The People’s Bank of China said it would lower its one-year benchmark lending rate at the weekend by almost half a percentage point to 5.6% and cut its one-year deposit rate amid concerns that the world’s second largest economy is weakening. The FTSE 100 closed 1% higher at 6750.76 on Friday, while the Dow Jones was also higher in early trading.  Analysts said one of the main effects of the interest rate cut would be to force down the Yuan against the yen and the dollar, helping China to export its way out of trouble. The Yuan has already fallen 10% against the dollar since the summer from a level that was widely regarded as overvalued and may have further to go in the coming months as the economy struggles and the US recovery gathers pace.  The interest rate cut will be welcomed by the millions of Chinese homeowners who pay a large proportion of their salary each month on mortgage payments. Rocketing mortgage debt has become a huge problem in China alongside the massive debts racked up by state enterprises and local authorities.  Officials at the central bank, aware that many homeowners have reduced spending on other items, will hope lower borrowing costs and the cut in deposit rates will encourage them to boost expenditure in other areas of the economy.  China’s slowdown was highlighted by David Cameron as one of his red warning lights signaling the danger of a second financial crash. He said faltering growth in emerging markets was a cause for concern alongside the escalating dispute in Ukraine and the Ebola crisis.  Beijing has maintained that GDP growth continues to stay above 7%. Government figures for the third quarter this year estimated growth at 7.3%.   Meanwhile back in unemployment and recession hit Europe no action from the EU Eurocrats; 7 years after the event they continue to run up their expense claims and take their pay and pensions, while debating what to do.... Pitiful...

Mr.  Juncker said Europe needed a kick-start and the Commission was offering the jump-leads

He said Europe had to face "the challenge of a generation" head-on, without a money-printing machine, and described his plan as the greatest effort in recent EU history to trigger additional investment without changing the rules.

The plan would take the burden off national governments, already facing big debts after the financial crisis. But they could contribute to the fund if they wished, and would be asked to come up with a list of projects with "high socio-economic returns" that would start between 2015 and 2017.

Illustrating the type of projects he has in mind, Mr.  Juncker said he had a vision of:

 

• Schoolchildren walking into a brand new classroom equipped with computers in the Greek city of Thessaloniki
• European hospitals saving lives with state of the art medical equipment
• French commuters charging electric cars on motorways in the same way as petrol stations are used now
• Households and companies becoming more energy efficient

The Commission and the European Investment Bank (EIB) would create the fund's €21bn reserve, according to Mr Juncker, which would then enable the EIB to fund loans worth €63bn. Private investors would be expected to put forward the lion's share of the money, some €252bn.

Only €16bn of the original money would come from the European Union budget.

However, critics doubt it can attract so much private investment.

There was immediate scepticism from the European Trade Union Confederation (ETUC) whose General Secretary, Bernadette Segol, suggested the Commission was "relying on a financial miracle like the loaves and fishes".

She said she did not believe that €315bn could be raised from €21bn, a leverage factor of 15 which the ETUC argued was "almost certainly unrealistic".

The Commission believes it could create up to 1.3 million jobs with investment in broadband, energy networks and transport infrastructure, as well as education and research.

BERLIN, Nov. 25 (Xinhua) -- German Chancellor Angela Merkel on Tuesday warned that Europe could slide back into recession, German newspaper Frankfurt Allgemeine reported.

"If we do not want to be left behind by the growth markets, then Europe has to hurry up," Merkel told a conference of European family entrepreneurs here.
She called for an early conclusion of ongoing trade agreement negotiations with Canada and the United States.
Given the increasing weight of Asia in the global economy, "Europe is no longer the measure of all things," said Merkel.
She noted that opportunities may outweigh risks once the free-trade agreements with Canada and United States are put into place.

The Czech Republic‘s Interior Ministry is to tighten security measures at government offices after envelopes laced with poison were sent to two ministries.     "The central crisis committee agreed to raise security at selected state institutions, mainly ministries, and raise protection at other places," Reuters quoted Czech Interior Minister Milan Chovanec as saying on Friday.

The letters, which contained deadly doses of poison, were recently sent from Sweden and Slovenia by unknown persons and were stopped before reaching the intended addresses of Chovanec and Finance Minister Andrej Babis.   “We do not want to raise panic but... we need to adopt these security measures," Chovanec added.  The interior minister went on to say that hundreds of letters containing unusual substances are sent to government buildings each year, but this is the first case of harmful substances being used.    The Czech Republic, a European Union and NATO member, does not have any records of terrorist attacks over the past decades.

Across Europe, government bond yields are NEGATIVE, i.e. you have to PAY these bankrupt governments for the privilege of loaning them money.  And as IMF director Christine Lagarde said last week that a diet of high debt, low growth and high unemployment may yet become “the new normal in Europe”. Each of these data points signals an obvious long-term trend. We can see where this is going. But here’s the good news: none of this need affect you. The power is in your hands.

Even if the Swiss divorce themselves from prudent policy, and even if your government refuses to maintain sound money, you still have options.

You can choose to maintain a portion of your savings at a well-capitalized bank abroad in stronger currencies. You can choose to hold some physical precious metals (or even cryptocurrency) overseas at a secure location where it can’t be confiscated by a bankrupt government.

You can choose to own productive assets abroad or collectibles that cannot be conjured out of thin air by central bankers. All of these tools and resources already exist today. And for now, they’re available for anyone to take advantage of.

Herr Juncker, the head of the European Commission, is about to announce a plan whereby the EU puts $26 billion or so into an investment fund which is then geared up with private money to amount to a $390 billion fund that will revolutionize the European economy, light the flames of the white heat of technology and so drearily on. Sadly, the plan is based upon a simple misconception. It’s possible that there’s a case for public investment in a number of areas: there are such things as public goods, after all. It’s also possible that there’s a case for greater private investment in certain areas: that is how the economy advances, after all. But there’s no case at all for trying to make those public investments, potentially in public goods, on private sector terms. Yet that is what the fund is trying to do: I suspect that some have been reading a little too much Professor Mazzucato here (to the extent that Mazzucato’s “work” is not just an extended justification for this type of action).  The European Union is planning a 21 billion-euro ($26 billion) fund to share the risks of new projects with private investors, two EU officials said.  The new entity is designed to have an impact of about 15 times its size, making it the anchor of the EU’s 300 billion-euro investment program, said the officials, who asked not to be named because the plans aren’t final. European Commission President Jean-Claude Juncker is due to announce the three-year initiative in coming days.  The commission will pledge as much as 16 billion euros in guarantees for the vehicle, which will also include 5 billion euros from the European Investment Bank, the officials said. Loans, lending guarantees and stakes in equity and debt will be part of its toolbox, with the goal to jumpstart private risk-taking so that stalled projects can get off the ground.  Here’s what the problem with this sort of idea is. It’s absolutely true that there’re such things as public goods. These are, in the jargon, non-rivalrous and non-excludeable. No, don’t worry, it just means that it’s very difficult indeed to make money out of them. That people can’t make money out of them means that we think that private investment won’t produce enough of them. So, to get to the optimal level of their production we should have government, which doesn’t have to worry about making a profit, do the investing. This is the argument in favor of government funding basic research and even of their funding primary schools. It’s fine, it’s a simple argument that we see as far back as Adam Smith.  It’s also true that there’s things that will be funded, happily, by private investment. Assuming success it’s possible to make a profit so people have every incentive to gather in some capital, invest, and try to make a success out of whatever it is. There is no need for government funding here as the necessary incentives already exist. Government wouldn’t be helping here, at best they might crowd out private investment and more likely to, due to incomprehensible paperwork (yes, I have looked at such schemes myself, in my day job in business), slow down projects and even make them less likely to succeed.  So there is an argument for government investing. But that argument only holds for those public goods, where it’s not possible (or very difficult) to make a profit assuming success. Government investment where profit can already be made is contra-indicated. So what does this fund intend to do? Invest government money on commercial, private sector terms. To take equity and bond stakes in the projects funded. But if a project is viable, in the sense that it is possible to profit from success, then we don't need nor want the government involvement. Where we do want the government involvement, where there is one of those public goods, then we can't, by our very definition, appropriate the returns from that public goods component. So there’s nothing there that we can pay back that government portion of the investment from.  In fact, by forcing the commercial, non public goods, part of the investment to share the returns with the public sector we then lower returns for everyone and make the project less likely to happen, not more.

MEXICO CITY (AP) -- The U.S. Embassy in Mexico issued a security message Friday warning U.S. citizens to avoid the Pacific resort of Acapulco because of violence and protests.

In yet another blow to a coastal city once favored by U.S. movie stars and jet-setters in the 1950s and `60s, the embassy said its personnel "have been instructed to defer non-essential travel to Acapulco, by air or land," and added that it "cautions U.S. citizens to follow the same guidelines."

The alert noted that "protests and violent incidents continue in Guerrero state in response to the disappearance of 43 students there."  Demonstrators have blocked highways to Acapulco, hijacked buses and blockaded the city's airport to demand the government find the students who disappeared Sept. 26 in the nearby city of Iguala. Prosecutors say local police working for a drug gang probably turned the students over to gang members, who may have killed them and burned their bodies.

In early November, demonstrators blocked Acapulco's airport for hours carrying clubs, machetes and gasoline bombs, causing hotel reservations on a subsequent three-day holiday weekend to fall about 35 percent, said Javier Saldivar, head of Acapulco's business chamber. Hotel occupancy that should have neared 95 percent was only about 60 percent.  "We suffered a serious loss," Saldivar said.  While U.S. tourists account for about 55 percent of foreign visitors to Mexico, relatively few of them go to Acapulco any more. For example, while Mexico's most popular cruise ship port, Cozumel, handled 894 cruise ship arrivals in 2013, Acapulco had only 9.  Drug gang violence has also played a role. In recent years there have even been some shootouts on Acapulco's famed coastal boulevard, but those incidents have calmed somewhat in the last two years.  Acapulco was once a well-regarded destination. It was during a vacation there in the 1960s that novelist Gabriel Garcia Marquez came up with the idea for "100 Years of Solitude." It was there that Bill Clinton took a young woman named Hillary for a honeymoon in 1975.  But in the 1970s and `80s, the resort's infrastructure crumbled, and poor, crowded settlements sprung up inland from the bay, sparking rising problems of unemployment, crime and pollution.

In mid-April 2003, German author Hans Magnus Enzensberger published a piece in the daily Frankfurter Allgemeine Zeitung in which he celebrated the fall of Saddam Hussein. He wrote of his "deep," even "triumphant" joy upon learning of the end of Iraq's brutal dictatorship. The article was also full of derision and mockery for the skeptics who warned against the wisdom of US President George W. Bush's invasion.  At the time, I was thrilled about Enzensberger's contribution. His was one of very few voices that dared counter the almost unanimous public opposition to the American offensive in Iraq. Just before the outbreak of the war, I visited northern Iraq, including the town of Halabja, where Saddam murdered thousands of Iraqi Kurds with poison gas in 1988. The gas killed children playing in the streets and women on their way to the market. I met with survivors whose lungs were almost destroyed: people who had been dying a painful death for the 15 years since the attack. More than any other city, Halabja is symbolic of the crimes Saddam perpetrated against his own people. Although I was not in favor of the Iraq war, my visit made it clear to me that the overthrow of a dictator is cause for joy.   But in the end, the skeptics were proven right. In 2003, Enzensberger believed forecasts that up to 200,000 people would die in Iraq as a result of the invasion were absurdly high. But serious studies have suggested that that number has been significantly exceeded in the 11 years since Saddam's fall. Iraq and the entire region have descended into chaos and anarchy, clearing the way for the radicalization fostered by Islamic State. There are many reasons to be gratified by the end of a dictatorship. For one, it means that a criminal is no longer in a position of power. And there's the prospect that democracy could take root in its stead. Some people also believe that anything is better than despotism.  But that last belief is incorrect ... The last decade has shown that there is something worse than dictatorship, worse than the absence of freedom, worse than oppression: civil war and chaos. The "failing states" that currently stretch from Pakistan to Mali show that the alternative to dictatorship isn't necessarily democracy -- all too often, it is anarchy. In the coming years, global politics will not be defined by the polarity between democratic and autocratic states as much as it will by the contrast between functioning and non-functioning ones.  Rule is order. For Thomas Hobbes, the father of modern political science, the intrinsic function of the state was to impose legal order in order to subdue the "state of nature." In "Leviathan," which he wrote in the 17th century under the shadow of the English Civil War, he argued that the state's monopoly on violence was legitimate when used to protect the lives and possessions of the state's citizens. When the state was no longer able to guarantee order, the threat of "war of every man against every man" loomed. The latter was the state of nature that the state, symbolized by the Leviathan, was tasked with taming.    In his 1525 article "Against the Murderous, Thieving Hordes of Peasants," Martin Luther also argued in favor of a severe sovereign putting a stop to the German Peasants' War. Luther was largely sympathetic to the complaints of the peasants, but he was turned off by the rampant violence and anarchy of their rebellion. The rebels, Luther wrote, should be dealt with "just as one must kill a mad dog."   Germany last experienced an extended period of anarchy almost 400 years ago during the Thirty Years' War. In the long period of peace and stability that has followed World War II, we in the West have come to view political continuity as the norm. During the decades of the Cold War, the threat to Western Europe did not come from weak states, warlords and terrorist organizations but from Communism. The era was marked by the confrontation between Western democracy and socialist dictatorship: The opposite of dictatorship was democracy.

The peaceful revolutions in Eastern Europe in the 1990s confirmed this view. In those countries, the collapse of the socialist dictatorships led not to anarchy but to the installation of a new, democratic order. This created the illusion that one merely had to remove obstacles for democracy to appear, almost automatically.... But in Russia the transition from the Soviet system to democracy failed. After the end of socialism, Russians were able to vote in more-or-less democratic elections and the economy was privatized. But the rule of law did not take hold. Instead, capriciousness and corruption gained the upper hand; power was monopolized by the strong. Chechnya began fighting for independence and the state started to disintegrate.  Such was the situation when Boris Yeltsin named Vladimir Putin prime minister in 1999. To Yeltsin, Putin, the head of domestic intelligence, seemed to be the only person capable of keeping the country together. Putin's task when he took over the Russian presidency a short time later was to return a crumbling state to functionality.

He was also being asked to lead a vast, sparsely populated country where state control had always been fragile: "Russia is large and the czar is far away," holds one Russian proverb. The specter of the "Smuta" -- a period of chaos and anarchy in the early 17th century -- continues to hang over Russian history. The iron-fisted Brezhnev era, by contrast, is considered by many in the country to be among the happiest periods in recent times.  In Yugoslavia, it also later became apparent that it is much easier to topple dictators than to establish democracies. Although a few weeks of bombing is generally sufficient to mortally wound autocratic regimes -- such as those run by Milosevic, Saddam, Gadhafi or Mullah Omar -- even in Europe, in relatively small territories such as Bosnia-Herzegovina and Kosovo, it took years to establish halfway stable countries with reasonably democratic governments.  The effort -- both in terms of money and labor -- was enormous. For years, control in Bosnia was largely in the hands of the High Representative in Bosnia and Herzegovina -- an office created by the Dayton Peace Agreement -- while in Kosovo, the United Nations ran the country...All of which raises the question: Is stability a value in and of itself? Those who answer in the affirmative are often seen as cynics who place little importance in freedom and human rights. But the uncomfortable truth is that dictatorship is often preferable to anarchy. Were people given a choice between a functioning dictatorship and a failing or failed state, the dictatorship would often be seen as the lesser evil. And most people believe that a more-or-less secure livelihood and a modicum of justice are more important than individual freedoms and unimpeachable democracy.

It is easy to label these kinds of attitudes as backwards from the comfort of a Western democracy. When I ask my Iranian friends why they don't rebel against the Islamic system they hate, they say they don't want a revolution because it might worsen the situation. And they know what they are talking about -- the last revolution in Iran was just 35 years ago.  Political instability triggers the yearning for order, sometimes at any price -- and thus often paves the way for extremists. That was true in Germany at the end of the Weimar Republic; in Russia, Stalinism followed the revolution and civil war; in Afghanistan, the period of unrest following the Soviet withdrawal spurred the rise of the Taliban. And now Islamic State has appeared in Iraq and Syria.  That is why the swath of political instability stretching from Pakistan to Mali is so disconcerting. In Iraq, Syria, Yemen and Libya, central governments have lost control over vast portions of their territory and entire countries are becoming ungovernable. Tribes and clans are fighting with each other while warlords are exerting regional control -- at least, until they lose it again.  The failed democratization of Iraq and the unsuccessful "Arab Spring" in Syria have fed the rise of Islamic State. In neither of these countries does democracy currently have realistic prospects for success. The best solution for Syria -- and this is not cynicism speaking -- would perhaps be a military putsch against Assad. It would rid the country of its dictator while leaving the country's last center of power, the Syrian army, intact and able to resist Islamic State.  This kind of argument isn't particularly attractive -- smelling, as it does, of cool realpolitik. It is an admission of the West's impotence -- of its limited ability to export its values and lifestyle. It feels like a selling out of ideals. The argument is also often used to justify doing business with dictators and, even worse, provides dictators with justification for their own policies of oppression.  But that doesn't make it wrong. There are an increasing number of failed states in the world. According to the Fragile State Index assembled by the Fund for Peace, the number of states receiving a rating of "very high alert" or "high alert" has increased from nine to 16 since 2006. The spread of democracy and freedom, by contrast, has hardly made any progress. According to Freedom House, following a significant increase in the number of free countries at the beginning of the 1990s, there has been little change since 1998.   Democracy can only function in an environment where there is at least a minimum of stability. And it cannot necessarily establish this stability itself. In Iraq and Egypt, that process has failed, at least for the time being. In Afghanistan, the power of President Hamid Karzai, who made way for his successor at the end of September, never extended much beyond the city limits of the capital, Kabul, despite massive Western support. It is debatable whether the rudimentary rule of law established there after 13 years of Western involvement can survive ISAF's departure at the end of this year.  Free countries, as constitutional law expert Ernst-Wolfgang Böckenförde once wrote, flourish in conditions that they themselves are unable to guarantee. Without a cultural learning process -- like the one undergone by Europe over the centuries -- the toppling of a dictator and the holding of elections are not sufficient to establish democracy. As such, the West should value functioning states to a greater degree in the future.

Even as it longs to see the departure of autocrats in Russia, China, Central Asia and elsewhere, the alternatives must be seriously examined. And the next time an intervention is considered -- whether this means military force, sanctions, or the support of opposition powers -- the West must consider what will follow the toppling of the dictator. Indeed, that is exactly the argument US President Barack Obama used recently to justify his reticence to use force: "That's a lesson that I now apply every time I ask the question, 'Should we intervene militarily? Do we have an answer (for) the day after?'"     Hans Magnus Enzensberger now sees the toppling of Saddam and the Iraq War as an illustration for the fact that it is necessary every now and again to change one's opinion. At an August literature festival in Potsdam, he said that, with the opinion piece he wrote, he "fell heavily on my face."

“Our expectation for a moderate recovery in 2015 and 2016 remains in place,” Mr. Draghi said.

His statement, though incrementally more upbeat, was consistent with others he has made in recent months, in which he has left the door open to the same “quantitative easing” used by the Federal Reserve in the United States and other central banks to stimulate their economies.  The European Central Bank has been edging closer to large-scale purchases of government bonds, which are seen as an essential component of quantitative easing. But the bank also seems to hope that this controversial step will not be necessary.  Mr. Draghi said he thought that previous measures by the bank were beginning to show results, including low interest rates and a program that grants loans to banks on very favorable terms, if they in turn lend the money to businesses and individuals.  In a speech, a European Central Bank official said that the bank could also buy gold, stocks or other securities traded on exchanges.  But the official, Yves Mersch, a member of the bank's six-member executive board, listed numerous reasons why quantitative easing, and in particular large-scale purchases of government bonds, might not work as well in Europe as it did in the United States.  The Federal Reserve “operates in a completely different environment than the E.C.B.,” Mr. Mersch said at a banking conference in Frankfurt.  Bond purchases aimed at pushing down long-term interest rates would have less effect in Europe, Mr. Mersch said, because most credit flows through banks rather than capital markets.He also expressed concern that if some governments defaulted on debt purchased by the bank, it would face a conflict between printing money to cover the losses and keeping inflation under control.  Mr. Mersch acknowledged that quantitative easing could have a positive psychological effect on markets. But he said he was concerned that government bond purchases by the bank would effectively make eurozone taxpayers liable for each country’s debt, without the approval of elected officials. National governments in the eurozone are ultimately liable for any losses suffered by the bank.  “It is questionable to what extent it would be justifiable to communalize credit risks,” Mr. Mersch said.  He noted that many of the calls for the E.C.B. to begin quantitative easing come from the United States and Britain.  Mr. Mersch said he wished “that these well-meaning suggestions were based on thorough understanding of the institutional and legal limits of the E.C.B. as well as the economical particularities of the euro area.”