France's opposition Socialist Party is expected to gain several seats in Senate elections on Sunday and could even lead a historic takeover of the chamber by the left. France's right wing has controlled the Senate since 1958 and the political shift could be a dangerous omen for President Nicolas Sarkozy's re-election drive.

Nearly half of the 348 Senate seats are up for grabs in Sunday's indirect election. The opposition is almost sure to take a dozen seats from Sarkozy's ruling UMP party, but the Socialists and their allies on the far left are trying to wrestle away the 22 seats they believe will be enough to give them control of the upper house.

On behalf of the Polish EU presidency, Interior Minister Jerzy Miller issued a strongly-worded statement, regretting the positions of the Netherlands and Finland.

"This evokes in me above all rather sad conclusions on mutual trust between EU member states," he stated. "We live in hard times, hard also for the EU. Such moments require that we support each other. Today, some lacked the courage to say that we want to do it together and not separately."

...Unsurprisingly, all the major political groups of the European Parliament also regretted the veto by the Netherlands and Finland...

The leader of the European People's Party in the European parliament Joseph Daul denounced what he called "the populist attitude" of the Dutch and Finnish governments.

"While Romania and Bulgaria meet all the requirements for joining the Schengen area, some states, abusing the rule of unanimity, strengthen further the intergovernmental drift in Europe", Daul stated.

AFP - Russian President Dmitry Medvedev on Saturday announced he will step aside in 2012 polls and backed Prime Minister Vladimir Putin to return to the Kremlin for a new stint that could last until 2024.

Ending months of uncertainty over which of the men would run, Putin swiftly accepted Medvedev's proposal to run for president in carefully-choreographed speeches at the ruling party annual congress that dismayed liberals.

In an apparent consolation prize for the man who will go down in history as post-Soviet Russia's only one term president, Putin said Medvedev should become his prime minister in 2012 and head the party list in upcoming legislative polls.

A man who fired four shots from an airgun in the eastern German city of Erfurt, was arrested on Saturday. Police said the man shot at security forces through the open window of a flat about a kilometer (600 yards) from Erfurt's Cathedral Square, where 30,000 people had gathered to celebrate mass with Pope Benedict XVI.

Police say no one was injured and the pope had not been in danger at any point, since he arrived an hour after the incident. The mass was held two hours later.

Security for the pope's first state visit to his native Germany has been tight and large parts of Berlin, Erfurt and Freiburg have been locked down for the trip, requiring a massive police presence and resources.

...The pope was criticized for his speech in Erfurt's Augustin monastery on Friday, for failing to honor the father of Reformation, Martin Luther. "I will say very openly that I expected more from the pope's speech" the vice president of the Synod of the Protestant Church in Germany, Günther Beckstein, told Vatican Radio, adding that the pope should not just pay lip service to the ecumenical cause.

David Cameron is to go head to head with Alex Salmond in a bitter battle over the future of the union between England and Scotland. The Government is to fight what it sees as "outrageous" claims and increasingly aggressive moves towards complete self-rule from the Scottish First Minister in a desperate attempt to stop Scotland from "sleepwalking into independence".

The Prime Minister has ordered an aggressive government attack on the SNP in the hope of raising the alarm in England and Scotland about the prospect of Scotland voting to split from the United Kingdom. He believes the First Minister has had an easy ride and not faced enough questions on how an independent Scotland would stay afloat - and bankroll its huge pensions and benefits bill without raising taxes.

The more "muscular" approach, agreed by the coalition's ruling "quad" of ministers, will target areas where Mr Salmond is seen to be vulnerable - notably on the economy and welfare.

UK: A Department for Transport report into the high costs of light rail projects in the UK was published on September 20. 'Green Light for Light Rail' was commissioned by Transport Minister Norman Baker with the aim of identifying the key cost drivers and what can be done to make light rail more cost-effective and thus more attractive to promoters.

...There is a tendency to 'over-design' because promoters lack internal expertise to select designs which minimise lifecycle costs, or are unable to withstand pressure from consultants and politicians for prestige projects. The lack of specialist tram engineers results in an over-reliance on heavy rail expertise and 'unnecessarily cautious' approaches.

The report says UKTram should assist with sharing expertise through a procurement 'centre of excellence'. The adoption of Germany VDV technical standards is proposed, and is supported by the Office of Rail Regulation. Pooling of maintenance facilities and spares could also save money, with joint ownership of heavy equipment.

SPAIN: RENFE suburban services began running to a new station beneath Terminal 4 at Madrid Barajas airport on September 23. An official opening ceremony had been performed the day before by Development Minister José Blanco, President of the Madrid regional government Esperanza Aguirre and Mayor of Madrid Alberto Ruiz-Gallardón.

SPAIN: During a test run on the high speed line between Ourense and A Coruña on September 20, Development Minister José Blanco announced that RENFE would introduce Class 730 gauge-changing electro-diesel trainsets on services between Madrid and the northwestern region of Galicia in mid-2012.

The trainsets would enable Madrid - Galicia journey time to be cut to less than 5 h, using high speed infrastructure between Madrid and Olmedo, the non-electrified 1 668 mm gauge route from Olmedo to Ourense, and the Ourense - A Coruña high speed line which is due to open on December 10.

Also see comment on the train.

_{*Lunatic*, n.
One whose delusions are out of fashion.}

CANADA: Operator OC Transpo has awarded Alstom Transport a C$34m contract to supply six Coradia Lint diesel multiple-units to increase capacity on the O-Train service in Ottawa.

...The Alstom DMUs are scheduled for delivery in May 2013, and will offer greater fuel efficiency and lower emissions than the current fleet of three Bombardier Talent DMUs, which could be sold...

Both of Talents and LINTs are product platforms made for and in Europe. Also see From byproducts to variable stars: local multiple units.

_{*Lunatic*, n.
One whose delusions are out of fashion.}

USA: The Senate Appropriations Committee voted on September 21 to provide $110m in funding for inter-city passenger rail enhancements in the next financial year, a fraction of the $8bn President Obama had requested under his long-term plan to provide inter-city passenger rail services to 80% of the population by 2036.

After an incredibly volatile day on world markets, the head of the International Monetary Fund, Christine Lagarde, warned of a looming "collapse in global demand" which threatens to push economies around the world into a new recession.

"Dark clouds over Europe and huge uncertainty in the United States" mean that "the challenge could not be more urgent", she told politicians and leading economists in Washington, who are meeting there in an attempt to tackle the world's economic woes.

Calling for immediate action to support global growth and stabilise the international financial sector, Ms Lagarde said: "The actions I am calling for today are not for the coming years - they are for the coming months."

UBS chief executive Oswald Gruebel has resigned over a $2.3 billion rogue trading scandal, Switzerland's biggest bank announced on Saturday. London-based trader Kweku Adoboli was charged with fraud and false accounting on September 16.

US coffee giant Starbucks wants to "double or triple" the number of outlets in Germany, according to the company's CEO. The company also plans on expanding its product line and tailoring offerings to local tastes.

German and French authorities have begun work on a three-pronged strategy behind the scenes amid escalating fears that the eurozone's sovereign debt crisis is spiralling out of control.

Their aim is to build a "firebreak" around Greece, Portugal and Ireland to prevent the crisis spreading to Italy and Spain, countries considered "too big to bail".

....

The complex deal would see the EFSF provide a loss-bearing "equity" tranche of any bail-out fund and the ECB the rest in protected "debt". If the EFSF bore the first 20pc of any loss, the fund's warchest would effectively be bolstered to Eu2 trillion. If the EFSF bore the first 40pc of any loss, the fund would be able to deploy Eu1 trillion.

....

As quid pro quo for an enhanced bail-out, the Germans are understood to be demanding a managed default by Greece but for the country to remain within the eurozone. Under the plan, private sector creditors would bear a loss of as much as 50pc - more than double the 21pc proposal currently on the table. A new bail-out programme would then be devised for Greece.

Officials would hope the plan would stem the panic in the markets and stop bond vigilantes targeting Italy and Spain, which European and IMF figures believe should not be in any immediate distress but are in need of longer-term structural reform.

... It's a fact that nominal GDP growth must be above the average cost of debt as a percentage of GDP in order to reduce a country's debt-to-GDP ratio.

Greece, Ireland, Italy, Portugal and Belgium would have to grow their nominal GDP's anywhere between 4% and 6%. So we know there is no need to look any further as none of these will ever regain market access if they can't devalue (Italian nominal GDP has been falling relentlessly for 30 years from 8% in 1980 to 2% now).

Next is the question of Spain and France. They would both need a nominal GDP growth rate around 2%. Seems feasible in a normal environment, although the new normal is nothing like the past. I could use unfunded liabilities for the entire eurozone to make a point that the debt path is unsustainable but I am convinced that these will simply not be honored and therefore don't need to be funded. Under this approach of considering unfunded liabilities there is almost no developed country in the world that is solvent. At the end of the day, the promises that can't be paid simply won't be kept.

The most important consequence of running the state like a private firm is that the state should not be in the business of providing free or implicit guarantees of any kind, as these are large "contingent liabilities" threatening to bankrupt the state. The threat of bankruptcy is real, as the state must fund itself by borrowing from private lenders, unable as it is to create money to fund necessary expenses deriving from the exercisising of implicit guarantees. One alternative to bankruptcy is default, but this is considered unthinkable as defaulting on obligations to fellow EU member states is "uneuropean". In addition, countries with a large primary trade deficit may find it impossible even to default.

So, what kinds of implicit guarantees are Eurozone governments providing that they shouldn't be in the business of providing? I can think of half a dozen off the top of my head:

• deposit insurance for banks
  
• granting limited liability to businesses
  
• disaster relief
  
• access to health care
  
• access to education
  
• access to legal redress
  
• public safety
  

All of these are implicit guarantees that every citizen in Europe expects to enjoy relatively free of charge. These are large contingent liabilities of the state. Any and all of them could not be undertaken by a private entity that didn't charge hefty fees up front and wasn't adequately capitalised in case a particularly large claim presented itself. Would you pay a savings deposit insurance premium to an inadequately capitalised insurance company? (not that "sophisticated investors" didn't do exactly that when they bought CDS "protection" over the past 10 years) Would you incur risks with a full-liability entity having less capital than your potential loss? Would you trust you can be rescued from a disaster by an entity without the capital and operating income to actually fund a rescue operation? How about health insurance from an entity without the resources to pay for the treatment? How about your right to file a complaint to an entity without the necessary money to operate a grievance handling system? How about contracting physical security or firefighting services from an entity without the operating income to actually deploy security or firefighters?

The Government has been forced to deny it has been secretly printing punts, to facilitate an Irish exit from the euro, a rumour that has been spreading through Dublin's chattering classes in recent weeks.

Such has been the ferocity of the speculation that new notes have been printed, a parliamentary question was tabled by Fianna Fail TD Sean Fleming, who asked Finance Minister Michael Noonan when was the last time Irish punts were printed.

Since the rumour first began during the summer, the Department of Finance and the Central Bank both issued strong denials to this newspaper that any fresh national currency was being readied in case of a break-up of the eurozone.

Mr Fleming asked Mr Noonan "when the Irish Central Bank last printed Irish punts currency; and if he will make a statement on the matter".

Hoisted from comments, this from reader barrisj. When I went to read the London Banker post in question, I too was struck by the passage barrisj singled out:

    A remarkable document has been placed today on the "London Banker" blogsite, the testimony of Marriner Eccles to the Senate Finance Committee in early 1933. His testimony later was rewarded by President Roosevelt by bringing Eccles to Washington to help write or draft several seminal laws that essentially saved US capitalism from itself. In fact, "London Banker" highlighted this particular passage from Eccles' testimony:

       It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they can not save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying. It is for the interests of the well to do - to protect them from the results of their own folly - that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not "soaking the rich"; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.

    Where are people such as Marriner Eccles today?

I strongly recommend reading the post in full. Eccles gave a eloquent diagnosis of how the Depression became so severe and intractable, and a cogent, layperson friendly set of recommendations. I have yet to see any similar length discussion of our current crisis that is as clear and compelling.

Ben Bernanke works in The Marriner Eccles Building. We built the building and named it about a decade before we began dismantling Eccles' work.

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

AFP - The United States and other world powers called Friday for the Palestinians and Israel to resume direct peace talks within a month and commit to seeking a deal by the end of 2012.

The Quartet of the United States, Russia, the European Union and the United Nations acted after Palestinian president Mahmud Abbas formally submitted his request to the United Nations for Palestine to be admitted as a full member.

The United States has vowed to veto the unilateral bid at the UN Security Council, arguing that the resumption of direct negotiations between Israel and the Palestinians is the only real path to peace and statehood.

US-brokered talks stalled a year ago when Israel failed to renew a partial freeze on settlement construction in the occupied West Bank, but the Quartet urged both sides Friday to resume negotiations and plotted out a path forward.

REUTERS - Libyan provisional government forces backed by NATO warplanes swarmed into the city of Sirte on Saturday but weathered heavy sniper fire as they tried to win control of one of deposed leader Muammar Gaddafi's last bastions of support.

Black smoke billowed over the town as National Transitional Council (NTC) forces massed in Zafran Square about 1 km (half a mile) from the town centre. Gunfire could be heard from the centre as NTC fighters moved tanks and mortars into the square.

Pick-up trucks mounted with machineguns and loaded with NTC fighters raced into the town. NTC forces also advanced from the south of Sirte, Gaddafi's hometown on the Mediterranean coast.

...A large cloud of smoke over the town was the result of a strike on an ammunition dump, NTC fighters said. At the western gate, gunners fired artillery towards the town and both sides exchanged volleys of rockets.

So, where is NATO protecting civilians as per its UN mission?

_{*Lunatic*, n.
One whose delusions are out of fashion.}

REUTERS - The main opposition protest camp in Sanaa came under heavy mortar fire and sniper attack early on Saturday, just hours after President Ali Abdullah Saleh returned from a three-month absence calling for peace and an end to fighting in the capital.

One witness and protesters said troops loyal to Saleh, including the elite Republican Guard and Central Security forces assaulted the southern end of "Change Square," the heart of an uprising where thousands have camped out for eight months calling for Saleh's overthrow.

...Protesters said at least three people had been killed and 25 hit by sniper fire and shelling. A shaken medic said some of the bodies were severely mangled.

...Protesters in the opposition encampment on the 4-km stretch of avenue they have dubbed "Change Square" said some buildings and tents were on fire and that protesters had retreated by about half a kilometre.

AP - Bahraini police set up checkpoints and patrolled key roads Saturday in a massive show of force during highly charged parliamentary elections that Shiite-led opposition groups have vowed to boycott.

The heaviest security was around Pearl Square in the capital Manama, which was once the hub for Shiite protesters demanding greater rights from the ruling Sunny monarchy. The area was ringed by barb wire and lines of armored police vehicles amid calls by anti-government factions to try to reclaim control of the site.

The special elections were called to fill 18 parliament seats abandoned by Shiite lawmakers to protest the harsh crackdowns since February in the strategic nation, which is home to the U.S. Navy's 5th Fleet.

Reports over mass graves containing 1,700 bodies found in Tripoli - spokesman say bodies are from 1996 Abu Salim prison massacre.

keep to the Fen Causeway

Turkey is set to begin natural gas exploration in the coming days in the Eastern Mediterranean, north of Cyprus. According to reports in the Turkish media, the exploration will be accompanied by a fleet of Turkish war ships and submarines.

Turkey's war planes will also be stationed in the northern part of the island, which is under Turkish control. It is still unclear whether the exploration will take place in the areas where Israel and Cyprus divided exploration rights in an agreement signed last year. Last week, Turkish Prime Minister Recep Tayyip Erdogan accused both Israel and Cyprus of "oil madness".

The World Bank and IMF are proposing global carbon taxes on aviation and ship fuels in developed economies to help reduce carbon dioxide emissions, according to a draft proposal seen by AFP Friday.

The proposal suggests an international charge on aviation and maritime bunker fuels of $25 per tonne of CO2, which it said would "reduce CO2 emissions from each sector by around five to 10 per cent."

Such a charge, if implemented well, could also bring in $250bn in taxes in 2020, according to the report, which focuses on how funds to fight climate change can be mobilised.

Scottish and Southern (SSE), the UK's second-biggest energy generator, has abandoned its quest to develop nuclear power in favour of producing more electricity from renewable energy sources such as wind farms and biomass plants.

Dealing a blow to government plans to ramp up nuclear generation, SSE has pulled out of a joint venture with France's GDF Suez and Spain's Iberdrola that would have involved it in atomic energy for the first time.

...Although GDF and Iberdrola stepped in to acquire SSE's stake, analysts said the Perth-based group's decision not to enter the nuclear power market was a blow to government plans to boost atomic energy significantly in the coming decades, implying that for providers not already operating reactors, the business case does not stack up.

Berlin may well be one of the hippest tourist destinations in Europe, but it is also a city of harsh realities.

More and more locals are scouring the city's streets and bins for empty glass and plastic bottles, which they can turn in to collect a cash deposit. Many of the bottle-collectors say they are forced to do it to make ends meet.

Thanks to legislation eight years ago, they can. The German government introduced a mandatory deposit on drinks packaging in 2003.

IN AUGUST 2010, a bowhead whale from the Bering Sea swam into the North-West Passage. Having negotiated Alaska and picked its way through the maze of ice-ridden channels off the north coast of Canada, it made its way to Viscount Melville sound. There it met a second bowhead, which had entered the passage from Baffin bay, next to Greenland.

The two met because the passage, long blocked by ice, is opening as the climate warms. The anecdote, which came to light thanks to satellite transmitters on the whales, is part of increasing data showing how ocean life is being transformed by rising sea temperatures, with some bits of apparently good news to sweeten the pill.

Hydrogen has been detected in a pipe at the No. 1 reactor at the Fukushima No. 1 nuclear power plant, but there is no possibility it will cause an explosion "in the immediate future," the plant's operator said Friday.

According to Tokyo Electric Power Co., hydrogen of at least 10,000 parts per million was detected at two spots in a pipe passing through the containment vessel on the reactor building's first floor. This concentration was higher than TEPCO had anticipated.

Although TEPCO is not certain how much hydrogen is still inside the vessel, the utility believes it is possible the concentration of the highly flammable gas is higher than had been assumed.

In air and liquid, 10,000 ppm is equivalent to 1 percent. Air containing at least 4 percent hydrogen and 5 percent oxygen is at risk of causing explosion.

Teacher Sandra de Nieto de Diego heaps praise on the students, encouraging them by making their bilingual education enjoyable through music.

"The Spanish-speaking kids help the German-speaking kids understand the lyrics," she says. Most of the children in the school have at least one parent from a Spanish-speaking country.

Fostering integration

The Catholic primary, or elementary school, in a southern district of Cologne has been a German-Spanish school for a year now. "The idea is that children are welcome to use the language they were brought up with," Principal Margit Faix explains.

...Now, Germany has over 600 schools that offer some form of bilingual education, with 150 of those at primary level. The state of Rhineland-Palatinate alone has reorganized 13 schools this year, to allow them to offer bilingual classes.

Vienna police say a sniper has shot 17 people with an air rifle. No one has been seriously injured, but the random attacks have the residents of the Austrian capital worried.

On 31 March, the Indian Ocean island of Mayotte became the 101st department of France. For most of the local population, which is 90% Muslim, there is no conflict of interest between their religion and the principle of secularity much cherished by the French state. Le Monde reports.

Cesaria Evora, the "Barefoot Diva" who toured the world singing ballads from her native Cape Verde, has decided to end her career at the age of 70 because of health problems, her producer said Friday.