Several hundreds of people were protesting in the village of Silistea-Pungesti in Eastern Romania on Wednesday against plans by US company Chevron to start operating the first shale gas exploration drill in the county of Vaslui, news agency Agerpres reports.

Protesters - some of whom have come from the Barlad, Iasi and other cities in the region of Moldova, Eastern Romania, some of whom are locals from Pungesti - installed tents on the field where Chevron machines are to be deployed. They remained there over night to protest today and said they would not leave the perimeter and would not allow representatives of the US company to come to the area.

On Wednesday afternoon, some 500 people were taking part in the protest. Some locals forced a line of intervention police deployed in the area and managed to reach the perimeter they were not allowed in. Vaslui county prefect Radu Renga warned that laws must be complied it and that gendarmes have to intervene when public order and traffic on public roads are affected.

The first exploration drill is to be deployed in the close vicinity of the village of Pungesti.

Chevron Romania holds another three certificates for the county of Vaslui to start explorations in order to identify possible shale gas reserves.

It changes by the hour ....what a circus !!! lies and deceit and that's all !!

Good news for the European economy: retail sales were much stronger than expected in August.

Eurostat reported that retail sales volumes rose by 0.7% in the euro area, and 0.4% across the wider European Union in August. July's data was also revised higher, showing consumers weren't as cautious about spending as first thought.

Eurozone retail sales to August 2013 Photograph: /Eurostat

Eurostat's data shows that non-food shopping was strong, rising by 0.6% in the eurozone. That covers items such as computers, clothing and medical products.

The data also showed an increase in fuel purchases, suggesting a rise in motor journeys. Spending on "automotive fuel in specialized stores" (that's petrol stations to you and me) was up by 0.9% across euro members.

The eurozone recovery is gathering pace, with its private sector firms reporting the biggest leap in activity since June 2011 last month.

Data firm Markit's monthly surveys of companies across the single currency showed a solid rise in activity.

New business has picked up, and the rate of job cuts may finally be slowing to a halt.

Markit's monthly survey of activity came in at 52.2, up from August's 51.5. Both service sector firms and manufacturers said conditions were better.

Photograph: Markit

Here's some key factoids from the report (online here)

Ireland: 55.7 2-month low
Germany: 53.2 2-month low
Italy: 52.8 29-month high
France: 50.5 20-month high
Spain: 49.6 2-month low

The news comes hours after China's service sector output hit a 6-month high.

Chris Williamson, chief economist at Markit, said the eurozone data showed Europe's recovery on track, despite Spain's private firms faltering after a better August.

Talks on forming a new German coalition between Chancellor Angela Merkel's conservatives and their main leftist rivals are under way in Berlin.  Her Christian Democrats (CDU) fell just short of an outright majority at last month's polls, when their liberal partner won no seats at all.   Seven leading figures from the CDU are meeting seven counterparts from the Social Democrats (SPD).   The SPD is seen as their likeliest new partner despite sharp differences.  Also present at the talks are seven members of Mrs Merkel's Bavarian allies, the Christian Social Union.   Key issues are taxation and a proposed national minimum wage.   If a grand coalition is forged by the two main parties, like the one Mrs Merkel led in 2005, it faces the twin tasks of rebalancing the eurozone's biggest economy and winning the support of the German public to tackle the eurozone's debt and banking problems.  The SPD, which has not won an election since 2002, has said that any deal must be approved by its membership.   Keeping its options open, Mrs Merkel's party is also holding preliminary talks next week with the Greens. At the election on 22 September, the CDU took about 41.5% of the vote, the SPD won 26%, the Greens 8.4%, and the former communist Left Party 8.6%.   The CDU's previous coalition partner, the Free Democrats, narrowly failed to cross the 5% threshold for entering parliament.

In Germany, the finance minister Wolfgang Schaeuble has completed an outspoken week with a flourish.

Speaking to German daily Handelsblatt, in an interview published this morning, Mr Schaeuble revisited talk of a third bail-out for Greece, following on from his surprise admission about the prospect earlier this week. Today, he added that, while Greece is likely to need another rescue package, that the sums involved will not be as high as the earlier deals, which totaled €240bn. He's also insisted that Greece will not get another debt haircut.

We have held out the prospect of further aid, on condition that the government in Athens meet its agreed commitments and on the expectation the sums involved will be much smaller than before.

I don't want to be accused, after the election, of not having said the truth before the election.

I'm happy that the broad public is aware of what I've been saying for a long time, that we'll have to look next year at further measures for Greece.

Greece's international bailout faces a shortfall of around €11 billion ($14.59 billion) by the end of 2015, the International Monetary Fund said Wednesday in a review of the country's program, adding that this could be even bigger if the fund's outlook turns out to be optimistic.  Greece's international bailout faces a shortfall of around $14.59 billion by the end of 2015 and this shortfall could be even bigger if the fund's outlook turns out to be optimistic. Global economics expert Charles Forelle joins MoneyBeat. Photo: AP.  According to the report, Greece's bailout faces a €4.4 billion financing gap in 2014 and another €6.5 billion in 2015. The gap could be even bigger, according to the head of the IMF's mission in Greece Poul Thomsen, if the fund's growth outlook is overly optimistic or if the country doesn't reach its privatization revenue target.  "There are clearly downside risks [to the economic forecast] next year," Mr. Thomsen said during a conference call. "The assumption of a gradual recovery is based on the assumption that we have a rebound in consumption and investment and sustained implementation of policies and broad political support of the program."   A group of European Union finance ministers will have to meet and make commitments for the 2014 financing gap at the next bailout review—which likely wouldn't be considered by the board until October, according to Mr. Thomsen. "I have no doubt that we will see a bottoming out and gradual recovery in output next year. The exact timing is where the uncertainty comes," the head of the IMF's mission said.  The report says that Greece needs debt relief worth 4% of gross domestic product to meet a 124% debt-to-GDP ratio by 2020.  Last week, a European Union official said that the country's bailout faces a shortfall of around €3.8 billion between now and the end of 2014. That gap is because of the refusal of national euro-zone central banks to buy new Greek bonds when the ones they hold mature. When the euro zone and the IMF sealed Greece's latest aid program last year, such a rollover was part of their calculations. But since then, several central banks have refused to follow through, claiming it would amount to financing a national government, which central banks aren't allowed to do under EU rules. The official said the shortfall will have to be closed this fall in order to continue with the bailout program.  The EU and Greek flags flew in front of the Parthenon on the Acropolis on February 17, 2012 in Athens, Greece.  A group of European Union finance ministers will have to meet and make commitments for the 2014 financing gap at the next bailout review—which likely wouldn't be considered by the board until October, according to Mr. Thomsen.   "I have no doubt that we will see a bottoming out and gradual recovery in output next year. The exact timing is where the uncertainty comes," the head of the IMF's mission said.  The report says that Greece needs debt relief worth 4% of gross domestic product to meet a 124% debt-to-GDP ratio by 2020.(source WSJ) 

‘The mystery of Mario Draghi the Invisible Man is more disturbing in some ways. I posted about Schäuble briefing bigtime against him the week before last, and I now think it boils down to two serious possibilities. The first is that Berlin has somehow neutralised the ECB boss, and told him to stay out of public eye and leave it to them. If so, he has managed very well to be AWOL during a classic Brussels-am-Berlin cock-up. But even as the ECB demanded a Nicosia decision by Monday and then demanded more money after the Moscow talks broke down, SuperMario was nowhere to be seen. That is odd.

The second possibility – and one I increasingly favour – is that from the outset Mario Draghi saw Cyprus as a distraction, no more: he knows that via his control over the banking purse-strings, he can bring the island to its knees any time he likes. Either he knew (or guessed) that the Berlin mentality would jackboot into the situation and use it as a test-case for (a) future events where threats are felt to be necessary and (b) setting the precedent for State theft of depositor funds under the guise of bollocks like Open Bank Recontruction (OBR) or fantasy ‘levies’. Of course, he would prefer to be away from that grubby operation, but I return to the key word here – distraction: Germany’s aim is control; Draghi’s aim is the survival of the euro, whatever it might cost. The two need not be the same, and in the long term probably won’t be….Personally, I suspect what he plans to do adds up to yet another form of citizen pauperisation alongside the bank robbery approach…. in Frankfurt, Marketwatch opined as follows: ‘the precedents set by the Cyprus deal have undermined the euro in a very important way. The imposition of capital controls–a euro-zone first–now means that a euro held in a Cypriot bank account can’t be moved, withdrawn or even spent with the same ease as a euro held in a bank account in Germany, France or anywhere else in the 17-nation eurozone. Simply put, a “Cypriot euro” is worth less than a euro held in a bank account anywhere else".

The whole idea of EMU a nonsense: it is, in fact, the beginning of the end of EMU. In a client note after the true level of Cyprus haircut was announced, Deutsche Bank strategist George Saravelos wrote, ‘Economic and monetary union across the entire euro zone no longer exists. Even though [Cyprus] is very small, policy makers’ willingness to suspend cross-border euro convertibility is a meaningfully negative signal for the euro zone.’ The economics boffins at Nomura concurred: ‘Common currency, by definition, means that a euro in country A is equivalent to a euro in country B’ they wrote. UBS Head of Global Economics Paul Donovan told CNBC, “If you impose capital controls, effectively, the monetary union is dead.”. And perhaps most chilling of all, David Mann, Regional Head of Research for the Americas at Standard Chartered Bank says, “There is no point in anyone claiming they know what’s coming next. It’s [capital controls] gone from something hardly mentioned a week ago to something that is being taken absolutely seriously enough to be running into a real scenario. But it has to be instant. Bank runs can literally be electronic — they happen at a touch of the button.”

The taboos are falling one by one.

“We must leave the austerity cage,” he told leaders of his Democrat Party (Pd), responding to Italy’s electoral earthquake by tearing up his pre-election programme. “A change of course is absolutely necessary given that five years of austerity and attacks on workers have pushed up public debt levels across Europe,” he said.

“The vicious circle between belt-tightening and recession is putting representative government at risk and making it impossible to govern. The immediate emergency is the real economy and joblessness,” he said. The pledge puts Mr Bersani on a collision course with the ECB, which is constrained from helping to shore up the Italian bond market unless Rome complies with Europe’s austerity agenda. “Italian voters may have effectively voted away the ECB safety net,” said Christian Schulz from Berenberg Bank. The central bank cannot activate its bond purchase programme (OMT) unless Italy requests a rescue from the EMU bail-out fund, and that in turn requires a vote in Germany’s Bundestag.

“The ECB cannot – and will not want to – do anything to help Italy after the inconclusive election result, even if borrowing costs spiral out of control,” he said.

Mr Bersani’s Democrats (Pd) and its allies control the lower house but failed to win the senate. He is hoping for tacit support on a law-by-law basis from the Five Star Movement of comedian Beppe Grillo. Mr Grillo has responded with a volley of anathemas, calling Mr Bersani a relic from a defunct political order that must be swept away by civic revolution. Yet many of his 163 senators and deputies say the movement should seek common ground with the Pd.

Mr Bersani said Italy should mobilize its EU voting weight to push for an EU-wide change of course. He has natural allies in Paris.

French finance minister Pierre Moscovici warned EMU colleagues on Monday that current policies “risk a loss of social and political confidence across Europe. We must not pile austerity on top of recession”. Mr Moscovici said France would need an extra year to meet its deficit target of 3pc of GDP and called for action to tackle the root of the crisis with an EMU-wide growth strategy.

French officials are deeply alarmed by the relentless upward rise in France’s unemployment rate to 10.6pc, or 26.9pc for youth. President Francois Hollande’s popularity ratings have crashed from 55pc to 30pc since his election in May, the fastest decline ever recorded for a French leader.

Italy, France, and Spain toyed with a Latin bloc alliance last year to confront Germany over EMU’s contractionary policy mix, but the initiative faded.

Mr Hollande pulled back from a showdown with Berlin and ultimately pushed through further fiscal cuts and reforms, while Italy’s Mario Monti was never willing to jeopardise the European Project that he served for ten years as a commissioner.

Critics says Mr Monti, whose Civic Choice list won just 10pc of the vote, went native in Brussels long ago and has been slow to understand the deeper political crisis unfolding in Italy.

The outgoing premier gave them fresh ammunition today, saying that it would be better to hold fresh elections than to see an anti-EU government to take power.

It is unclear whether a second vote would achieve what he intends. The latest snap polls show that Mr Grillo’s support is still rising, jumping from 25pc to 28pc.

Ominously, nostalgia for Fascist leader Benito Mussolini has started to emerge as the post-War order crumbles. Two key figures have praised elements of Fascist rule over the last two days.

A leader of the Five Star Movement professed “fascination” with the Fascist sense of the Italian state and the family, while the deputy state secretary of the economy said Mussolini “governed well until 1935.” (source telegraph)

ROME — A brief sampling of politicians’ remarks made on Monday underline how far Italy is from forming a government after last week’s surprisingly inconclusive general election.

“No solution can be reached without the Democratic Party,” Massimo D’Alema, a former prime minister, said in Rome. His party is the lead member of the center-left coalition that won the most votes in the election, which translates into 340 seats in the 615-member Chamber of Deputies, making its support of any prospective government truly indispensable.

Meanwhile, in Palermo, Angelino Alfano said Silvio Berlusconi’s People of Freedom party and the center-right coalition “have emerged as the winners.”  In fact, his party came in third and his coalition second, and will have only 20% of the lower-house seats. But Mr. Alfano sought to make the point that his coalition was surging in polls and saw itself as on course to win the next election.

Ultimately, the next election is what all today’s maneuvering is about.  That’s even more true of the Five-Star Movement, a protest movement led by Beppe Grillo that won more than a quarter of votes and enough seats to make it a potential kingmaker. Mr. Grillo strongly believes he can emerge the outright winner if Italy’s establishment politicians remain true to form and try to govern through an unwieldy coalition. That’s one reason why he is tempted to hope that happens. On Monday, he caustically suggested his rivals opt for a cabinet led by Corrado Passera, a former bank chief executive who served as Mario Monti’s industry minister in the technocratic government that is widely blamed for halfhearted reform efforts that, along with austerity measures required by Europe, led Italy into a prolonged recession.

The rate of unemployment in the eurozone rose to a fresh record high in January, official figures show.

The jobless rate in the 17 countries that use the euro rose to 11.9% in January from 11.8% in December, the statistics agency Eurostat said. The highest rate was 27% in Greece, although the most recent figure there was from November, while the lowest rate was 4.9% in Austria.  Eurostat also said eurozone inflation had fallen to 1.8% in February.  The inflation figure was the lowest for two years, putting it in line with the European Central Bank's (ECB) inflation target of below, but close to 2%.

Analysts said that the high unemployment and low figure for inflation would make it more likely that the ECB would cut its interest rates later in the year from the current rate of 0.75%.

"All the data is supporting a rate cut, which we see in the second quarter," said Sarah Hewin from Standard Chartered.

"They could move as early as next week, but there's an element of the ECB wanting to keep its powder dry as we enter an uncertain political situation with Italy and the Cypriot debt question has to be resolved." The highest unemployment rates among countries that have reported their January figures were 26.2% in Spain and 17.6% in Portugal.  Unemployment in the 27 countries that make up the European Union rose to 10.8% in January from 10.7% the previous month.

MILAN—Italian police early on Tuesday arrested Finmeccanica SpA FNC.MI -7.31%Chief Executive Giuseppe Orsi as part of an investigation into possible international corruption related to the 2010 sale of helicopters by the Italian aerospace company to India, according to the prosecutor in the investigation. Hours after the arrest, India's Defense Secretary Shashikant Sharma told The Wall Street Journal that the country's government had ordered its federal investigation agency to investigate the helicopter deal. The official gave no further details of the Indian investigation. Mr. Orsi has been under investigation for several months in the case, in which Italian prosecutors are looking into whether the helicopter unit of Finmeccanica paid bribes to secure the €560 million ($750 million) sale of 12 helicopters to the Indian government, according to Finmeccanica and a person close to the investigation. Mr. Orsi was chief executive of AgustaWestland, the helicopter unit, at the time. Eugenio Fusco, the prosecutor on the case, also said that Bruno Spagnolini, current head of AgustaWestland, had been placed under house arrest as part of the same probe. Mr. Spagnolini was chief operating officer of AgustaWestland in 2010. A lawyer for Mr. Orsi, who hasn't been charged in the case, wasn't immediately reachable for comment. Mr. Orsi has in the past denied any wrongdoing. In a statement, Finmeccanica expressed support for Mr. Orsi and said the company's operations would not be affected by the arrest. A spokesman for AgustaWestland had no comment, and a lawyer for Mr. Spagnolini—who hasn't been charged—wasn't reachable for comment. The arrest of Mr. Orsi—who runs a company that is majority-owned by the Italian state—comes at a politically sensitive moment, just two weeks ahead of national elections. Outgoing Prime Minister Mario Monti said the government would deal with management issues created by the arrest. "(This opens up) a problem of governance at Finmeccanica, which we will address," he said in a radio interview on Tuesday morning. Mr. Orsi has said that he would step down from his position if the Italian government, which owns 30.2% of Finmeccanica, asked him to. Finmeccanica's stock fell 8.06% to €4.37—its lowest in two months—after being suspended from trade on the opening of the Milan exchange.

What an asshole would say ....

Olli Rehn, the European Union's economic and monetary affairs commissioner, today warned that recession-hit Italy must continue to implement economic reforms once the election is decided.

"It's a very fragile situation. Whatever colour the new government in Italy has, it is important that it maintains the course of reform," he told Austria's Profil magazine.

Rehn also cautioned that the growing strength of the euro will hurt countries in southern Europe by causing "problems with their exports to other parts of the world".

Germany and France have clashed over whether EU officials should intervene in currency markets, and Mr Rehn today argued that countries around the world should work more closely together to offset the potential damage caused by currency fluctuations.

"I recognise the risk of competitive devaluation. We have recently warned the government of Japan about corresponding steps towards depreciation of the yen," he said.

"We need reforms in the international monetary system so as to avoid negative influences on international trade. The coordination within the G7, G20 or the IMF should therefore be improved," Mr Rehn added.

Germany's central bank, the Bundesbank....

The German economy grew by 0.7% in 2012, a sharp slowdown on the previous year, preliminary figures show. The figure was well below the 3% growth seen in 2011 and suggests the economy contracted in the fourth quarter. "In 2012, the German economy proved to be resistant in a difficult economic environment and withstood the European recession," the federal statistics office Destatis said. Some analysts believe the German economy will enter recession itself. Destatis said economic activity "slowed down considerably" in the second half of the year, and particularly in the final quarter. "The full-year growth figure [of 0.7%] implies a contraction of around half a percentage point in the fourth quarter," the office's top statistician Norbert Raeth said. Last month, Germany's central bank, the Bundesbank, cut its growth forecast for this year to 0.4% and warned that the economy may have contracted in the final three months of 2012, and may do so again in first quarter of 2013. The eurozone economy as a whole is already in recession, having contracted in both in the third and fourth quarters of last year. For 2012 as a whole, Destatis said foreign trade was "very robust", with exports up 4.1% on 2011. Imports grew by 2.3%. The positive trade balance was "once again the main driving force for economic growth in Germany". Household expenditure increased by 0.8%, while government spending was up 1%. The figures also showed that while the service sector of the economy expanded, industry and construction contracted. Destatis will publish official fourth-quarter growth figures on 14 February.

Growth in China, Risks in the USA...If the situation in Southern Europe doesn't improve in 2013, the German economy will become even more dependent on consumers in the rest of the world -- particularly in the United States and China.

Concerns about a slump in Chinese growth have eased recently, with the World Bank revising its growth forecast upwards. And demand from emerging economies continues to be good.

But the situation in the US is more difficult. President Barack Obama's re-election has dispelled some uncertainty, but the country's political divide is deeper than ever before. The brinkmanship that saw a deal reached on Jan. 1 on the "fiscal cliff" may have averted disaster, but it hardly inspires confidence in the world's largest economy. And while there may have been a last-minute deal, it is difficult to predict what effect it will have. After the Democrats and Republicans reached an 11th-hour deal on the budget in 2011, rating agency Standard & Poor's responded to the deal by stripping the US of its highest rating.

The shakier the global economy, the more important domestic demand becomes. In Germany, companies have been wavering for some time, with investment in new equipment declining over the past year. Consumers, on the other hand, have been a driver of the German economy, a first in a country that has often been criticized for its heavily export-dependent economy.

"Even during the financial crisis, consumption was solid as a rock," said Ifo's Carstensen. "That was because the labor market was supported by measures such as shorter working hours."

However, at the end of 2012, that mood deteriorated, with the GfK consumer confidence index falling twice in a row, largely because of fears over employment prospects. According to a survey by insurer Allianz, the fear of job losses has increased significantly over the past year. Thus far, many German companies had continued to hire new staff, while existing workers benefited from salary increases secured through collective bargaining agreements. According to Weber, however, "that positive trend in the labor market is broken."

During the 2009 financial crisis, after the federal government introduced its short-time working program, many German companies sucessfully avoided layoffs. And Weber believes 2013 will not see any catastrophic plunge. "There will be no major downturn," he says, but rather "more of a long, drawn-out dampening."

Russia's largest oil producer, state-controlled OAO Rosneft, ROSN.RS -0.31%said Monday it has raised $16.8 billion in bank loans and plans to sign a trade-finance package with two international oil traders to finance the buyout of TNK-BP BP.LN -0.01%. Rosneft is acquiring TNK-BP, Russia's number three oil producer, from BP PLC and the AAR consortium of Soviet-born billionaires in deals worth $55 billion in cash and shares that will create the world's largest listed crude producer. Under the deal, agreed to in October, the AAR tycoons will get more than $28 billion when the deal closes in the first half of 2013. BP will hold a 19.8% stake in Rosneft as part of its deal to sell out of TNK-BP.

To finance the purchase of BP's 50% stake in TNK-BP, Rosneft said it obtained a five-year loan of $4.1 billion and a two-year $12.7 billion loan from a group of international banks. Under the agreement, Rosneft said it plans to sign contracts to supply up to 67 million metric tons of crude oil in total for a period of five years, subject to a prepayment. Rosneft would use future oil exports as collateral for the trade financing from the traders. The supplies are expected to commence in 2013, the company said, but didn't provide any financial details of the deal.

The leader of Italy's anti-establishment Five Star Movement political party, the second most popular by opinion polls, has added his voice to the anti-austerity rhetoric that will likely dominate the country's upcoming election campaigns. Beppe Grillo, an Italian comic, echoed Silvio Berlusconi's scathing criticism of the current prime minister Mario Monti's policies as 'German-centric' when he told US broadcaster CNBC that Mr Monti is a mere "bankruptcy curator" who "needs to disappear". He said:

The ECB puts out money that is meant to help our banks,but they do not use it to finance our businesses, but they give it to them to buy back their debt, to help French and German banks. That was Monti's work. The CNBC interview came on the same day Mr Grillo expelled two prominent party members who had voiced criticisms over his leadership style, branding it dictatorial. His expulsion of the pair unleashed at outpouring of criticism from the party's young supporter base, who compared him to famous dictators including Benito Mussolini and Joseph Stalin.

The feeble EU will....

European banks have asked the European Commission to postpone the introduction of tougher global bank capital rules by a year to 2014 after U.S. regulators told lenders they did not expect the new regulations to take effect in 2013......The feeble EU will almost certainly cave in. Europe is SO bust that it needs the bankers, more than the bankers need the EU. This would show that the EU is no more than a grubby little exercise (or project) to allow politicians to borrow "however much it takes" to get as many European people "hooked for good" on Europe's spend, spend, spend socialist politicians as possible. And, later on, if US banks decided to play by less strict rules, then don't let them trade in Europe? The new Basel rules are not that strict anyway. They are only designed to try and make it a bit more difficult for banks to go bust when the next crash happens. It tries to raise the cover provided for banks debts turning bad from 2% to 7%. Meaning if more than 2% of the loan book goes bad now - the bank goes bust. The authorities have plucked a 7% figure out of the air as being sufficient cover for all future banking crises.

History explains all....

History explains all....The EU is experiencing its 'Stalingrad' moment....Sheer hubris makes it impossible for the EU to make the right decisions. Draghi's wears his vanity as if it alone is enough to save the EU. His vision is correct in his eyes, and to him that is all that matters, and that imprisons him in a course of action that is clearly failing. He is the only one who can't see it, though his generals nod their approval to maintain their salaries and privileges. Even Greece has deferred the worst effects of their austerity measures, which means that there will be no avoiding mounting civil disorder. If Golden Dawn show some political maturity (which they haven't so far) they'll walk in to power. Samaras is trying to defuse the Golden Dawn threat with some cynical changes to citizenship law but that's only upsetting his coalition partners. His government is doomed to collapse. European governments should focus on spending cuts, not tax rises to get their deficits down, according to the head of the European Central Bank. Mario Draghi said that the ECB's action (via its €1 trillion LTRO bazooka and announcement of the OMT programme) had helped to calm markets, but that it was up to governments to regain credibility.The growing tension between Germany and Greece was on show today as public sector workers stormed a building where officials from the two countries were meeting in the Greek city of Thessaloniki. Police had to form a shield around German Consul Wolfgang Hoelscher-Obermaier as he tried to enter the building. They also pelted him with water bottles and coffee in a protest against austerity measures. The workers chanted: "It's now or never!" and held up mock gravestones and banners proclaiming "Fight until the end!" ...Workers said that they were furious at comments by German envoy Hans-Joachim Fuchtel, who reportedly told journalists on Wednesday that it takes 3,000 Greek public sector workers to do the work of 1,000 of their German counterparts. Mr Fuchtel is Angela Merkel’s special envoy to Greece. Michael Meister, a member of Chancellor Angela Merkel's Christian Democratic Union party, told reporters that he could "live with" giving Greece more time to bring down its debt levels, adding that the EU had "many tools" to enable this to happen. However, he said that a writedown of Greek debt would be unacceptable to Berlin, and that MPs would not rush through a vote on the country's next aid tranche.

The Single Market is like a customs union. Tax and duty paid in one member country is deemed as tax and duty paid in another member country and so goods are free to move across borders between members. Many readers eher will not remember the bad old days when trucks crossing borders had to queue and wait for a customs official to measure the amount of diesel in the fuel tank and then the driver had to pay tax on the import of that fuel into that particular country. Only passenger vehicles were exempt.

Hannah is simply playing word games. He admits the EU is internally a free trade area but, the fact that it is not free and open to the world is not unusual. Most of the world is not free and open to the EU or to many other parts of the world.

Hannah provides examples of free trade areas, Nafta (Canada, the United States and Mexico) and ASEAN (ten South East Asian states). The EU is setting up similar Free Trade Agreements, EU-Japan Free Trade Agreement, EU- Canada Comprehensive Economic and Trade Agreement, EU-US Transatlantic Economic Council, EU-India Free Trade Agreement, EU-Mercosur Free Trade Agreement.

Hannah says nothing but he does demonstrate his naivety; "The optimum deal for the United Kingdom is surely to be in a European free trade area but not in a customs union." That's like saying that the optimum deal for the United Kingdom is one where the UK is the sole winner.

We'd all like unlimted freedoms but with no attached responsibilities but you will never ever eliminate 'if you sell to him, I won't sell to you' and very quickly, 'and I'll ask my mate not to supply you at all'. Deals are struck, bargains are made. No one allows a single trader to take all the profit.

Spain is being made to return to competitiveness through so-called internal devaluation. Wages are falling to offset their rapid appreciation relative to those in core Europe during the years leading up to the crisis. It would help Spain if inflation—and thus labor costs—were rising faster in core Europe, reducing the amount of domestic deflation needed. But that’s not happening—indeed core inflation is running below rates around the euro zone’s troubled fringe, in part because of austerity-related tax increases in the latter. Without German acceptance of higher inflation, Spain is looking at more of the same. More wage cuts, more unemployment, more contraction.

The country is already into its second recession since the financial crisis and forecasters have been paring back growth expectations for the coming year. Official unemployment makes up around a quarter of the potential labor force and continues to rise. Even ignoring that the data are probably distorted upward by overly generous employment protections that give firms strong incentives to use unreported workers, the jobless rate is unsustainably high. Social and political strife is already common.  Even where economic measures have improved, the turnaround isn’t all positive. For example, Spain has managed to turn its current-account deficit into a surplus, but only because domestic demand and thus imports have collapsed.  The ratings agencies don’t tell us anything we don’t know. Their downgrades have little or no significant bond-market impact. But they’re still relevant because they confirm an increasingly gloomy outlook.

It looks very likely there will be mass demonstrations in Athens to mark Angela Merkel's visit next Tuesday. Our correspondent Helena Smith has spoken with the radical left-wing main opposition Syriza party, and they are confident that the German chancellor will be met with vocal protests.“She should expect demonstrations. Greek society will welcome her with mass protests,” Panos Skourletis, the party’s spokesman told me, emphasizing that Syriza’s leader Alexis Tsipras would not be meeting the German chancellor. “Firstly, we have no intention of meeting her,” said Skourletis. “Secondly, we will propose that trade unionists aligned to Syriza meet with other trade unions in emergency session to decide on holding a general strike on the day of the visit. Demonstrations will obviously coincide with the strike.” Protestors would be united by an over-riding demand: to abolish the brutal austerity that was pushing societies across Europe, and especially Greece, to the brink, he said.The Independent Greeks party, also vehemently anti-bailout, has said it will make war reparations a major part of its own protest when it stages a “symbolic blockage” outside the German embassy in Athens on Tuesday.