French regional leaders have urged EU policymakers to maintain cohesion funding at current levels or risk throwing Europe back into recession. 

Their intervention comes as the EU institutions gear up for tough negotiations over the future shape and size of the bloc's regional policy after 2013, when the current funding period comes to an end.

Stakeholders are jostling for position ahead of the likely unveiling of a blueprint for the next funding period (2014-2020) by Regional Policy Commissioner Johannes Hahn by the end of June. 

Members of the European Parliament's regional policy (REGI) committee recently backed plans drawn up by the European Commission to divide Europe's regions into three groups, according to their level of wealth, by creating a new category between the poorest and most prosperous areas.

MEPs want to make sure that the Commission addresses the needs of regions whose level of GDP per person falls between 75% and 90% of the EU average by introducing the category of 'intermediate regions'.

The E. coli outbreak in Germany is a new form of the bacterium, researchers and public health experts believe.

The infection can cause the deadly complication - haemolytic-uraemic syndrome (HUS) - affecting the blood and kidneys.

More than 1,500 people have been infected and 18 have died: 17 in Germany and one in Sweden.

In the UK, three British nationals have been infected - all had visited Germany.

The World Health Organisation said the variant had "never been seen in an outbreak situation before."

Scientists at the Beijing Genomics Institute in China are also reported as saying the new form was "highly infectious and toxic."

...Professor Gad Frankel, from Imperial College London, the Sanger Institute and the Medical Research Council, said: "This is a new combination and a deadly combination.

"It has a gene which produces a toxin and another which helps the bacterium colonise the gut more efficiently, which effectively means even more toxin is produced.

"Research we published last year showed this same factor mediates attachment to the human gut and the surface of salad leaves."

More than 200 migrants are missing in the Mediterranean Sea after a boat trying to reach Europe broke down, Tunisia's Tap state news agency says.

The Tunisian coast guard and army rescued 570 but up to 270 went missing in the stampede to get off the fishing vessel, the report says.

An operation to rescue the would-be migrants began off the Tunisian Kerkennah islands on Wednesday.

The mainly African migrants were on a boat bound for Italy from Libya.

Search operations were continuing, a Tunisian security official told Reuters news agency.

ECB president puts forward ideas on economic governance during Charlemagne prize speech.

Jean-Claude Trichet, the president of the European Central Bank, has floated several controversial ideas for strengthening economic governance in the eurozone, including an economic ministry for the European Union. st1:*{behavior:url(#ieooui) }

He suggested that where a eurozone country that was receiving financial assistance from its partners failed to comply with the conditions attached to that assistance, then the eurozone authorities should have "a much deeper and authoritative say in the formation of the country's economic policies if these go harmfully astray".

Such powers of intervention would, he suggested, be "well over and above the reinforced surveillance that is presently envisaged".

A balance had to be struck, he said, between a country's independence and the interdependence of countries' actions.

Serbian Defense Minister Dragan Sutanovac categorically denied on Thursday allegations that former Bosnian Serb army chief and suspected war criminal Ratko Mladic received medical treatment at a leading military hospital in Belgrade while on the run.

"With complete responsibility, I declare that this is not true," Sutanovac told journalists in Belgrade.

Mladic's lawyer was quoted in media reports as saying that the 69-year-old former general, who was suffering from lymphoma, underwent surgery at the hospital of the Belgrade Military Medical Academy in 2009.

"These are groundless claims," Sutanovac said. "I don't know why Mr. Mladic's lawyer is lying to the public in such a way and discrediting the army."

EFC reaches a "deal" at their meeting in Vienna, under which most of the important details have yet to be worked out; programme is to run until 2014, with €30-40bn in new loans, €25bn in privatizations, and €20bn from private sector; form of private sector involvement remains unclear, but agreement is reached to avoid a credit event; Papandreou meets Juncker today to present his fiscal plan; includes a faster course of privatizations, a fall in the tax-free threshold; and new taxes on alcohol and tobacco; Jean-Claude Trichet calls for the creation of the job European finance minister with intrusive powers over national governments; today is the last day of the election campaign in Portugal, with opposition leader Passos Coelho holding on to a firm lead; ECB clarifies its position on private sector involvement, saying that it accepts schemes that do not constitute a credit event; a maturity extension may not be a credit event if the exercise leaves the NPV of the debt unchanged, FT Alphaville reports; Spanish trade unions and employers fail to reach agreement on collective bargaining reforms; Paul Krugman, meanwhile, offers a theoretical explanation of a why a collapsing eurozone can be consistent with a strong euro.

I mentioned yesterday that Lorenzo Bini Smaghi has a spectacularly wrong-headed piece in today's FT, offering some very badly framed arguments for using headline rather than core inflation to drive monetary policy. Among other things, as Brad DeLong points out, LBS seems confused about the difference between levels and rates of change. Incidentally, LBS is regarded at the ECB as a deep thinker; I have no idea why.

To sum up Wolf's, Krugman's, Sinn's and Smaghi's point of intellectual convergence, the strains that the ESCB labours under are gargantuan and escalating every day the crisis continues. Against this background, a default of any kind (not necessarily in Athens) will kickstart a catastrophic sequence of `events' that will render the costs of salvaging the common currency (to the surplus member-states) prohibitive. At that point (as I have outlined here), the solvent member-states will simply bail themselves out, abandon the euro and proceed to set up their own currency or currencies. Unencumbered by the periphery, they will, subsequently, struggle to find ways of dealing with an impending massive recession caused by the loss of export markets (due the revaluation of their new currency/ies). (A note of caution: The fact that Germany managed well in the 1980s under an overvalued DM is not a good omen for the struggle it will have on its hands in today's globally recessionary environment.) Meanwhile, the very notion of a United Europe will have met the same fate as that of the much lamented Weimar Republic...

...

Do the European powers-that-be entertain real hope that Bail-Out Mk2 can succeed where Mk1 did not? What will they do differently this time? The answer they give is that, having learnt their lesson the hard way, this time they will take no chances with the Greek government. They will play hard ball in two crucial ways both of which violate the most basic principles of national sovereignty: First, the privatisation program (which is supposed to yield €50 billion by which to retire existing debt) will be carried out by non-Greek officials (who will presumably decided what to sell, the price and the way in which the proceeds will be utilised). Secondly, tax collection will be contracted out to non-Greek collectors.

...

Of course, every quantitative predictive model is as good as its assumptions. So, to explore this section's pressing question, we decided to assume that the (grossly unrealistic) targets set by the EU and the Greek government will be met well and truly. Imagine our surprise when we discovered that, even under these official science-fiction-like presumptions, Greece's debt-to-GDP ratio path remains explosive. Indeed, and this is crucial, the aggressive privatisation drive would make no difference to the probability of default.

FT Why would it not be possible to organize a so-called "orderly" debt restructuring as suggested by prominent economists, for instance, Nouriel Roubini and Deutsche Bank's Thomas Mayer? Have we not learnt from the experience of Latin American countries?

...

Second, the Latin American crisis was a foreign debt crisis. The main problem in the Greek crisis is Greece, its banks and its own financial system. Latin America had borrowed in dollars and the lines of credit were mainly with foreigners. Here, a large part of the debt is with Greeks. If Greece defaulted, the Greek banking system would collapse. It would then need a huge recapitalization - but where would the money come from?

Third, after default the Latin American countries still had a central bank that could print money to pay for civil servants' wages, pensions. They did this and created inflation. So they got out [of the crisis] through inflation, depreciation and so forth. In Greece you would not have a central bank that could finance the government, and it would have to partly shut down some of its operations, like the health system.

Finally, in Latin America they imposed capital controls to partly expropriate the wealth of their own citizens to repay debt. This cannot be done in the EU. You have free flows of capital, free flows of people. This would make it much more difficult for the government to expropriate private wealth to pay debt.

I think it just shows that the ECB is not willing to think outside the box at all, while at the same time blaming politicians for not doing what's needed. Also, an incredible amount of market fundamentalism.

Economics is politics by other means

(Reuters) - Moody's Investors Service said on Thursday there is a very small but rising risk of a short-lived default by the United States if there is no increase in the statutory debt limit in coming weeks.

In a statement, Moody's said it would put the Aaa U.S. rating on review for a possible downgrade if lawmakers in Washington do not make substantive progress in budget talks by the middle of July.

"Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely," Moody's said.

(Reuters) - Goldman Sachs Group received a subpoena from New York prosecutors seeking information on the investment bank's role leading into the global financial crisis, a person familiar with the matter said on Thursday.

The subpoena from Manhattan District Attorney Cyrus Vance is the latest blow for the largest U.S. investment bank, which is reinventing itself as new U.S. financial regulations cut into some of its key businesses.

Goldman's shares fell as much as 3.4 percent as news of the subpoena emerged, but then took back much of their losses, trading down 1.7 percent to $133.90 in the early afternoon.

In addition to the New York subpoena, the Department of Justice is likely to subpoena the bank, The Wall Street Journal reported recently. A subpoena is a request for information, and does not represent a charge or guarantee of a charge.

This morning, amidst news of Moodys cutting Greece's debt rating to Caa1, I came across a phrase I wish I'd thought of first, reading through a friend's morning commentary. The phrase? "Too Stupid to Stop". According to Bill Blain, Senior Director at Newedge in London, and self-professed Euro skeptic, "'Too Stupid to Stop' is based on politicians behaving as rational maximisers of their electoral objectives." He was referring to the real reason behind all the bank-demanded bailout loans for austerity measures throughout Europe. In the United States, that mantra can be extended to include appointed officials, like Treasury Secretary, Tim Geithner (still not admitting our record debt increase came directly from the $4 trillion worth of Treasury issuance and other forms of assistance extended to our banking system since late 2008, as we endure his stomach-churning 'show-begging' to the GOP for a debt cap raise) and Fed Chairman, Ben Bernanke (ditto). It also, of course, applies to congress people whose political survival depends on corporate and bank contributions and financial support, the ones that believe the Dodd-Frank bill changes anything. Rather than considering how governments have systematically done, and continue to do, the wrong (as in immoral, unfair, and uneconomically sound) thing by trying to preserve banks, any politicians possessing the ability to think independently (an oxymoron, I know) should be asking themselves instead, how clever they could be about closing them down. Take a cue from Iceland. But, the 'Too Stupid to Stop" behavior, prevents this from occurring.

Nice rant.

"It is not necessary to have hope in order to persevere."

In September 1936, British economist John Maynard Keynes, whose ideas had been credited as behind US president Franklin Roosevelt's New Deal, prepared a preface for the German translation of his book, The General Theory of Employment, Interest and Money. Addressing a readership of German economists, Keynes wrote: "The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state, than ... under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that [justify] the fact that I call my theory a general theory. Although I have, after all, worked it out with a view to the conditions prevailing in the Anglo-Saxon countries where a large degree of laissez-faire still prevails, nevertheless it remains applicable to situations in which state management is more pronounced." Keynes clearly understood that the greater the degree of state control over any economy, the easier it would be for the government to manage the levers of monetary and fiscal policy to manipulate macroeconomic aggregates of total output, total employment, and the general price and wage levels for purposes of moving the overall economy into directions more to the economic-policy analyst's liking.

snip...

 Neo-liberal economists everywhere seven decades later have yet to acknowledge that employment is all that counts and living wages are the key to national prosperity.

so even a creep like hitler understood economics and finance better than the ECB?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

Here's the log of real median family income (I use a log so that equal proportional changes are equal in height) since 1947:

The first half of this figure is, according to Reinhart, the era of financial repression. It's also, as you can see, the era of the great postwar boom. Surely one's response to this history should be "Yay financial repression!"

What's happening here is that Reinhart is using a term originally developed to describe an extremely distortionary policy in developing countries, and applying it to much more defensible policies pursued in advanced countries. It used to be common for third world governments to impose sharply negative real interest rates on savers year after year, driving saving down or pushing saving into unproductive channels. Maybe Regulation Q had something in common with those policies qualitatively; but the America of Regulation Q was an enormously successful economy with a much higher savings rate than we have had since financial repression, if that's what it was, came to an end.

Thousands of residents are fleeing Sanaa, the Yemeni capital, as fighting between opposition tribesmen and loyalist troops of president Ali Abdullah Saleh rages on.

Much of the fighting, which began late on Wednesday night, occurred in the Hasaba district of northern Sanaa, where Sheikh Sadiq al-Ahmar, the powerful leader of the Hashed tribal confederation, has his base.

Yemen's defence ministry said the Special Forces, headed by Saleh's son Ahmed, have been deployed to "liberate" buildings held by al-Ahmar's fighters.

Medics in Sanaa told the AFP news agency that 15 people had been killed in the overnight clashes, including a seven-year-old girl hit by a stray bullet.

At least 25,000 university student protesters have marched through the streets of Santiago, Chile's capital, calling for reforms in education, local news reported.

Police used water cannons to disperse demonstrators on Thursday, after some students broke through police barricades and others hurled stones at riot police. Fifteen people were arrested during the clashes, according to authorities.

The students have been pushing the government for years to boost education funding in a country with one of the highest university fees in the world.

Chilean university students receive only 15 per cent state funding, the lowest of all countries part of the Organisation for Economic Co-operation and Development (OECD).

When taking into consideration the average family income in Chile, university fees are nearly three times higher than the United States, Japan, and Australia.

CAIRO, Jun 2, 2011 (IPS) - Egyptian officials are warning that the country, just emerging from a popular uprising that ousted the regime of former President Hosni Mubarak, could be facing a major economic crisis with lagging international aid and foreign investment.

General Mahmoud Nassr, a member of the Supreme Military Council, which is running the country's interim government, told an economic conference in Cairo last week that foreign direct investment (FDI) has come to a standstill while Western rating agencies race to downgrade the country's sovereign credit rating. The poverty rate has also worsened to 70 percent, Nassr added.

The General Authority for Investment and Free Zones (GAFI), whose job is to attract foreign businesses, says FDI in Egypt fell by 500 million dollars in the first quarter of 2011 - down to 1.2 billion dollars from 1.7 billion the previous year.

The country's Finance Ministry also forecast at least a 9.4 percent budget deficit this year, while growth was seen slowing to less than 2 percent - down from a 5.8 percent growth forecast before the revolution.

Egypt's spending on food and energy subsidies will increase by 40 percent this year from last year, further straining the budget, the government says.

(Reuters) - Mitt Romney, the multimillionaire former governor of Massachusetts, kicked off his second bid for the White House on Thursday with a hard-hitting economic message charging that "Barack Obama has failed America."

"I'm Mitt Romney. I believe in America. And I'm running for president," Romney said to cheers during an 18-minute speech in Stratham, New Hampshire.

The Republican front-runner so far, Romney started his campaign in this early-voting state where a win in February's primary election is crucial to his chance of winning the party nomination to face President Barack Obama in the November 2012 election.

June 2 (Bloomberg) -- Russian Foreign Minister Sergei Lavrov warned the U.S. and European nations not to encourage anti-government protesters in Syria by holding out the prospect of military support like they provided in Libya.

"It is not in the interests of anyone to send messages to the opposition in Syria or elsewhere that if you reject all reasonable offers we will come and help you as we did in Libya," Lavrov, 61, said yesterday during an interview in Moscow. "It's a very dangerous position."

Prime Minister Naoto Kan indicated Thursday he would resign as soon as the response to the March 11 disaster had been stabilized, hours before the embattled leader survived a no-confidence motion against his administration in the Diet.

Kan likely judged it would be impossible to avoid a split in his Democratic Party of Japan unless he gave some sign he would step down as prime minister, sources said.

Many DPJ lawmakers, including former party President Ichiro Ozawa and former Prime Minister Yukio Hatoyama, had been expected to vote for the no-confidence motion submitted by opposition parties Wednesday.

"After the earthquake response is settled to some degree, I would like to pass the responsibility on to a younger generation," Kan said at a meeting of DPJ lawmakers prior to the vote in the House of Representatives. Kan said the no-confidence motion against him showed he lacked leadership.

Miami Herald: The Organization of American States readmitted Honduras Wednesday, marking an end to a two-year crisis that left dozens dead.

Colombia Reports: Colombia's Victims Law was passed Wednesday by a plenary session of Congress, meaning that final presidential approval is the only step left in finalizing the "historic" piece of legislation.

SÃO PAULO, Brazil -- Brazil's environmental agency gave final approval on Wednesday for a giant hydroelectric power plant in the Amazon rain forest that has been at the center of a protracted battle between the government and environmentalists over the fate of indigenous people.

WikiLeaks Haiti: The PetroCaribe Files: Préval's dramatic inauguration day oil deal won high marks from many Haitians, who had demonstrated against high oil prices and the lack of electricity. But it ushered in a multiyear geopolitical battle among Caracas, Havana and Washington over how oil would be delivered to Haiti and who would benefit.  The revelations come in a trove of 1,918 cables made available to the Haitian weekly newspaper Haïti Liberté by the transparency group WikiLeaks. As part of a collaboration with Haïti Liberté, The Nation is publishing English-language articles based on those cables.

MercoPress: Relying on the expected growth of the oil and gas industry in Brazil and the influx of new rigs and floating production, storage and offloading, FPSO, in the Brazilian offshore market, British manufacturer, Rolls Royse is set to make a 60 million US dollars investment in a new plant to build energy modules for offshore rigs.

"Beware of the man who does not talk, and the dog that does not bark." Cheyenne

The Nuclear Energy Institute (NEI) is the lobby association for the entire process chain of the nuclear industry in the U.S., from uranium mining to the manufacture of the reactors and the supply of nuclear fuel, all the way to nuclear power production. Its lobbyists are well-connected in the Obama administration and on Capitol Hill. In the last midterm and off-year election campaign cycle, politicians of both parties received approximately $4 million from the NEI. In order to boost public acceptance, shiny ad campaigns, such as those of the Clean and Safe Energy Coalition, filled the airwaves. This greenwashing by the NEI has repeatedly crossed the border of the permissible, and has been criticized by environmental and social organizations. The NEI PR staff even drafts opinion pieces which are sent to nuclear engineers across the country, to be signed and submitted to local newspapers.

In addition to the umbrella lobby, the major nuclear power plant operators and corporations to which they belong also play an important role. In the last election campaign, they, together with the NEI, spent sums for lobbying and campaign contributions that went into the double-digit millions. Chief beneficiaries of this largess were Congress members from the states where their corporate headquarters are located, as well as committee heads and members of the caucus leaderships. Contributions of up to $10,000 to each individual Congress member are legal. The most generous corporations were:

Over the strong objections of indigenous groups, activists and environmentalists, Brazilian authorities gave a green light Wednesday to what will be the world's third largest hydroelectric plant and dam.

The massive $11 billion project is to be built in western Para state, along the Xingu river in Brazil's Amazon rainforest.

Once completed, the Belo Monte plant will generate some 11,200 megawatts of energy, equivalent to about 11 percent of the power currently produced in Brazil.

Indigenous communities, ecologists and the Catholic Church have spent more than a year campaigning against the dam, which will flood an area of 516 square kilometers (198 square miles) along the banks of the Xingu.

Construction of the dam will displace 16,000 people, according to government figures.

Local communities also fear the arrival of thousands of workers in the jungle area.

Computer simulation studies by scientists at the U.S. Department of Agriculture (USDA) suggests that a dairy cow living year-round in the great outdoors may leave a markedly smaller ecological hoofprint than its more sheltered sisters.

Agricultural Research Service (ARS) agricultural engineer Al Rotz led a team that evaluated how different management systems on a typical 250-acre Pennsylvania dairy farm would affect the environment.

ARS is USDA's chief intramural scientific research agency, and this work supports the USDA commitment to promoting sustainable agriculture. Rotz works at the ARS Pasture Systems and Watershed Management Research Unit in University Park, Pa.

For this study, Rotz and his team used the Integrated Farm System Model, a computer program that simulates the major biological and physical processes and interactions of a crop, beef or dairy farm.

The rate of destruction of the world's three largest forests fell 25 percent this decade compared with the previous one, but remains alarmingly high in some countries, the U.N. Food and Agriculture Organization said.

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A report entitled The State of the Forests in the Amazon Basin, Congo Basin and South East Asia, was released to coincide with a summit in the Congo Republic bringing together delegates from 35 countries occupying those forests, with a view to reaching a global deal on management and conservation.

The Amazon and the Congo are the world's first and second biggest forests, respectively, and its third biggest -- the Borneo Mekong -- is in Indonesia.

They sink billions of tonnes of carbon and house two thirds of the world's remaining land species between them.

The level of radioactive water has fallen significantly in the No. 1 reactor building at the Fukushima No. 1 nuclear power plant, Tokyo Electric Power Co. said Thursday.

The water level, which had risen 376 millimeters in the 24 hours from 7 a.m. on Monday, fell one millimeter in the following 24 hours, and plunged 79 millimeters from 7 a.m. Wednesday to 7 a.m. on Thursday.

The underground water level around the No. 1 reactor facility is higher than the water level in the reactor building.

TEPCO is checking whether the water is leaking from the No. 1 reactor building into the turbine building of the No. 2 reactor.

THE first DNA analysis of the Travelling community has proven that it is a distinct ethnic minority who separated from the settled community between 1,000 and 2,000 years ago, experts have claimed.

<snip>

The revelation was made on RTÉ's documentary, Blood of the Travellers, and will put further pressure on the Government to recognise Travellers as a distinct group of people.

In March, the UN Committee for the Elimination of Racial Discrimination expressed concern at the state's "persistent refusal" to recognise Travellers as an ethnic minority, and pointed out that they satisfied the internationally recognised criteria for such a group.

Yanomami Indians in the Brazilian Amazon have captured an airplane used by health workers, in protest at corruption within the health service.

The Yanomami are outraged by the nomination of a new indigenous health coordinator, who has little connection with indigenous peoples, and who is thought to be favored for political reasons. Yekuana Indians have also joined the protest.

WikiLeaks founder Julian Assange has been awarded the Martha Gellhorn prize for Journalism.

The prize is awarded annually to a journalist whose work has "penetrated the established version of events and told and unpalatable truth that exposes establishment propaganda, or 'official drivel', as Martha Gellhorn called it."

Gellhorn, who died in 1998, was a well-known war correspondent and author.

Hackers likely based in China have attempted to break into hundreds of Google mail accounts, including those of senior US government officials, Chinese activists and journalists, the internet company said.

The unknown perpetrators, who appeared to originate from Jinan in Shandong province, recently tried to breach and monitor email accounts by stealing passwords, but Google detected and "disrupted" their campaign, the world's largest web search company said on its official blog on Thursday.

TOKYO, Jun 2, 2011 (IPS) - As of July, Japanese minors will no longer be able to buy comic books featuring children portrayed as violent or as sexual objects, under an ordinance enacted by the Tokyo Metropolitan Government last December.

The move, the first in Japan, has resulted in a fierce ongoing battle between supporters - mainly parents and some medical doctors - and Japan's lucrative comics industry.

"The Tokyo Metropolitan law has definitely dealt a blow to the comics industry," says Takayuki Nishitani, a spokesperson for Japanese publishers. "Many aspiring animation artists have stopped producing new works fearing they will become targets of the law."

Expressing sharply different views is Tamae Shintani, head of the Parent Teacher Association of Tokyo Primary Schools, who says she is livid about the "shocking and incomprehensible attitude of the comics industry."

"The law is a long awaited step by concerned parents who want to protect children from the influence of kinky sexual fantasies of adult animators. This has to stop," she says.

In an unusual settlement a Malaysian social activist has allegedly agreed to apologise 100 times on Twitter as part of a defamation case involving a magazine publisher, the Guardian reported today.

The penalty has sparked debate among internet users about the pitfalls of social media in Malaysia where authorities have warned people to be more cautious about what they write on blogs, Facebook and Twitter.

INDEPENDENCE, Mo.-- An alligator caused a lot of commotion for one Independence man Sunday when three Independence police officers shot at his concrete lawn ornament.

Rick Sheridan was working in his garage when he heard gunshots. He went around the back of his house to a pond, where he saw three police officers.  The three officers had spotted the gator and were lined up on the bank, shooting at the large reptile. 

Rosalyn S. Yalow, a medical physicist who persisted in entering a field largely reserved for men to become only the second woman to earn a Nobel Prize in Medicine, died on Monday in the Bronx, where she had lived most of her life. She was 89.