tax and customs officials in an operation code named "Tax Cobra." Robert Kaliňák, the interior minister, said officials detained two men loading a truck on July 18th, confiscating a tobacco haul that would have bypassed some €350,000 in excise tax. Police had to fire warning shots as the 59-year-old alleged ringleader - who was renting the industrial property where the tunnel emerged -- sought to flee the scene.

The tunnel begins in a house in the Ukrainian city of Uzhorod and exits inside a building some 220 metres into Slovak territory on private property between the villages of Vyšné Nemecké and Nižné Nemecké. Officials estimate the tunnel could have helped dodge up to €50 m in tobacco tax over the past year.

Nicola Solomon, chief executive of SoA, has written (4-page / 174KB PDF) to Culture Minister Ed Vaizey to express the organisation's concern about diminishing rates to authors' compensation as a result of the rise of volunteer-run libraries in place of traditional public libraries.

Under the EU's Directive on copyright relating to rental rights and lending rights (Lending Directive) authors generally have the exclusive right to authorise or prohibit others from renting or lending their original works or copies of those works. Those authors are entitled to a "single equitable remuneration" as way of compensation from those who loan out their works.

The Directive does allow EU member states to "derogate" from that "exclusive right" where it concerns "public lending" and they may "exempt certain categories of establishments from the payment of the remuneration" if they so choose. However, authors are still entitled to "obtain a remuneration for such lending" in those circumstances.

The United States was comparatively slow in putting a woman into orbit. In 1959 Jerrie Cobb had been selected by Nasa, only to be dropped when the organisation cancelled the women's programme. In 1962 the astronaut John Glenn testified at a congressional hearing that "men fly the airplanes and test them. The fact that women are not in this field is a fact of our social order."

Such factors did not restrain the Soviet Union where, in 1963, Valentina Tereshkova, a 26-year-old textile worker, became the first woman in space, orbiting Earth in her Vostok VI spaceship.

He encountered opposition not only from the Left, but also from business lobby groups and the corporatist element in the Conservative Party, but this did nothing to dent his beliefs: one of his proudest boasts was that he was "sacked in 1973 by Mr Campbell Adamson, director-general of the CBI, for supporting capitalism, free enterprise and the market economy".

Following his departure from the CBI, where he been economic director since 1968, he became economic adviser to the Institute of Directors until 1996. He made budget submissions of eye-watering radicalism which were not always welcomed by the Chancellor. A prolific pamphleteer for free market think tanks, he also wrote two dozen more substantial academic volumes.

Inheritance Tax was a particular target. His paper Euthanasia for Death Duties: Putting Inheritance Tax Out of Its Misery concluded that the revenue gained is "offset or more than offset by reductions in the yields of other taxes". According to his calculations, death duties and inheritance taxes had achieved a net loss for the economy in every year of their century-long history.