Nato's new secretary general, Jens Stoltenberg, says the alliance wants constructive ties with Russia - but Russian policy in Ukraine must change.  On his first day as head of the 28-nation alliance he said "we need to see clear changes in Russia's actions".

Nato accuses Russia of supporting pro-Russian separatists in eastern Ukraine with heavy weapons and soldiers. Russia admits only that Russian "volunteers" have gone there. Shelling in Donetsk has jeopardised a ceasefire. "We have to see that Russia changes its behaviour and its actions and returns to compliance with international law and its obligations," Mr Stoltenberg told a news conference in Brussels. A former prime minister of Norway and centre-left politician, he has taken over the Nato job from Anders Fogh Rasmussen, a former conservative prime minister in Denmark.

'A strong Nato' Nato is bolstering its presence in the former communist countries on Russia's western borders, which are now Nato members. "I see no contradiction between a strong Nato and our continued effort to build a constructive relationship with Russia," Mr Stoltenberg said. He said Nato would continue to support Ukraine as an "independent, sovereign and stable" nation.

Ukraine is not in Nato, but the alliance says member states are free to supply weapons to Ukraine if they want to.

Since Russia annexed Crimea in March, forcing Ukraine to abandon its bases there, Nato has halted practical co-operation with Russia but kept political channels open.

Eurozone growth was flat in the second quarter and the latest evidence suggests the weakness continued in the third. The ECB is battling to prevent outright deflation in the 18-member region, with inflation perilously low at 0.3% in September - sharply lower than its target of close to but below 2%. Draghi appeared more concerned about low inflation than recent months, but added: “As all our measures work their way through to the economy they will contribute to a return of inflation rates to levels closer to our aim.”

He said France must implement structural reforms and stick to the EU’s deficit rules, a day after Paris announced a budget that would not bring its deficit under the required 3% of GDP until 2017. “Each actor has his role to perform,” Draghi said.

Christian Schulz, senior economist at Berenberg, interpreted Draghi’s comments as “a stark warning to France to live up to the fiscal adjustment commitments it made in previous budget rounds”.

Schulz added: “Since the ECB is involved in reviewing the budgets as part of the European semester which starts in mid-October, France could be headed for stiff headwinds, up to financial penalties being imposed by the EU Commission. Since these could only be averted by a qualified majority of the member states, France faces an uphill battle and will probably have to make significant concessions. If not on fiscal targets, than on structural reforms.”

Today is the anniversary of German reunification in 1990. Merkel's speech, on Austrian TV, contains the following (my translate). "I know I repeat and repeat this issue and many thing it is insignificant, but I will keep repeating it because only by doing what we do are we showing how to resolve our European problems. If we do not continue with our method we, here in Europe, will soon not be taken very seriously. We Europeans must stick to the principles and treaties we have founded and put in place for ourselves, including the Growth and Stability Pact."

I think those remarks, the frankest I've heard from Angie, are directed at France, the other throne in the dual monarchy, and to some growing extent Italy. Interesting times ahead, especially as the ECB is empty and we are going to discover quite a few banks are void too, and not just in the GIPIS group.

LATE EDIT - I found this too!

French 2015 budget statement -“No further effort will be demanded of the French, because the government – while taking the fiscal responsibility needed to put the country on the right track – rejects austerity.” This was yesterday...."European companies continued to struggle this September, as continued weakness in France took a turn for the worse.

Key gauges of private sector strength slipped, failing to meet the expectations of analysts. The composite purchasing managers’ index (PMI) reading for the euro area as a whole dropped to 52, from 52.5 in August.  While above 50, and thus implying private sector growth across the currency bloc on average, the data suggest that the pace of growth fell.  A consensus poll of economy watchers suggested that the headline reading would only deteriorate to 52.3 in September. 

"The PMI suggests the eurozone economy remained stuck in a rut in the third quarter", said Chris Williamson, of Markit, who compiled the report. "

The International Monetary Fund describes public infrastructure spending as "one of the few remaining policy levers available to support growth"...All the advanced economies should take advantage of ultra-low borrowing costs to lift spending on key infrastructure projects and boost the global recovery, according to the International Monetary Fund.   The IMF said a debt-funded investment spree could "pay for itself" if projects were chosen wisely, as government spending would stimulate demand, create jobs, and support longer-term growth.  "In advanced economies an increase in infrastructure investment could provide a much-needed fillip to demand and it is one of the few remaining policy levers available to support growth, given already accommodative monetary policy," the IMF said in a chapter of its World Economic Outlook.  The Fund suggested the eurozone could benefit most from ramping up infrastructure spending because it said policies were most effective in low growth, high quality infrastructure economies that were currently running below their potential. Borrowing costs in some European countries have fallen to record lows amid a pledge by the European Central Bank (ECB) to keep interest rates low and policy loose for an "extended period". The IMF said borrowing at ultra-low rates to finance infrastructure spending would have a much bigger impact on growth than if policymakers raised taxes or cut spending in other areas to make the policy budget neutral. While public debt would increase, so would growth, keeping the debt-to-GDP ratio stable, the IMF said. However it warned against governments embarking on a blind spending spree, which would push up debt piles without stimulating growth. Spending on infrastructure would only have a positive impact if policymakers conducted "rigorous" cost-benefit analyses to ensure that public money was not being spent on wasteful projects that provided little return.  "Countries shouldn't spend on whatever they want. It's really critical that countries choose the right projects and invest efficiently," said Abdul Abiad, IMF deputy division chief...Even the IMF is acknowledging supply side economics doesn't work.  Stimulus put into the top of the system, banks, according to supply side economics, should have kick started the global economy.  But the bankers blew asset bubbles, the rich got richer and the global economy stalled.  There was no one to buy the "wealth creators" products and services.  The "wealth creators" are driven by demand and would not increase supply until demand rose. They just sat on their huge wads of cash waiting for demand to rise.  But those silly "wealth creators" hadn't realised that employees are also consumers and in holding down their wages, meant demand didn't rise.  So now back to true Keynesian economics where demand is the driver.  You build infrastructure that needs building anyway and create jobs, wages, spending and demand. Oh you silly "wealth creators" you are nothing without demand for your products and services...So the IMFs answer to the worlds economic problems is to get the spendaholic governments of the world to spend even more money, because apparently they haven't spent enough already.
The IMF is calling for more taxation on the people. When a government takes out a loan and spends the money, it will eventually have to be repaid via taxation, so the IMF is basically calling for more taxation. Thanks for that IMF, why don't you **** off.
If you can't see that the IMF is nothing more than an extension of the banking system, and big western governments, then you haven't got your eyes open.

Well,Germany’s dominant service sector will be increasingly relied upon to deliver growth. The sector’s PMI reading rose to 55.4 in September, a rise of 0.5 points on the previous month.

“September’s flash PMI results paint a mixed picture of the health of the German economy at the end of the third quarter”, said Mr Kolodseike. Markit expects German GDP to rise by just 0.4pc in the quarter.

Meanwhile, incoming minimum wage legislation, scheduled for January 2015 has “weighed on service sector sentiment, with business expectations the lowest in nearly two years”, Mr Kolodseike said.

Equivalent PMI numbers for France showed both its manufacturing and services sectors in contractionary territory - at 48.8 and 49.4 respectively.

The data suggest that the nation’s zero growth trend could continue. INSEE today confirmed that France’s economy managed no growth at all in the second quarter of the year. here is a surprise... for all the EUSSR diplomats' bravado about hurting Russia in the medium and long term... we come to hear about how badly this is hurting the EU itself round about NOW, which will not recover its food market in Russia or have the same growth opportunities there from now on as Russia seeks to cut ties and strengthen their links with the 2/3 of the world population and more than 50% of world GDP that does not have a problem with Putin... anyone up to start calculating how much this is costing the EU? as I don't think we'll be getting that snippet of info out the Treasury any time soon...

"DRAGHI SAYS EU BUDGET RULES ARE THERE TO BE RESPECTED" - Draghi also realises that big countries will ignore them with impugnity - just like they did the first time around. France is already in violation and knows full well that the EU and the ECB are utterly importent in the face of that.  Just as they were when Germany - yes, Germany - lead the way in breaking the rules shortly after the euro came into being. All countries remember this, espescially the ones on the receiving end of imperious Germanic lectures about "doing their homework".  Germany has made the classic mistake of doing well when others around it are doing badly, presuming this state of affairs will persist eternally and feeling it has a free hand to treat it's neighbours as it pleases. The moment German needs demand it, the Fiscal Pact will be out of the window; Anegla Merkel would be out of office within weeks if her government were to attempt the sort of austerity it has, in essence, forced upon Greece. The Netherlands were, if anything, even more hawkish than the Germans regarding "lazy Southerners" and wanted things like automatic fines. Then their own economy began to suffer the same problems and they also breached the rules - you don't hear much from them these days. Our Scottish friends may wish to ponder the huge difference in the treatment meted out to small countries as opposed to large ones in the EU. Of course, none of this should be greeted with any Satisfaction in the UK. A recession in the eurozone is bad for us too. Though thankfuly we have at least managed to dodge the madness of dropping a hand-grenade into the economy via a Scottish separation. Now, a worsening recession means there will be less taxable income for governments to fund ever growing entitlements. Add that to a huge pile of moldering away bad debts. What I see is not a solvable problem the way the world works today.

Neither Draghi or any of the bankers even bother to talk about the real problem of not enough regional income and too much government spending. Draghi’s only solution is some form of money printing. Printing money to pay bills might work over the short term. But long term, it cannot. If money printing works in the real world why not print and give every one a billion dollars, euros or yen?

The most Draghi can do is have the ECB print money to service existing bad debts made by banks and governments. But printing money to pay interest and principle on loans is not debt service. That is called money printing, debasing the currency whatever. Yes, governments want to do whatever possible to avoid bad times for its citizens. But, as someone else once said, the road to hell is paved with good intentions.

Earlier this month, the European Central Bank introduced new measures to stimulate the area's flagging economy.

As well as launching an asset purchase programme, through which it will buy debt products from banks, the ECB cut its benchmark interest rate to 0.05%.

Business growth in France slumped to a three-year low, with both the manufacturing and service sectors suffering.

"Anaemic demand continues to hold back the private sector," said Jack Kennedy, a senior economist at Markit, "with further price cutting insufficient to prevent new orders from falling".

In Germany, service sector growth rebounded to a two-month high, but manufacturing growth recorded its slowest growth for 15 months.

Markit economists also raised concerns about the crisis in Ukraine, and related Russian sanctions, which they warned could have further adverse effects on business in Europe.

"The danger is that the ECB's efforts to stimulate the economy will prove ineffective in the face of such headwinds, which are exacerbating already-weak demand," said Mr Williamson.