Thousands of protesters have again rallied in Spain, where the government submitted an austerity budget and said the public debt and deficit are set to rise far above earlier forecasts.

Chanting that politicians must resign, the demonstrators surrounded parliament in Madrid on Saturday evening, facing off with riot police and denouncing the conservative government's deep budget cuts.

Rallied by the Indignants protest movement and organised on social media, the protesters held up signs that said simply "No", "Resign" and "Democracy" and shouted toward the legislature: "They do not represent us".

On Tuesday helmeted riot police fired rubber bullets and baton-charged protesters as thousands rallied near parliament in anger at the economic crisis in clashes that left at least 14 people wounded.

The crisis, blamed on the collapse of a speculation-driven real estate boom, has plunged Spain into recession, throwing millions out of work and many families into poverty. Unemployment is close to 25 per cent.

Amid the gloom, the government had more bad news on Saturday, when Budget Minister Cristobal Montoro said debt was now predicted to reach 85.3 per cent of gross domestic product in 2012 and 90.5 per cent in 2013.

The deficit meanwhile was revised to 9.44 per cent of GDP from 8.9 per cent and was predicted to hit 7.4 per cent instead of 6.3 per cent this year.

Turkey's prime minister has said that the era of military coups in his country is over, a week after a court sentenced more than 300 military officers for attempting to overthrow the government.

Recep Tayyip Erdogan trumpeted Turkey's credentials as a rising democratic power on Sunday while addressing a ruling party congress in Ankara.

Erdogan also said that his Islamist-rooted ruling party had become an example to the Muslim world after being in charge for a decade.

Addressing thousands of party members and regional leaders at a congress of his Justice and Development (AK) Party, Erdogan vowed to forge a more diverse constitution and turn a new page in relations with Turkey's 15 million Kurds, in a speech lasting almost two and half hours and meant to chart the AK Party's agenda for the next decade.

Former Chancellor Helmut Kohl, who reunified Germany and pushed the country into the euro, urged Europe to press ahead with closer integration despite a crisis of the single currency, saying the continent must never again descend into conflict.

In a rare public appearance to mark 30 years since he became chancellor, Kohl was celebrated by party allies, an array of former presidents and prime ministers, as well as Angela Merkel, a former protégé with whom he has had a frosty relationship since she turned on him over a decade ago.

Frail since a fall in 2008 put him in the hospital for months, the 82-year old Kohl has remained largely silent through three years of euro turmoil, but on the occasions he has spoken out, he has voiced doubts about Merkel's handling of the crisis.

"Europe can never sink into war again," he told an audience at the German Historical Museum in Berlin. "We need to press ahead with the unification of Europe. Let's make good use of the time we have."

Instead of seeking to position itself to the West or to the East, Ukraine should reform and use its huge natural resources and human potential to become a big international player on its own terms, speakers told a conference held in the European Parliament on Wednesday (26 September).

The conference "EU-Ukraine in 2020, looking beyond the current paradigm", attempted to frame the discussion about Ukraine outside the usual context of the short-term bilateral agenda.

The conference was organised by Fondation EurActiv and the Ukrainian Foundation for Democracy People First, and hosted by Polish MEP Paweł Zalewski (European People's Party).

Most speakers refrained from referring to the imprisonment of former Prime Minister Yulia Tymoshenko, or to the tug of war between Kyiv and Moscow on energy issues.

They did comment at length, however, on the parliamentary elections to be held on 28 October.

France's Left Front Leader Jean-Luc Mélenchon rounded up supporters on Sunday against austerity and the European fiscal treaty. Thousands of people and more than sixty organisations took part in a protest through the streets of Paris.

"Today is the day where the French people begin our movement against a politics based on austerity," Mélenchon said on Sunday.

The protest is a first for the Communist party since the presidential elections, when Mélenchon ran for the top spot. It comes at a time of rising unemployment (pegged at over three million), tax hikes and increasing disapproval of President François Hollande's leadership.

The International Monetary Fund wants to assemble a pool of German pensioners with finance expertise to help Greece establish a functioning financial system, it was reported on Saturday.

The business magazine Wirtschaftswoche reported that IMF Chief Christine Lagarde is hoping to attract retired German financial experts to help out ailing Greece.

She is said to be looking for people with tax experience and also those who held management positions.

Some 170 tax experts from German state and federal finance offices have already offered their services to the Greek tax authorities. But according to State Secretary Hartmut Koschyk only seven of these experts have actually been sent to Athens to help out.

The government is to unveil blueprints for a new generation of shrunken schools and has told builders they will be about 15% smaller than those built during Labour's spending boom.

Corridors, assembly halls, canteens and atriums will be squeezed under the proposals, expected this week, which will set the template for 261 replacement school buildings to be erected over the next five years at a cost of £2.5bn.

The tough space standards will be introduced to help hugely reduce costs in the coalition's delayed programme to replace the country's most run-down primary and secondary schools.

Last week investors - and Spanish journalists - suddenly discovered to their horror that Germany will not after all allow Spain to dump the risk of its banks on to the European Stability Mechanism, the eurozone rescue fund. That seems to contradict the June 29 eurozone leaders' summit statement, which said it was "imperative to break the vicious circle between banks and sovereigns". EU leaders reached this agreement in the early hours of the morning after a diplomatic ambush by the Italian and Spanish prime ministers. Whatever may have been agreed that morning, it was understood differently in Spain than in Germany. The Spanish interpretation had been that the EU would adopt a banking union by the beginning of next year. This would then automatically trigger a shift in the burden of the recapitalisation of the Spanish banking sector from Spain to the ESM.

...

Whether or not you call this a banking union, or a breach of the June 29 agreement, is irrelevant.
The point is that you cannot force through a banking union against the explicit will of the German government, the German parliament, the German public at large and the Bundesbank. I suspect the EU will ultimately agree on a fudge. But it would be irrelevant for the resolution of this crisis.

...

Judging from the political debate, Germany is not ready for a fiscal transfer mechanism of any kind. In particular, Germany is not ready for a banking union. Ms Merkel never made a political case for a banking union in Germany. All she did was play down the implications. I would counsel readers against falling into the trap of thinking that next year's German elections will miraculously clear all the hurdles. All the various probable outcomes favour a continuation of the present policy.

SPD settles on former finance minister as its candidate for the September 2013 federal elections; Steinbrück emerged after Frank-Walter Steinmeier dropped out of the race; Steinbrück has reinvented himself as a pro-European - having been the co-architect of the policy that each country bails out its own banking system; he now comes out in support of a third Greek programme; Kurt Kister says Steinbrück is unlikely to become chancellor as the SPD badly trails the CDU; Kister also dismisses the possibility of an alliance with the Greens and the FDP; Oliver Wyman published its bank recapitalisation estimates for Spain, which came in at exactly the rate forecast by the government and bank executives; critics say that the adverse scenario is still too optimistic because the stress tests only focused on the loan book, while excluding the equity portfolio; one bank does better under the adverse scenario than under the baseline scenario; Spanish government now expects to tap €40bn from the European rescue fund; the political movement of the chairman of Ferrari officially supports Mario Monti as its candidate for prime minister; Eugenio Scalfari also supports a second mandate for Monti, and lists five reforms the goverments needs to undertake to get out of the crisis; Italy's industry minister announces that the crisis is over - thanks to policies already taken by the government; the troika is back in Athens to exert further pressure on the government, with a final agreement now not expected until the end of the week; Dimitris Kontogiannis writes that the cumulative impact of austerity has been 30% of GDP; protests spread to all several south European capitals over the weekend;  Wolfgang Munchau writes that no matter what was agreed at the June 29, there shall be no banking union of any significance, as Germany is not ready; Ruo Chen, Gian-Maria Milesi-Ferretti, and Thierry Tressel, meanwhile, argue that external trade shocks have played a big role in the eurozone's internal imbalances.

Sprem, who suffered from multiple myeloma, died at the MD Anderson Cancer Center in Houston early Sunday morning, Central European Time. He was 56.

France is open to the idea of a new European Union treaty to deepen integration if it is deemed necessary for new "solidarity" mechanisms in the bloc such as debt mutualisation, said French Minister for European Affairs Bernard Cazeneuve.

Cazeneuve was reacting to calls this month by José Manuel Barroso, president of the European Commission, and German Chancellor Angela Merkel for a new treaty to help the bloc overcome a sovereign debt crisis through integration.

"If, for greater solidarity, for more efficiency in the mechanisms of mutualising debt or intervening in the markets, new treaties are necessary, then yes, we'll need new treaties," Cazeneuve told news web site Mediapart during a panel debate on Thursday (27 September).

A new treaty could also help improve economic governance, give citizens a greater voice in European affairs, and better coordinate industrial and clean energy policies, he added.

The Germany weekly Der Spiegel reported last month that Merkel wants an EU 'convention' to draw up a new treaty that would transfer some areas of national sovereignty, notably authority over budgets, to European institutions.

Merkel hopes a summit of EU leaders in December will be able to agree a concrete date for the start of the convention on a new treaty, Der Spiegel reported.

Barroso, in a speech to the European Parliament, called for the bloc to be turned into a 'federation of nation states' in a sweeping call for countries to give up more sovereignty and move toward greater integration.

A more social side to EU integration?

France's position so far has been to achieve as much integration as possible within the confines of the Lisbon Treaty, the bloc's governing agreement, which entered into force in December 2009 after years of wrangling.

But the Socialist-led government now appears ready to discuss further changes to the EU treaty if they imply greater solidarity between member nations, such as debt mutualisation, which President François Hollande has insistently called for.

The promise of further changes to the EU treaty, adding a more social angle to European integration, would help the Socialists ratify the European fiscal discipline pact. The proposal has provoked a backbench rebellion among Hollande's leftist allies in the French Parliament.

It would also help the Socialists calm growing popular discontent about the EU's fiscal discipline treaty, denounced as a Conservative ploy by thousands of protesters who marched in Paris yesterday (30 September).

Angela Merkel has insisted on achieving fiscal and political union in the eurozone as a prerequisite for considering any moves towards greater debt sharing.

Now, the French Socialists seem decided on taking her at her word. "I came to tell you that France is favourable to political union," Cazeneuve told a Brussels conference last week.

From Berlin's perspective, the answer is clear: The German government believes the OMT should only be a last resort; Spain should avoid asking for ECB support unless it becomes absolutely necessary. That's partly because Berlin would have to submit any Spanish request for aid to a potentially troublesome vote of the Bundestag; it is also because any government bond-buying by the ECB will further antagonize the Bundesbank, fanning German opposition to the OMT; and partly because Berlin fears that no sooner does Spain request aid than the market will turn its attention to other countries including Italy, fueling the sense of crisis in the euro zone. If ECB support for Spain does become necessary, strict conditions will be required to ease the domestic political pressure on Berlin.

But viewed through Italian eyes, the situation looks very different.

Rome believes the current wide spread between German and Italian bond yields is a gross distortion of economic reality. The government points out that Italy already runs a healthy primary surplus before interest payments and has taken aggressive fiscal action that should bring the budget back into balance by 2014. At the same time, Italy remains a major manufacturing and exporting economy, producing a trade surplus excluding energy costs last year. Italy never had a debt bubble, it didn't need to bail out its banks and its households possess €9 trillion ($11.57 trillion) of assets, making it one of the world's wealthiest countries. True, government debt which is expected to peak this year at 123% of GDP is high, but Italy has historically sustained high levels of debt with help from a large, loyal investor base.

Business activity in the U.S. unexpectedly contracted in September for the first time in three years, adding to signs manufacturing will contribute less to the economic recovery.

The Institute for Supply Management-Chicago Inc. said today its business barometer fell 49.7 this month from 53 in August. A reading of 50 is the dividing line between expansion and contraction.

Who's afraid of the fiscal cliff? Even as protests in Spain and Greece revive jitters in the euro zone, global businesses and investors have discovered a new political horror, this time in the U.S. The fear now in world markets is not so much about November's election, but about the automatic tax hikes and public spending cuts that Ben Bernanke has dubbed the "fiscal cliff." These fiscal changes, which come into force on Dec. 31 unless Congress passes new legislation, will tighten fiscal policy by some 4 percent of GDP, comparable to the austerity programs in Spain, Italy and Britain.

Given what fiscal austerity has done to Europe, the worries are understandable, but everyone should calm down. A drastic fiscal tightening is almost inconceivable after the election, because politics, economics and markets interact in Europe and America in opposite ways.

Let's start with economic policy.

(Reuters) - Labour leader Ed Miliband launched an offensive against banks on Sunday ahead of his party's annual conference, promising a "real separation" of retail and investment banking and to raise the top rate of personal income tax.

The Conservative-Lib Dem coalition government has said it will implement the recommendations of an independent review by Oxford University economist John Vickers into how banks should be structured in the wake of the global credit crisis.

But critics, including Vickers, have lamented the watering down of some of the proposals - including the definition of the ring fence between retail and investment arms and the ratio of loans to capital that banks can hold on their books.

(Reuters) - Hermes (HRMS.PA) enjoyed healthy sales growth in the summer and September, contrasting with other luxury brands such as Burberry (BRBY.L) and Tiffany & Co (TIF.N) which have warned of deteriorating trading conditions.

The upbeat trading update on Sunday is likely to cement the view that the global luxury market is becoming increasingly segmented with some brands such as Hermes, Prada, Dior, Balenciaga feeling no pain while others, more vulnerable, are starting to suffer.

During the last two years, Europe has been facing a debt crisis, and Greece has been at its center. In response to the crisis, drastic actions have been taken, including the halving of Greek debt. Policy makers acted because interest rates for sovereign debt increased dramatically. High interest rates imply that default is likely due to economic conditions. High interest rates also increase the cost of borrowing and thus cause default to be likely. In equilibrium markets, economic conditions are used by the market participants to determine default risk and interest rates, and these statements are mutually compatible. If there is a departure from equilibrium, increasing interest rates may contribute to--rather than be caused by--default risk. Here we build a quantitative equilibrium model of sovereign default risk that, for the first time, is able to determine if markets are consistently set by economic conditions. We show that over a period of more than ten years from 2001 to 2012, the annually-averaged long-term interest rates of Greek debt are quantitatively related to the ratio of debt to GDP. The relationship shows that the market consistently expects default to occur if the Greek debt reaches twice the GDP.

Mr Hollande likes to quote Leon Blum, the Popular Front leader of the interwar years. The reality could hardly be more cruel. He is replicating the disastrous deflation policies of Labour Chancellor Philip Snowden in 1931, before the Labour Party woke up to the delicious possibility that you could lift two fingers to the forces of reaction and leave the Gold Standard.

Worse yet, he is perilously close to re-enacting the desperate deflation decrees of Pierre Laval -- an ex-Socialist dreamer, pacifist, and utopian who lost his way, and ultimately cleaved too closely to foreign ideologies -- and like Laval he is doing so to uphold a fixed exchange system that is slowly asphyxiating his country and no longer makes any sense.

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France now joins Italy, Spain, Portugal, Greece, Ireland, and parts of Eastern Europe in synchronized tightening, with the Netherlands and Belgium cutting too, all dragging each other down in a 1930s slide into the political swamp.

What's at stake: The global youth unemployment rate, which was already high before the start of the Great Recession, has reached skyrocketing levels in the past two years. While youth unemployment rates have increased in almost all countries, there has been wide divergence in the size of this increase - often reflecting the country specific aspects of the transition from school to work. For most, if not all, a serious discussion about the potential "scarring effects" induced by such a situation appears, however, warranted if we want to avoid having one generation permanently bear the burden of this crisis.

It's pretty clear that Netanyahu has read all the polls, Nate Silver's analyses, and the on-line betting and has decided that now is the time to kiss and make up with Obama in hopes that the president really means it when he says that containing Iran is off the table and that he's determined to prevent Tehran from acquiring a nuclear weapon. And if he now keeps quiet for the balance of the election campaign, it will be much more difficult for Romney and his neo-con advisers and supporters and the Republican Jewish Coalition (RJC) to make the case that "Obama has thrown Israel under the bus." On the contrary, it now looks like Bibi has thrown Romney under the bus.

WASHINGTON/KABUL, Sep 20 2012 (IPS) - Sharply increased attacks on U.S. and other NATO personnel by Afghan security forces, reflecting both infiltration of and Taliban influence on those forces, appear to have outflanked the U.S.-NATO command's strategy for maintaining control of the insurgency.

The Taliban-instigated "insider attacks", which have already killed 51 NATO troops in 2012 - already 45 percent more than in all of 2011 - have created such distrust of the Afghan National Army (ANA) and national police that the International Security Assistance Force (ISAF) command has suspended joint operations by NATO forces with Afghan security units smaller than the 800-strong battalion of Kandak and vowed to limit them in the future.

ISAF had intended to carry out intensive partnering and advising of ANA and police units below battalion level through 2012 to get them ready to take responsibility for Afghan security. Now, however, that strategy appears to have been disrupted by the insider attacks, and Afghan military and civilian officials are seriously concerned.

Secretary of Defence Leon Panetta sought to minimise the crisis in U.S. war strategy Tuesday by calling the inside attacks on NATO troops the "last gasp" of a Taliban insurgency that has been "unable to regain any of the territory that they have lost." The "last gasp" phrase recalls then Vice-President Dick Cheney's infamous 2005 claim that the Iraqi insurgency was "in its last throes".

Hundreds of shops were burning in the ancient covered market of the Old City of Aleppo as deadly fighting between rebels and government forces in Syria's largest city threatened to destroy the UNESCO world heritage site.

Syria's Local Co-ordination Committee, an opposition group, said that at least 41 people were killed in fighting across Syria on Saturday.

The activists said the dead included eight people executed by security forces and Shabiha militias in the Damascus suburb of Qudsaya.

Bombs striking targets across Iraq have killed at least 37 people and wounded 90, officials said, in the latest instance of what appeared to be co-ordinated violence.

The deadliest attack came in the town of Taji, a former al-Qaeda stronghold just north of Baghdad, where three explosive-rigged cars went off within minutes of each other on Sunday morning.

Police said eight people died and 28 were injured in the back-to-back blasts that began around 7:15am local time.

RIO DE JANEIRO, Sep 25 2012 (IPS) - You do not need to live in the countryside to grow vegetables, as hundreds of thousands of people involved in urban agriculture from Havana to Buenos Aires know very well. Now they are being joined by residents of Rio de Janeiro's "favelas".

Plants can flourish in the middle of the city, everywhere from community gardens to the rooftops and balconies of homes in Brazil's poorest neighborhoods.

A pioneering initiative is now underway in two favelas or shantytowns in particular: Babilônia and Chapéu Mangueira, both located in the southern Rio de Janeiro district of Leme.

The initiative forms part of Rio's Sustainable City programme, being carried out by the Brazilian Business Council for Sustainable Development (CEBDS). So far, 16 residents of the favelas have volunteered for five months of training in techniques for growing crops in household planters.

Organic agriculture is a growing trend in big cities, said Marina Grossi, president of the CEBDS. "Not only because people want organic food, but also because it shortens distances and generates income."

BRUSSELS, Sep 19 2012 (IPS) - The European Commission has announced it will limit the amount of crop-based biofuels used in transport, but its newly proposed measures are not nearly enough to curb the disastrous impact of the EU's biofuel policy around the world. Its effects will only worsen, activists say.

According to the existing European rules at least 10 percent of the EU's transport energy must come from renewable sources by 2020, primarily through biofuels derived from wheat, soy or rapeseed. But in an unprecedented move, EU Energy Commissioner Günther Oettinger and Climate Commissioner Connie Hedegaard announced Monday that the European Commission (EC) is planning to limit the use of crop-based biofuel to five percent in the total share of renewables in transport fuel.

Just ahead of the meeting, international NGO Oxfam released a new report which demonstrates that Europe's hunger for biofuels is pushing up global food prices and driving people off their land, resulting in deeper hunger and malnutrition in poor countries.

The European wind energy association (EWEA) says that wind power is having a "substantial" impact on Europe's energy security.

This comes after wind recently passed the milestone of 100 GigaWatts (GW) of installed wind power capacity.

The association says that in reaching the target, the EU had "cemented its title as the world champion" of wind power.

Turbines across Europe's plains and seas can now pump out as much electricity as 39 nuclear power plants - or enough for 57 million households.

The EWEA says the new record "underlines" how quickly wind power has grown in the EU, despite the eurozone crisis and concern about the cost of wind subsidies and turbine-blighted views.

The German government has abandoned its goal of having one million electric cars on the streets of the country by 2020.

"The hype is over," the Frankfurter Allgemeine Sonntagszeitung wrote, citing information from the Ministry of Education and Research. The high expectations for electric cars, which have no carbon dioxide emissions, has been replaced by huge disappointment, the paper wrote.

Environment Minister Peter Altmaier admitted that there are problems with electric cars and Economy Minister Philipp Rösler has refused to encourage electric car sales with economic incentives.

Chancellor Angela Merkel will meet with auto industry leaders on Monday for a summit on electric mobility. The government has become less enthusiastic about electric cars, unnamed government sources said.

The automobile industry has said that without additional government subsidies they can only sell 600,000 electric cars by 2020 at best.

Global grain production is expected to reach a record high of 2.4 billion tons in 2012, an increase of 1 percent from 2011 levels, according to new research conducted by the Worldwatch Institute's Nourishing the Planet project (www.worldwatch.org) for the Institute's Vital Signs Online service.

According to the United Nations Food and Agriculture Organization (FAO), the production of grain for animal feed is growing the fastest - a 2.1 percent increase from 2011. Grain for direct human consumption grew 1.1 percent from 2011, write report authors Danielle Nierenberg and Katie Spoden.

In 2011, the amount of grain used for food totaled 571 million tons, with India consuming 89 million tons, China 87 million tons, and the United States 28 million tons, according to the International Grains Council.

The world relies heavily on wheat, maize (corn), and rice for daily sustenance: of the 50,000 edible plants in the world, these three grains account for two-thirds of global food energy intake.

Monday 1 October marks the halfway point in a 100-month countdown to a game of climate roulette.

On a very conservative estimate, 50 months from now, the dice become loaded against us in terms of keeping under a 2C temperature rise. This level matters because beyond it an environmental "domino effect" is likely to operate. In a volatile and unpredictable dynamic, things like melting ice, and the release of carbon from the planet's surface are set to feed off each other, accelerating and reinforcing the warming effect.

The time frame follows an estimate of risk of rising greenhouse gas concentrations from the world's leading authority on climate change, the Intergovernmental Panel on Climate Change (IPCC), that passed a certain point, it will no longer be "likely" that we stay the right side of the line. Some consider even a 2C rise too much, but it is the limit that the EU and others have signed up to.

Apple Inc. (AAPL) Chief Executive Officer Tim Cook apologized for the iPhone mapping software released last week that has been criticized for flaws such as misrouted directions and inaccurately located landmarks.

"We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better," Cook said in a letter to customers posted today on the Cupertino, California-based company's website.

Apple's decision to build its navigation application reflects a widening rift with Google Inc. (GOOG), which had provided its Google Maps program since the iPhone debuted in 2007. While the new software adds features such as turn-by-turn navigation, it is widely faulted for unreliable landmark searches, routes that get users lost and a lack of public transit directions.

Ants that are held as slaves in nests of other ant species damage their oppressors through acts of sabotage. Ant researcher Professor Dr. Susanne Foitzik of Johannes Gutenberg University Mainz (JGU) first observed this "slave rebellion" phenomenon in 2009. According to the latest findings, however, this behavior now appears to be a widespread characteristic that is not limited to isolated occurrences.

In fact, in three different populations in the U.S. states of West Virginia, New York, and Ohio, enslaved Temnothorax longispinosus workers have been observed to neglect and kill the offspring of their Protomognathus americanus slavemakers rather than care for them. As a result, an average of only 45% of the parasite's offspring survived.

An Evolutionary Biologist at The University of Manchester, working with scientists in the United States, has found compelling evidence that parts of the brain can evolve independently from each other. It's hoped the findings will significantly advance our understanding of the brain.

The unique 15 year study with researchers at the University of Tennessee and Harvard Medical School also identified several genetic loci that control the size of different brain parts.

The aim of the research was to find out if different parts of the brain can respond independently of each other to evolutionary stimulus (mosaic evolution) or whether the brain responds as a whole (concerted evolution). Unlike previous studies the researchers compared the brain measurements within just one species. The findings have been published in the journal Nature Communications.

To evaluate the effects of inequality on the real economy, I report in Figure 2 the scatterplot of the average Gini coefficient in 2005 and the cumulative real GDP growth between 2006 and 2011 for each Euroarea country.[1] Figure 2 shows that the relation between income inequality and GDP growth is negative. In other words, when inequality increases real GDP decreases (correlation of -0.69).