The European Commission reacted on Tuesday, after the deputies of the Commission for Industries and Services have passed a series of amendments to the Natural Gas Law, according to which the gas producers will be required to fully trade their output on the OPCOM, with the Romanian Commodities Exchange being left out in the cold. Currently, they have licenses for the trading of natural gas on two entities: the Romanian Commodities Exchange, private company, and the OPCOM, a branch of Transelectrica, in which the state owns 58.68%. The amendments made in the Commission for Industries would leave the BRM without a license. On Tuesday, the European Commission wrote to Iulian Iancu, the president of the Commission for Industries, that the proposal for the production of natural gas to be traded completely on the OPCOM is problematic.  The commission thinks that moving trading to the OPCOM is not recommended, as the BRM is currently a more liquid market, and granting exclusive rights to the OPCOM raises competition issues. Also, the Commission considers that the trading of 100% of the natural gas output on an exchange can be excessive. A warning letter concerning the "severe consequences" of the amendments to the Law of natural gas was recently received by the president of the Chamber of Deputies Liviu Dragnea, from the PEGAS European natural gas platform. That letter also arrived, among other places, at the Ministry of Energy, the ANRE and the European Commission. It is debatable whether the amendments are compatible with the competition laws of the European Union, since they limit the ability of offering trading services, amid the obligation of using only one platform, according to PEGAS, which also says that there is a risk that the platform used by the operator would not reflect the requirements of the market.  Furthermore, the measures proposed can raise an obstacle in the implementation of the EU package of energy, which would lead to an isolation of the Romanian gas market, says PEGAS, the trading platform of the German EEX Group, operated by Powernext, in France. PEGAS had 238 members and offers access to the trading of natural gas on contracts from Austria, Belgium, Holland, France, Germany, Italy, Denmark, Czech Republic and Great Britain.

Here is a longer extract from Nigel Farage's controversial 'victory' speech:  "If the predications now are right this will be a victory for real people, a victory for ordinary people, a victory for decent people. We have fought against the multinationals, against the big merchant banks, against big politics, against lies against lies, corruption and deceit and today honesty and decency and belief in nation I think now is going to win.  We will have done it without having to fight, without a single bullet having been fired.  I hope this victory brings down this failed projects and brings us to a Europe of sovereign nation states trading together.  Let June the 23rd go down in our history as our independence day."

GERMANY - Timmermans these days is having to exercise his utmost diplomatic skill in order to avoid an escalation of tensions. When, during a visit to Amsterdam on Thursday, Timmermans was asked about the Polish foreign minister's jibe, he could have struck back. But there is already enough tension, so he chose to take a different tack, instead praising the transformation of Eastern European countries from socialist dictatorships to free societies. But, he added, true democracies include two important elements: the protection of human rights and adherence to the rule of law. The fact that Timmermans had to utter something that obvious says a lot about the current state of the European Union -- and developments in Poland. In less than two months, the country's new nationalist-conservative government has succeeded in disempowering the constitutional court, passing a law establishing government control over public broadcasting and installing party-aligned political appointees at the head of its intelligence services. "We want to cure our country of a few illnesses," Foreign Minister Waszcykowski told Germany's tabloid Bild earlier this month.

Explosive job growth in the oil and gas sector propped up the U.S. economy for several years in the wake of the recession, as the fracking revolution put American energy workers back to work.

But 2015 was the year that job gains in the energy sector came to a screeching halt as rock-bottom oil prices triggered layoffs of more than 258,000 workers globally, according to a comprehensive analysis by industry consultant Graves & Co. And the energy business is poised to endure a fresh round of job cuts and bankruptcies in early 2016, analysts say.  The number of active oil and gas rigs in the U.S. fell 61% to 698 as of Dec. 31, compared to a year earlier, according to Baker Hughes Rig Counts....Oil companies in Texas have endured revenue losses of up to 70% over the last year, he says.  Dan Heckman, national investment consultant for U.S. Bank Wealth Management, said he expects to see a fresh round of layoffs, production cuts and bankruptcies in the oil and gas business in early 2016.  The current U.S. unemployment rate for the oil, gas and mining sector is 8.5%, but could top 10% by February, about double the overall jobless rate, Heckman projected.   Oil production leader Saudi Arabia has refused to slash output to bolster prices, and U.S. producers have kept wells flowing to pay off investments ordered in the 2000s when new fracking technology triggered a spike in American energy production.  "Many of these companies are in negative cash flow, and that’s not a sustainable dynamic," Heckman said.  It’s a game of chicken, with energy analysts closely watching to see where production cuts take place in an effort to boost prices.  Projections for a prolonged period of low oil prices provide little hope for a quick rebound. Most analysts believe oil prices will stabilize in 2016, but probably won’t rise much until the second half of the year, barring unexpected geopolitical instability.  It’s a sharp reversal of fortunes for an industry that was celebrated for the economic windfall it provided for oil-rich states such as Texas, North Dakota and Pennsylvania as other areas of the economy remained soft.  The number of jobs at oil and natural gas companies rose 40% from the start of 2007 through the end of 2012, even as total U.S. private-sector employment rose only 1%, according to the U.S. Energy Information Administration.

"We have a clear aim with the Energy Union. It is to strengthen the security of energy supply and increase energy efficiency at an affordable cost", said András Gyürk MEP, the EPP Group Shadow Rapporteur, after the adoption of the European Parliament initiative Report on the Energy Union. "It is up to economic actors to decide which projects make economic sense and what could be the potential of extraction projects in the area of energy. The European Parliament must do its best to provide a sound regulatory environment that includes strict standards with regards to climate, health and environment", Gyürk said. An important brick in the construction of the Energy Union is the plan to achieve a goal of 10 percent cross-border interconnectivity in the internal EU electricity grid.  "Increased interconnectivity is a crucial step towards achieving a true internal electricity market in EU. It must be achieved by more infrastructure as well as better access to the existing infrastructure", said Bendt Bendtsen MEP, the EPP Group Shadow Rapporteur, after the adoption of the initiative Report 'Making Europe's electricity grid fit for 2020'. "It will enable the EU to make better use of the electricity produced in Europe and thus lower dependence on imports, resulting in better energy security and lower electricity prices, to the benefit of European businesses and citizens", Bendtsen concluded.

If the British public were to vote to leave the European Union it would be the modern equivalent of the toppling of the Berlin Wall and herald the beginning of the end for the bloc, says Marine Le Pen, the leader of France’s National Front. In a week when Denmark rejected “more Europe” in their latest EU referendum, and David Cameron was rebuffed in Brussels over his demands to cut welfare benefits to newly arrived EU workers, the new, softer face of France’s far-Right is clearly dreaming big. “Brexit would be marvelous - extraordinary - for all European peoples who long for freedom,” she told The Telegraph on Friday on a frantic last day of campaigning ahead of Sunday's regional elections in France where the polls put her party on the cusp of a new electoral breakthrough. “Objectively, it will be the beginning of the end of the European Union,” she adds, “I compare Brussels to the Berlin Wall. If Great Britain knocks down part of the wall, it’s finished, it’s over.”  And if Britain did knock a hole in the European project, then Ms Le Pen, with her hardline anti-immigrant, anti-Europe, anti-globalisation mantra wants to be there in 2017, leading France through the breach. For her, that real road to power begins on Sunday when, if polls are correct, Ms Le Pen’s party could emerge as the first-round winners in as many as six of France’s 13 new “super-regions”, a showing that she is already touting as a launch-pad for a serious run at the French presidency in 2017. In round two, she is widely expected to clinch control of the northern Nord-Pas de Calais-Picardie region. Down South, her niece, Marion Maréchal-Le Pen, 25, stands a high chance of clinching France’s second largest region, Provence-Alpes-Côte d’Azur. The FN could also triumph in Alsace-Lorraine-Champagne-Ardenne, Burgundy-Franche Comté and Normandy.

On 16 July 2014, the Supreme Court provided clarity on the nature of a principal’s entitlement to recovery of a secret commission or bribe received by an agent.  The court ruled that when an agent acquires a benefit as a result of his fiduciary position, including a secret commission or bribe, he is to be treated as having acquired the benefit on behalf of his principal and so holds it on trust for the principal.  The ruling is significant in the context of insolvency, as the effect of the decision is to give a principal a preferential claim over the assets of his agent, as against an unsecured creditor.  It also permits the principal to trace the bribe into the hands of others (where they are not bona fide purchasers), which can be crucial where the agent has dissipated his assets.  This ruling confirms a principle which has, to date, been treated inconsistently by the courts since the nineteenth century.

Facts of the case : In December 2004, FHR European Ventures LLP (FHR) purchased the issued share capital of the Monte Carlo Grand Hotel SAM from Monte Carlo Grand Hotel Ltd (the Seller).  Cedar Capital Partners LLC (Cedar) were consultants who acted as FHR’s agent in negotiating the purchase of the hotel.  However, Cedar had also entered into an “Exclusive Brokerage Agreement” (Agreement) with the Seller, under which Cedar received a €10m fee on conclusion of the sale and purchase of the hotel in or around January 2005.

In November 2009, the claimants brought proceedings to recover the €10m fee from Cedar on the basis that they had failed to disclose the Agreement to the claimants and breached their fiduciary duties.  The claim was successful at first instance, but the judge refused to give the claimants a proprietary remedy in respect of the monies (which would otherwise have put the claimants in a favorable position over unsecured creditors in the event of insolvency).  Instead, FHR was held to have a personal claim against the agent.

The Court of Appeal granted the claimants’ appeal on this point and made a declaration that Cedar received the €10m fee on constructive trust for the claimants and so was entitled to a proprietary remedy.  This decision has now been upheld by the Supreme Court.

The argument focused on the limits of the application of a rule of equity that an agent who acquires a benefit as a result of his fiduciary position or pursuant to an opportunity resulting from his fiduciary position, is to be treated as holding that benefit on behalf of, and so on trust for, the principal. If the rule applied in the context of a bribe or secret commission, it would give the principal a proprietary claim to the bribe as well as a personal claim against the agent; if not, the principal would have only a personal claim against the agent. Cedar argued that the claimants should not be entitled to a proprietary remedy in such a case, on the basis that a bribe or secret commission was always intended to be made to the agent, not his principal; it was never the principal’s property.  Accordingly, it would be wrong to assume a constructive trust and there should be an exception to the equitable rule to that extent.  FHR argued that the equitable rule should apply, on the basis that equity does not permit an agent to rely on their own wrong to justify retaining a benefit received as a result.    Lord Neuberger, who delivered the judgment, reviewed the conflicting authorities and concluded that it was not possible to decide the case on the basis of clear legal authority and so it was necessary to consider the matter from the perspective of principle and practicality.  He considered Cedar’s argument to be the more complicated to justify and also unattractive, given that in a situation where the agent receives a bribe or secret commission from a third party, there would be a strong possibility that that payment would disadvantage the principal.  Looking at the facts of the case, Lord Neuberger considered that had the Sellers not paid the €10m to Cedar, it may have accepted a reduced price to reflect the fact it did not have to pay the large fee to the consultant.  Furthermore, given the heightened awareness and concern about bribery, the Supreme Court said that it expected “the law to be particularly stringent in relation to a claim against an agent who has received a bribe or secret commission” (at paragraph 42).

FHR’s arguments had the merit of simplicity and were consistent with the fundamental principles of the law of agency.  They were also consistent with the position in other common law jurisdictions, namely Australia, New Zealand, Singapore, Canada and the US.  It also seemed curious that if Cedar’s arguments were preferred, this could have the effect that a principal whose agent wrongly accepted a bribe would be worse off (in terms of recovery) than where the principal had obtained a benefit “in far less opprobrious circumstances” (at paragraph 41).

Accordingly, the Supreme Court favored the claimant’s argument, concluding that “there is no plainly right answer, and, accordingly, in the absence of any other good reason, it would seem right to opt for the simple answer” (at paragraph 35).  This decision provides a welcome clarification of the position of the status of bribes and secret commissions paid to agents.  It provides a departure from the jurisprudential differentiation between different types of benefits that an agent may receive in breach of his duties that had occupied the minds of lawyers and their textbooks for many years.  The judgment is likely to have a significant impact on cases where the agent in question has dissipated his assets or has become insolvent, such that the principal may not otherwise have been able to (1) recover the full amount of the bribe or secret commission from the remaining assets when other creditors are taken into account and/or (2) trace the funds into the hands of non-bona fide purchasers.  Of course, where a principal seeks to recover what is, in effect, a bribe paid to the agent, this may create other issues for the principal to grapple with, not least the money laundering provisions in the proceeds of crime legislation.  If not carefully considered and complied with, the principal may find himself committing a criminal offence by recovering “criminal property”.

Case reference: FHR European Ventures LLP and Others (Respondents) v Cedar Capital Partners LLC (Appellant) [2014] UKSC 45 

"Let's go to the bar," the foreign minister suggests. It is shortly after 10 p.m. and Federica Mogherini, with her long blond hair and a discreet pearl necklace, strides purposefully ahead, choosing a table at the front-left. A waiter rushes over. What would she like? "Nothing," the minister says pleasantly. Apologetically, she explains she prefers being "sober."  A married mother of two, Mogherini has been at the pinnacle of Italian diplomacy since February. Last week, her name was even thrown into the mix as a possible successor to EU foreign policy chief Catherine Ashton.   At 41, Mogherini is two years older than Prime Minister Matteo Renzi, but of all her predecessors in the Foreign Ministry in Rome, only Mussolini's son-in-law Count Galeazzo Ciano was younger at the beginning of his term.   On this evening in Vienna, however, following a meeting of EU foreign ministers, she denies that her relative youth could be construed as a potential shortcoming. "You can't demand generational change on the one hand and expect 40 years of experience on the other," she says.   Young, feminine and focused on issues: Mogherini embodies much of what the restless reformer Renzi values as he tries to awaken Italian politics from its torpor. In the European Parliament elections in May, voters thanked Renzi by handing him a 40.8 percent result, apparently the reward for a government that is focused on change. Among Social Democrats in the EU Parliament, the Italians now represent the largest faction.  The generational gulf between the former bunga bunga premier Berlusconi and Renzi is striking. But so too is the contrast between Foreign Minister Mogherini and those who came before her, particularly her divergence with Emma Bonino, the 65-year-old who held the office until February. The human rights activist and chain-smoking ex-European commissioner was considered to be indispensable because of her experience -- at least in the eyes of Italian President Giorgio Napolitano.

In the wake of years of a crisis that have shaken Europe to the core and raised existential questions, 2014 will bring a major shake-up in the political forces ascendant across the EU, in the people running things, in how the EU's rival institutions cope with and against one another.

Elections for the European parliament in May promise to be the most momentous ever held for the Strasbourg chamber. The angst of the elites across the continent is that the chamber will be captured by a motley crew of Europhobes dedicated to the destruction or subversion of the institution they have conquered.

As a result of years of austerity, soaring unemployment and the "renationalization" of European politics, anti-EU populists will do well in the elections, from Britain to Greece. France could be the big one, with Marine Le Pen's Front National tipped to win the election nationally.

The mavericks and populists will not win the election. But they could secure symbolic victories, take around 30% of seats, shape the agenda, cause the mainstream parties to trim their policies towards the far-right, and benefit from the perceived failings of lackluster leadership among the mainstream in Europe.

The fallout from the elections will also affect the next bout of horse-trading. October will see the appointment of a new European Commission, a new president of the European Council chairing EU summits and mediating between national leaders, and a new foreign policy chief.

There will be a battle between the new parliament and national leaders over who should make these key appointments and there will be the usual multi-dimensional scrapping over the plum jobs.

While these games preoccupy Brussels, Europe's real world is one of deepening social and economic impact from years of austerity and euro crisis, of the political costs of minimal growth, effective deflation, mass unemployment.

The British question will move up the agenda. Will the UK be the first country, and a big one, to quit the EU? This will concentrate continental minds.

Angela Merkel in Berlin, in the first year of her third term as German chancellor, is Europe's undisputed leader. The year should show if she really has an idea of what she wants her European legacy to be and whether she can get there. France's President François Hollande cuts an increasingly sorry figure on the European stage – he needs a new deal with Germany but there is little sign of that happening. French weakness and Italian messiness will reinforce the prevalent sense of worry about European decline.

Ian Traynor in Brussels

Angela Merkel’s policies are giving rise to extremist movements in the rest of Europe...

About The World Economy – Efforts to revive growth in the world’s most influential economies – with the exception of the eurozone – are having a beneficial effect worldwide. All of the looming problems for the global economy are political in character.

After 25 years of stagnation, Japan is attempting to reinvigorate its economy by engaging in quantitative easing on an unprecedented scale. It is a risky experiment: faster growth could drive up interest rates, making debt-servicing costs unsustainable. But Prime Minister Shinzo Abe would rather take that risk than condemn Japan to a slow death. And, judging from the public’s enthusiastic support, so would ordinary Japanese.

By contrast, the European Union is heading toward the type of long-lasting stagnation from which Japan is desperate to escape. The stakes are high: Nation-states can survive a lost decade or more; but the EU, an incomplete association of nation-states, could easily be destroyed by it.

The euro’s design – which was modeled on the Deutsche Mark – has a fatal flaw. Creating a common central bank without a common treasury means that government debts are denominated in a currency that no single member country controls, making them subject to the risk of default. As a consequence of the crash of 2008, several member countries became over indebted, and risk eurozone’s division into creditor and debtor countries permanent.

This defect could have been corrected by replacing individual countries’ bonds with Eurobonds. Unfortunately, German Chancellor Angela Merkel, reflecting the radical change that Germans’ attitudes toward European integration have undergone, ruled that out. Prior to reunification, Germany was the main motor of integration; now, weighed down by reunification’s costs, German taxpayers are determined to avoid becoming European debtors’ deep pocket.

After the crash of 2008, Merkel insisted that each country should look after its own financial institutions and government debts should be paid in full. Without realizing it, Germany is repeating the tragic error of the French after World War I. Prime Minister Aristide Briand’s insistence on reparations led to the rise of Hitler; Angela Merkel’s policies are giving rise to extremist movements in the rest of Europe. It is unfortunate that the current arrangements governing the euro are here to stay, because Germany will always do the bare minimum to preserve the common currency and because the markets and the European authorities would punish any other country that challenged these arrangements. Nonetheless, the acute phase of the financial crisis is now over. The European financial authorities have tacitly recognized that austerity is counterproductive and have stopped imposing additional fiscal constraints. This has given the debtor countries some breathing room, and, even in the absence of any growth prospects, financial markets have stabilized. The other great unresolved problem is the absence of proper global governance. The lack of agreement among the United Nations Security Council’s five permanent members is exacerbating humanitarian catastrophes in countries like Syria – not to mention allowing global warming to proceed largely unhindered. But, in contrast to the Chinese conundrum, which will come to a head in the next few years, the absence of global governance may continue indefinitely.

Yes, let's be honest, the de facto leadership of all things in Europe is exercised by Germany. The problem is that unless or until we all accept and formalize that a German politician (former STASI officer - merkel) captains the European Union and that Germany calls all of the shots, then it's the same as if there was nobody in charge.
Everybody was sure that somebody would do it. Anybody could have done it, but nobody did it. Somebody got angry about that because it was everybody’s job. Everybody thought that anybody could do it, but nobody realized that everybody wouldn’t do it. It ended up that everybody blamed somebody when nobody did what anybody could have done.My dual military related and commercial career to date has led me to hold a few golden rules dear to my heart.One of my golden rules is this. When one enters a situation where there is clearly a crisis playing out, the first question to be asked is, "Who is in charge here?" The answer can tell you a lot about why the crisis might have arisen in the first place, and can give some indication of the chances of the crisis being controlled and resolved.  If the person questioned can't answer straight away, confidently that "So-and-so is in charge", then you already have some understanding of why the organization is in a crisis. If the person questioned answers along the lines of "I think Blogs is in charge but, err, then again it could be Smith in charge. Err, or is it Jones in charge? Not sure really. One of them, is in charge anyway ... I think."...And there you have it. Nobody's quite sure who's really in charge at the ECB. Indeed, nobody's really sure who's in charge at the ECB; or in charge of the Euro Monetary Union; or in charge of the European Union. These are all just monstrous, dysfunctional European institutions which can neither jointly nor severally take 400 million European citizens to the economic and social paradise of a super state (which is what the European Union is supposed to be about). This is as much because the structures for governance of these organizations are a shambles, as it is because the underlying concept itself - of slamming sovereign nations together into a super state without democratic consent and without a single, clearly identified leader at the helm - is a monstrous deceit.  And now we have the particular situation explained by AEP above where the best the nascent European superstore's bank can do is to slam the continent into deflation. That's terrific, just terrific. A dysfunctional monetary union, tucked inside a dysfunctional economic and political union with, sitting behind it all, a dysfunctional central bank. An organization in crisis if ever there was one.

Public confidence in the European Union has fallen

Public confidence in the European Union has fallen to historically low levels in the six biggest EU countries, raising fundamental questions about its democratic legitimacy more than three years into the union's worst ever crisis, new data shows.

After financial, currency and debt crises, wrenching budget and spending cuts, rich nations' bailouts of the poor, and surrenders of sovereign powers over policymaking to international technocrats, Euroscepticism is soaring to a degree that is likely to feed populist anti-EU politics and frustrate European leaders' efforts to arrest the collapse in support for their project.

Figures from Eurobarometer, the EU's polling organisation, analysed by the European Council on Foreign Relations (ECFR), a thinktank, show a vertiginous decline in trust in the EU in countries such as Spain, Germany and Italy that are historically very pro-European.

The six countries surveyed – Germany, France, Britain, Italy, Spain, and Poland – are the EU's biggest, jointly making up more than two out of three EU citizens or around 350 million of the EU's 500 million population.

The findings, published exclusively in the Guardian in Britain and in collaboration with other leading newspapers in the other five countries, represent a nightmare for Europe's leaders, whether in the wealthy north or in the bailout-battered south, suggesting a much bigger crisis of political and democratic legitimacy.

                        

"The damage is so deep that it does not matter whether you come from a creditor, debtor country, euro would-be member or the UK: everybody is worse off," said José Ignacio Torreblanca, head of the ECFR's Madrid office. "Citizens now think that their national democracy is being subverted by the way the euro crisis is conducted."

EU leaders are aware of the problem, utterly at odds over what to do about it, and have yet to come up with any coherent policy proposals addressing the mismatch between the pooling of economic and fiscal powers and the democratic mandate deemed necessary to underpin such radical policy shifts.

José Manuel Barroso, the European commission president, said on Tuesdaythis week the European "dream" was under threat from a "resurgence of populism and nationalism" across the EU. "At a time when so many Europeans are faced with unemployment, uncertainty and growing inequality, a sort of 'European fatigue' has set in, coupled with a lack of understanding. Who does what, who decides what, who controls whom and what? And where are we heading to?"

The most dramatic fall in faith in the EU has occurred in Spain, where the banking and housing market collapse, eurozone bailout and runaway unemployment have combined to produce 72% "tending not to trust" the EU, with only 20% "tending to trust".

The data compares trust and mistrust in the EU at the end of last year with levels in 2007, before the financial crisis, to reveal a precipitate fall in support for the EU of the kind that is common in Britain but is much more rarely seen on the continent.

In Spain, trust in the EU fell from 65% to 20% over the five-year period while mistrust soared to 72% from 23%.

In five of the six countries, including Britain, mistrust prevailed over trust by sizeable margins, whereas in 2007 – with the exception of the UK – the opposite was the case.

Five years ago, 56% of Germans "tended to trust" the EU, whereas 59% now "tend to mistrust". In France, mistrust has risen from 41% to 56%. In Italy, where public confidence in Europe has traditionally been higher than in the national political class, mistrust of the EU has almost doubled from 28% to 53%.

Even in Poland, which enthusiastically joined the EU less than a decade ago and is the single biggest beneficiary from the transfers of tens of billions of euros from Brussels, support has plummeted from 68% to 48%, although it remains the sole country surveyed where more people trust than mistrust the union.

In Britain, where Eurobarometer regularly finds majority Euroscepticism, the mistrust grew from 49% to 69%, the highest level with the exception of the extraordinary turnaround in Spain.

A separate, more detailed study published this week on the impact of the currency and debt crisis and the austerity policies that have followed also found steep falls across the EU in faith in democracy and national political elites.

The study for the Cabinet Office by the European Social Survey, linking university researchers across the EU, found that soaring unemployment, anxiety and insecurity had eroded faith in politics.

"Overall levels of political trust and satisfaction with democracy [declined] across much of Europe, but this varied markedly between countries. It was significant in Britain, Belgium, Denmark and Finland, particularly notable in France, Ireland, Slovenia and Spain, and reached truly alarming proportions in the case of Greece," it said.

The financial crisis "not only eroded the objective economic conditions of many citizens, but also created widespread anxiety about a country's future even among those who did not experience hardship directly".

Faced with this erosion of political support and the battering traditional politics is taking from populist newcomers such as Beppe Grillo's Five Star movement in Italy, policymakers appear at a loss.

On Monday, Barroso said the austerity policies being applied, mainly under pressure from Berlin, had reached the "limits of political and social acceptance" and were "unsustainable" in their current form. On Tuesday, though, the commission in Brussels sought to row back on his remarks.

Within the eurozone, the key response to the crisis, apart from bailouts, has been to embark on a systematic surrender of budgetary and fiscal powers from national governments and parliaments to Brussels, as well as having countries being bailed out overseen by a "troika" of technocrats and economists from the commission, the European Central Bank and the International Monetary Fund. These are "federalising" steps in a long process of eurozone integration that might see it transformed from a currency into a political union.

"The EU has hit home and is here to stay as a watchdog of budgets, labour markets, pensions etc. This is unprecedented, and risky," said Torreblanca. "Unless it is fixed, it will feed the vicious circle between anti-EU populism and technocracy which we are currently seeing operating."

Barroso argued strongly in two speeches this week that federalism was the only answer to Europe's crisis of finances and of confidence. The German chancellor, Angela Merkel, brushing off widespread fears of a new German "hegemony" in Europe and the eurozone, also said that governments had to give up much more power to Brussels.

"We still haven't found the answer to the question of whether we're actually now prepared to unite on common economic parameters inside the single currency area," she said in a Berlin debate with the Polish prime minister, Donald Tusk. "If we want to have a common currency, a common Europe, we have to be ready to give up our hard-won habits … That means we have to be prepared to accept that in the end Europe has the final word in certain things. Otherwise we can't keep on building this Europe … To an extent, we have to jump over our own shadows. I'm ready for that."

But Tusk delivered an unusually stark warning that German prescriptions could bring increasing nationalism and populism across the EU in a backlash that was already well under way.

"We can't escape this dilemma: how do you get a new model of sovereignty so that limited national sovereignty in the EU is not dominated by the biggest countries like Germany, for example," he said pointedly. "Under the surface, this fear will be everywhere: in Warsaw, in Athens, in Stockholm. It will be everywhere without exception."

Aart de Geus, head of the Bertelsmann Stiftung, a German thinktank, also warned that the drive to surrender more key national powers to Brussels would backfire. "Public support for the EU has been falling since 2007. So it is risky to go for federalism as it can cause a backlash and unleash greater populism."

The head of Slovenia's central bank, Bostjan Jazbec, has said it will consider asking for outside help if the country's funding costs stay high. He also said Slovenia's GDP would shrink by 2.6% this year, more than April's 1.9% forecast.

Slovenia's banks are largely state-owned and saddled with bad loans worth 22.5% of its GDP.

Mr Jazbec's comments are likely to fuel speculation over whether Slovenia will be bailed out by the EU.

Still hope

Mr. Jazbec said he would consider asking for aid if yields on Slovenia's bonds remained high.

During a news conference, he said the country was doing everything it could to bring its funding costs down.

"If that is not successful, then there is a possibility to ask for help within various programmes," he added.

Meanwhile, Slovenia's Prime Minister, Alenka Bratusek, has admitted to parliament the amount needed to rescue the banks is "completely unknown".

But Ms Bratusek told STA, the state-owned news agency: "We are very intensely preparing measures that are needed, so as to avoid asking for help."

The results of the bank's stress-tests, out at the end of November, will indicate whether or not a bailout is needed.

Eurozone members can ask for help from the European Stability Mechanism, set up in 2012.

Radiation levels around Japan's Fukushima nuclear plant are 18 times higher than previously thought, Japanese authorities have warned.

Last week the plant's operator reported radioactive water had leaked from a storage tank into the ground. It now says readings taken near the leaking tank on Saturday showed radiation was high enough to prove lethal within four hours of exposure. The plant was crippled by the 2011 earthquake and tsunami. The Tokyo Electric Power Company (Tepco) had originally said the radiation emitted by the leaking water was around 100 milliseverts an hour.

However, the company said the equipment used to make that recording could only read measurements of up to 100 milliseverts.

The new recording, using a more sensitive device, showed a level of 1800 milliseverts an hour. The new reading will have direct implications for radiation doses received by workers who spent several days trying to stop the leak last week, the BBC's Rupert Wingfield-Hayes reports from Tokyo. In addition, Tepco says it has discovered a leak on another pipe emitting radiation levels of 230 milliseverts an hour.  The plant has seen a series of water leaks and power failures. The 2011 tsunami knocked out cooling systems to the reactors, three of which melted down.

The damage from the tsunami has necessitated the constant pumping of water to cool the reactors. This is believed to be the fourth major leak from storage tanks at Fukushima since 2011 and the worst so far in terms of volume. After the latest leak, the Japanese nuclear energy watchdog raised the incident level from one to three on the international scale that measures the severity of atomic accidents.

Experts have said the scale of water leakage may be worse than officials have admitted.

'The problems in Greece won’t be solved in 2014, so something more will have to happen,' Dijsselbloem told Het Financieele Dagblad.

Dijsselbloem, who heads the eurogroup of finance ministers, told Dutch newspaper Het Financieele Dagblad: "The problems in Greece won't be solved in 2014, so something more will have to happen." He said the form and scale of another rescue would depend on Greece's progress with economic reforms. His admission echoed that of the German finance minister, Wolfgang Schäuble, who told an election campaign event earlier this week that the bailed-out country still needed more aid. The International Monetary Fund has suggested that there is an €11bn (£9.4bn) shortfall in the current rescue package for Greece. The spectre of destabilising negotiations over a new bailout, though they are unlikely to get under way until after German elections next month, were a reminder that the eurozone is still not out of the woods, despite an upbeat survey suggesting economic recovery in the 17-member zone is gathering steam.

The monthly purchasing managers' indices, which test the confidence of firms across the 17 member-states, showed both manufacturing and services expanding at their fastest pace since summer 2011.

Chris Williamson, chief economist at data provider Markit, which compiles the indices, said: "The euro area's economic recovery gained momentum in August." Apolline Menut, of Barclays, said: "The readings confirm that recovery is on track and that GDP should continue to grow in the third quarter." However, while Germany scored a PMI reading of 53.4 – well above the 50 level which marks expansion, suggesting recovery in the eurozone's largest economy is gathering speed – output in France declined, and at a faster pace than during July, according to the survey, with both manufacturing and services output falling. Williamson said: "A big question mark still hangs over France's ability to return to sustained growth."

Across the eurozone as a whole, export sales rose for the second month in a row, Markit said, and new orders for manufactured goods jumped at their fastest pace since May 2011. However, some analysts remain more sceptical about whether the nascent upturn – after an 18 month recession – is set to last, particularly if the US Federal Reserve's plan to "taper", or start reducing, its $85bn a month quantitative easing programme continues to push up government bond yields on this side of the Atlantic, raising the cost of borrowing.

A research note from City consultancy Fathom said: "The fundamental structural problems facing the euro area have not gone away. In addition, the potential spillovers from Fed tapering pose a threat to debt sustainability in the periphery … we are a long way from calling an end to the euro area crisis." Investors were cheered by a similar survey of China's manufacturing survey, published by HSBC, which suggested output may be stabilising, after growth deteriorated sharply at the start of the year. The reading on the purchasing managers' index rose to a stronger-than-expected 50.1 for August, from 47.7 in July – the largest monthly jump in three years.

Analysts said there were hopeful signs that China is succeeding in shifting its growth model away from exports, towards consumer spending.  "Domestic demand is strong enough to support 7.5% [growth] in 2013," said Ken Peng, senior economist at BNP Paribas in Beijing. "Almost all of China's economic data since July has shown improvements and suggests a rebound is under way."

Fears about a so-called hard landing in China have exacerbated recent jitters in financial markets over the fate of emerging economies when the Fed withdraws from QE. Yields on US government bonds hit a fresh two-year high, as minutes from the Fed's latest meeting, released on Wednesday night, confirmed that QE could start to be phased out as soon as next month. However, the dollar's relentless rise was briefly checked after a worse-than-expected labour market survey, which suggested new claims for unemployment benefits had risen by 13,000, to 336,000, in the past week.

"The Fed tapering theme continues. The minutes reinforced expectations that the Fed will taper its quantitative easing programme in September and Thursday's jobless claims didn't really change that," said Greg Moore, currency strategist at TD Securities in Toronto.

Ever since Fukushima, the supporters of nuclear have been at pains to insist that the disaster had been contained, without any evidence, just accepting the government statements. Pro-nuclear environmentalists were insistent that there was nothing to worry about. What will they say now?

What is "highly toxic water". When I read this at least a week ago, it was radioactive waste. Just where are we supposed to get some accurate information about this? This should be front page news, as it will affect us all. Unfortunately, the west coast of the US and the north coast of Australia will get the effects well before we do. But there's no escaping the effects. What a tragedy. Is this an acceptable result of nuclear energy for those who support it?...This just goes to show that even a highly-industrialized country like Japan cannot handle the aftermath of a nuclear meltdown. When will people realize that nuclear is not the future but the death of this planet.  There are a number of solutions out there that need to be combined to give us the electricity we need but big industry and short-memory  politicians make sure that we keep on consuming and consuming. The first step is to make the price of electricity reflect the real cost of maintenance and decommissioning of the power stations. The people will realize just how much they can reduce their energy consumption (like insulating houses)....

Yes, the switch from intensely radioactive to "toxic" is clearly an attempt on someone's part, probably an industry PR man, to make it sound like a more manageable chemical hazard, conveniently overlooking those tedious details like radioactive half-life, and the increasing difficulty of getting men and even machinery into close enough proximity to effect repairs.

As for those defenders of nuclear energy who pop up on web forums, one in particular was almost certainly a top man in the UK nuclear industry, perhaps recently retired and kept busy. Back in March 2011 we had such a person on a different MSM site, not dissimilar to this one, telling us hourly that TEPCO had the technology to deal with what was an entirely manageable and containable spill, that normal background radiation was routinely blasting our DNA every minute of the day so what were we worried about, that suggesting parents try getting hold of some iodine pills to protect their children's thyroid glands was the height of criminal irresponsibility bla bla. I'm half expecting him to turn up here shortly. Let's hope the Report button works better here than it did there, back in March 2011.

...the German model is really a "beggar thy neighbor"

Schröder's economic "reforms" entailed gutting social security and unemployment benefits and eliminating the minimum wage in order to force young/unemployed Germans to go to work for one euro an hour (literally). Has this worked? Only sort of. True, the dramatic reduction of labor costs has been one of the keys to Germany's phenomenal export-oriented growth over the last decade. Combined with the artificial deprecation brought about by the adoption of the Euro, it's helped Germany maintain an extremely favorable balance of trade vis à vis other members of the Eurozone. What this means is that Germany's "success" has been built by selling more to their neighbors than their neighbors sell to them. (Internal demand on the other hand has flat lined; the German "model" is entirely predicated on exports.) Here's the thing though: it's impossible for all Eurozone members to maintain a trade surplus towards each-other; for one country to maintain such a surplus, another must have a deficit. Calls for the Mediterranean states to emulate the German model are thus deeply paradoxical; were the PIGS to run such a surplus, who would eat the deficit?

In other words, the German model is really a "beggar thy neighbor" policy, one which literally requires the impoverishment of the Mediterranean states. For ten years this kind of worked: Germany sold more to Spain et al than it purchased, then recycled those profits back to the periphery in the form of lines of credit, allowing those countries to purchase even more goods yielding greater profits, etc, etc. (Rinse and repeat.) Eventually the imbalance grew too deep for anyone to ignore and hey presto we had the start of the Eurozone crisis.

So, with shades of Plato's pharmakon, what the author is here calling for is to treat Europe with more of the poison that caused it's illness in the first place. What he identifies as Germany's "successful example" is actually the source of the crisis, not its resolution. A real solution would require the Germans to adopt a new policy based on internal demand, increasing domestic purchasing power by (for example) establishing a minimum wage and strengthening the working classes... Yes, the German mercantilist strategy cannot be maintained indefinitely and they do need to switch from an export driven economic strategy to one more balanced by domestic demand. And yes, the internal disparities and inconsistencies within the Eurozone make escape much more difficult (if not impossible) for the Southern periphery, including possibly France also.

But there are two further problems which are really at the genesis of the Eurozone's economic difficulties - one of which is shared with the UK. First, most of Europe (including the UK) has been running consistent deficits (trade and budget), and while one can argue about when and how and how fast these deficits are reversed, ultimately they will need to be for sustainability. It was not the economic disparities of the Eurozone per se which created their current difficulties, but the lack of flexibility to respond to the credit crisis. The other major problem is the sclerotic nature of a lot of Eurozone economies (eg France, Spain), with myriad obstacles and costs put in the way of enterprise and real job creation, and the disincentives to employment and inward investment.

 

As someone who has a VERY long and distinguished record of being wrong, here is my prediction: The CB's and governments of the world will print money (or do the equivalent) in an attempt to keep the current crony-socialist/crony-capitalist financial and government scams going. They have no other choice. The "markets" therefore will be as volatile as the actions of the sociopaths running the CB's and the governments, as there is no “market” other than that created by the central planners. But, let’s offer a “Keynesian” prayer that they can keep the scams going until I’m dead.

Let us pray: We must borrow / print more money to stimulate demand, (especially in assets owned by the top 10%)...So that jobs are created, (but, with the wealth effect, who needs jobs…) And prosperity ensues, (especially for the top 10%)...Then we pay off our loans. (Unless we don’t achieve perpetual “Keynesian” prosperity, I which case we simply borrow / print more money until we do)...May the “Keynesian” hedonism continue forever and ever, in his holy name, Amen. The gap between Wall Street and Main Street (rising asset prices, despite worse-than-expected economic performance) can be explained by three factors. First, the tail risks (low-probability, high-impact events) in the global economy – a eurozone breakup, the US going over its fiscal cliff, a hard economic landing for China, a war between Israel and Iran over nuclear proliferation – are lower now than they were a year ago.

Second, while growth has been disappointing in both developed and emerging markets, financial markets remain hopeful that better economic data will emerge in the second half of 2013 and 2014, especially in the US and Japan, with the UK and the eurozone bottoming out and most emerging markets returning to form. Optimists repeat the refrain that "this year is different": after a prolonged period of painful deleveraging, the global economy supposedly is on the cusp of stronger growth.

Third, in response to slower growth and lower inflation (owing partly to lower commodity prices), the world's major central banks pursued another round of unconventional monetary easing: lower policy rates, forward guidance, quantitative easing (QE), and credit easing. Likewise, many emerging-market central banks reacted to slower growth and lower inflation by cutting policy rates as well.

This massive wave of liquidity searching for yield fueled temporary asset-price reflation around the world. But there were two risks to liquidity-driven asset reflation. First, if growth did not recover and surprise on the upside (in which case high asset prices would be justified), eventually slow growth would dominate the levitational effects of liquidity and force asset prices lower, in line with weaker economic fundamentals. Second, it was possible that some central banks – namely the Fed – could pull the plug (or hose) by exiting from QE and zero policy rates.

This brings us to the recent financial market turbulence. It was already evident in the first and second quarters of this year that growth in China and other emerging markets was slowing. This explains the underperformance of commodities and emerging-market equities even before the recent turmoil. But the Fed's recent signals of an early exit from QE – together with stronger evidence of China's slowdown and Chinese, Japanese, and European central bankers' failure to provide the additional monetary easing that investors expected – dealt emerging markets an additional blow. The scramble for assets, fuelled by the Quantative Easing in the USA and Britain, is coming to an end. The suggestion that the USA was going to 'taper out' its huge QE was enough to send shares into a tailspin, and problems in China are so serious that any sober assessment must factor in the real possibility that the Chinese government might start to sell off its stocks of USA Treasury Bonds to support its banks. In these circumstances the turbulence on international currency markets will be huge, with unpredictable consequences for the value of currencies, trade flows and interest rates. Interesting times are ahead!

The point here is why Christine Lagarde was allowed to become chief of the IMF. It was obvious the EU put her in to save the Euro at any cost to individual countries or the IMF.

Truly disgraceful and obvious when she was announced head of the IMF. She is being investigated for corruption in France for gods sake. This leaked memo basically admits Lagarde forced the IMF to make the loans to Greece on terms it would never make to normal distressed countries and against the advice of her advisors at the IMF. This is surely a form of corruption and warrants a proper investigation. Also don't forget the UK is a large contributor to the IMF and if the IMF doesn't get its money back the UK will be taking a  hit. You see the good old EU got the UK to fund the Euro bailouts even when Cameron insisted they wouldn't. The two most recent French Directors General of the IMF, Strauss-Kahn and Lagarde  have failed their shareholders and the world.  Instead of assisting the EZ to dismantle itself by persuading the peripheral countries to revert to their own currencies in order to experience economic growth and the resurgence of hope, these two EU utopianisms used their position to channel shareholders' funds into this insane and doomed irrationality, thereby throwing good money after bad in a preposterously reckless fashion and stretching out the agony for their blighted peoples.  As southern Europe bursts into flames and blood flows in the streets, we will all know where the IMF leaders belong - in the dock!... Southern Europe may be a bit depressed, and the societies are traditionally cautious and conservative. But please don't think their published figures are correct. They omit the enormous 'black economies' that are presently supporting the south. Spain, for example, is estimated to have another 30% above the published stats, and that's the government's own estimate, hardly likely to be an overestimate. There may be riots one day but not in the near future.