This article titled “China imposes tariff on US car imports” was written by Graeme Wearden, for The Guardian on Thursday 15th December 2011 01.39 UTC

The tension between America and China over international trade escalated on Wednesday when Beijing imposed additional duties on cars imported from the United States.

China’s commerce ministry accused America’s car industry of “dumping and subsidising”, thereby causing substantial damage to China’s domestic car industry. From Thursday, levies will be charged on larger-engined cars from several manufacturers, some being European firms with factories in the US.

General Motors faces the greatest impact, almost 22% extra on some sports utility vehicles (SUVs) and other cars with engine capacities above 2.5 litres. Chrysler faces a 15% penalty, while a 2% levy will be imposed on BMW, whose US plants make many of the cars it exports to China.

Existing taxes and duties already push up the cost of US imports by 25%, and the new levies make it even more expensive for Chinese consumers to buy American. The move was swiftly attacked in the US. Carl Levin, the Democratic senator for Michigan (which includes the motor city of Detroit), called it an “unjustified” attempt to circumvent international trade laws. “Instead of ending its unlawful trade practices, China is choosing to take further steps that are unauthorised by world trade rules,” he claimed.”The livelihoods of American families and the integrity of global trade law are at stake.”

GM says the levies will have little immediate impact, as it mostly exports lower-power cars to China. Analysts, though, said the decision underlined China’s determination to protect its car industry.

“The move shows that China is always capable of intervening politically in its markets,” Juergen Pieper of Bankhaus Metzler, the German investment bank, told Bloomberg. Georges Dieng, a Paris-based analyst with Natixis Securities, said the levies had been set to “inflict pain on the Americans, above all”. Shares in General Motors fell by over 3%, while BMW’s shares slipped 5%.

China and the US have peppered each other with legal actions and tariffs over the past few years.

Earlier this month, the US International Trade Commission ruled against China’s solar-power industry after an anti-dumping and anti-subsidy investigation. Last week, the US pledged to take China’s anti-dumping measures against American poultry imports to the World Trade Organisation.

Debbie Stabenow, the junior senator for Michigan, urged the US government to take China’s car levies to the WTO as well. “China relentlessly breaks international trade rules, and seeks to gain an anti-competitive advantage over our companies and workers. America must be equally relentless in fighting back,” she said.

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This article titled “Image of France as a generous welfare state marred by grim reality” was written by Phillip Inman Economics correspondent, in Paris, for The Guardian on Monday 21st March 2011 17.46 UTC

Thousands will pour into the Galeries Lafayette this week to enjoy the last few days of the spring sales and beat the recession. Tourists and Parisians will find huge discounts on designer clothes on every floor of the ornately domed department store that dominates Boulevard Haussman, Paris’s main shopping street.

As a measure of confidence, the sales present a gloomy picture of France’s middle classes and their appetite for shopping. Marc Jacobs, Chloé and Lacoste offer 30% discounts. Givenchy dresses are knocked down by 40% and the Galleries’ own ranges can be bought for 50% less than the list price. Only Prada, Dior and a handful of international brands hold their value .

Like their British counterparts, French shoppers can only be enticed with massive bargains. Technically, France like Britain, has escaped recession. But to ordinary French workers, blue and white collar, the pain of the last two years lingers. Shopping is expensive even in the sales, especially when a mix of high taxes and punishing national insurance leaves you with one of the lowest rates of take home pay of any western country. Only Belgium and Hungary exceed its average 45% tax on pay.

France appears to have a natural order still in place with food and wine at its heart and a generous welfare state to support the sick, the elderly and those out of work. Yet this picture disguises a slow decline, made worse by the financial crisis, that leaves the average French family struggling to make ends meet.

Loïc Sadoulet, a professor of economics at the Paris-based business school Insead, says the word that sums up France is disconnect. By which he means the rosy image and the dour reality are miles apart.

A trip on the Paris Metro makes the point. It was always dowdy, if not a little shabby, which most residents and visitors accepted as part of its charm. Now there are major stations closed for refurbishment and some passageways are reminiscent of ancient caves with green slime and blown plaster adding to the effect. The construction at one station of glass screens to prevent passengers falling on the tracks can only be described as makeshift, with bits of wood screwed to the platform floor to hold the metal posts in place.

Paris train workers joined the protests against pension reforms last October and closed the city for several days after similar shutdowns in 2007, 2005 and 2003, over government plans to cut pensions and welfare.

An apocryphal story about France’s slide from greatness goes back to the decision in 2005 on where to hold the 2012 Olympics. It is said the top brass from the IOC arrived for a fact-finding mission just as the Metro workers began another strike. A quick look through the records showed that the frequency of strike action meant there was a strong likelihood an Olympic year would be no exception. With little else to separate the bids, London was declared the winner.

True or not, the French establishment vowed revenge and last year president Nicolas Sarkozy pushed through a law forcing vital public services to provide a minimum service during industrial action. Railway workers will be among the state employees caught by the law.

Recent polls have revealed the confusion many French workers feel about the colourful and sometimes violent protests against Sarkozy’s welfare cuts and plans to end decades old employment protections. A majority say the reforms are necessary while telling pollsters they support the protests.

This perplexing need to adopt both sides of the argument has paralysed debate, especially on pensions and the totemic 35 hour week. Unlike Germany, which has spent 10 years discussing and implementing reforms with a view to becoming more competitive, the French have reached a position of stasis. Apart from the new strike law and bill freeing universities from state control, pensions reform is almost all Sarkozy has to show for his four years in power.

Next month the Paris-based think tank, the OECD, will publish its biannual report on the French economy. It is expected to argue the Elysée palace must move more quickly to tackle a low growth, high unemployment economy that could spark widespread social unrest .

Antonio Gurria, the OECD boss, will stand next to finance minister Christine Lagarde and politely urge her to free small and medium sized businesses from the straitjacket that has stifled growth and innovation for decades.

Innovation has tended to come from France’s industrial behemoths – France Telecom, Renault, engineering firm Alstom and Compagnie Générale des Eaux, the water company that spawned media giant Vivendi and Veolia, a waste management firm that empties many of the UK’s dustbins. Others such as Pernod Ricard and the luxury goods maker LVMH dominate their industries. However, the government’s support and reliance on their tax revenues has been at the expense of smaller firms.

The strategy is also undermined by the vulnerability of these large businesses to innovative rivals with access to cheap skilled labour. Renault and Peugeot have seen Mercedes, BMW and Audi sweep them aside in the race for Asian customers. Air France remains loss making and the oil business Total, with its close links to France’s former colonies, is vulnerable to the changing political weather in many of the world’s hotspots. Last week it was forced to suspend production in Libya and is embroiled in bribery allegations over deals in Iraq.

Hervé Boulhol, the OECD’s France expert, says the country’s finances have deteriorated for the last 35 years. Since the financial crash the situation has worsened. “The public finances must be fixed because while France has been largely immune to the worst of financial crisis, at least so far, it needs to address deep-seated problems,” he says.

Boulhol reels off a list of measures that Sarkozy could implement to bring the country more firmly into the 21st century. First it must get more women into work by reforming a tax system that encourages them to stay at home to reduce the household’s taxable income. The result is the lowest employment rate among the 30 rich nations assessed by the OECD.

Second, its benefits system, which accounted for 3.5% of GDP in 2005, first in the OECD rankings, must be reformed. It is a source of Gallic pride but the system is largely universal, and boosts the incomes of the richest, as much as the poorest. Boulhol describes it as “regressive spending” that would be better channelled to the poorest. It may be the main reason middle income couples have continued to have children, unlike Italian and German families, but offering the same benefit to the wealthy is “just about writing cheques to people who are not going to change their behaviour,” he says.

A third problem is that France has the largest number of people in retirement as a proportion of the overall population.

The battle last year, which saw school cooks join teachers, factory workers and students on the streets of Paris, Marseille and Lyon, was eventually won by Sarkozy. A law pushing up the minimum retirement age to 62 was passed along with measures that mean younger workers must wait till they are 67 to pick up their full entitlement.

Bruno Tardieu, a full time official at one of the country’s most active anti poverty groups, ATD Quart Monde, is concerned that a growing number of working class people are being shut out of the benefits enjoyed by a decreasing number of white collar workers. He says every town is blighted by high unemployment, while 26% of young people are out of work compared with 20% in the UK.

A volunteering scheme designed to put 200,000 young people back into the workplace is directed largely at college educated under 25s and not those with poor qualifications. Tardieu will meet government officials this week to focus on ways to include low skilled people in the scheme.

“It is elitist. Poor groups don’t know it exists. It offers very low pay. And it presumes the young person will be housed and subsidised by their parents, which is often not possible for people from poorer families,” he says.

Back at Insead, Sadoulet argues that the French fear of Anglo-Saxon capitalism has paralysed the debate and left poor workers to bear the brunt of globalisation.

The number of “year in, year out” workers are growing he says, as companies resist giving full benefits to new employees. After six months, staff accrue full employment rights. A short term, six-month contract can be rolled over for another term, but then the workers must be laid off. Studies show that after a year of work, usually on the minimum wage, these workers spend a year on the dole, hence the “year in year out” tag that dogs them.

“France has spent two decades ignoring the problem and the longer it is left the bigger it will become. The debate about what to do, who should shoulder the cost, and how best to encourage innovation, is in its infancy compared with the UK and Germany,” he says.

“There is still a knee jerk reaction that says simply tax the rich some more. But increasingly ambitious people are leaving, they are going to London, to Silicon Valley, and anyway, there simply aren’t enough rich people to pay for the current level of welfare bills”, Sadoulet says

Union leaders point to the success of the country’s banks and risk averse property market as reasons to be cheerful. Here was good reason to avoid the risk taking of the Anglo Saxons.

They have a point. Compare Sarkozy, who pledged €40bn (£35bn) to boost bank finances and a further €320bn to guarantee interbank lending, with Gordon Brown, who had to pledge about £850bn to prop up the British banking system, of which £117bn was pumped straight into the worst hit banks.

But while Britain suffers wild property crashes, prices in many areas of France keep rising and finished higher in 2010 on the year before despite predictions of a slump. The steady rise has taken prices beyond the UK and shut middle income families out of the market, or prevented them moving. The long-term effect is the same as in the UK, where the financial crisis has left the incomes and assets of the wealthiest largely untouched, while hitting the growing number of – young people, immigrants and unskilled workers – who stand on the outside of protected, unionised industries.

Much of the French establishment, like the wider population, supports the unions’ conservative, old world view that globalisation is to be feared, feeding the sense of paralysis.

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This article titled “Hugh Hefner seals 0m deal to take Playboy back to private company roots” was written by Josh Halliday, for The Guardian on Monday 10th January 2011 23.01 UTC

Hugh Hefner took his Playboy empire private in a deal that values the adult entertainment media business at 0m (£135m).

Hefner secured a deal worth .15 a share to regain control of Playboy Enterprises, which encompasses the monthly magazine, plus Playboy-branded TV and radio shows, casinos and merchandising. Shares in Playboy jumped 17% in New York early trading yesterday before the deal was closed.

The deal ends months of negotiations, which last summer threatened to turn into a showdown between the two leading players in adult entertainment, as Penthouse weighed in with a 0m bid for Hefner’s 57-year-old publishing company.

The 84-year-old Playboy founder owns almost 70% of the company’s Class A common stock and 28% of its Class B stock, but last year expressed his desire to take the company private.

“With the completion of this transaction, Playboy will come full circle, returning to its roots as a private company,” Hefner said. “The brand resonates today as clearly as at any time in its 57-year history. I believe this agreement will give us the resources and flexibility to return Playboy to its unique position and to further expand our business around the world.”

Playboy’s globally recognisable “bunny ears” image remains untarnished by economic factors, but its business has faltered amid a rise in free adult entertainment online.

In the three months to the end of October Playboy reported a .4m loss. Playboy magazine’s circulation dropped by almost a third in the first half of 2010, while all non-editorial magazine production was outsourced as new chief executive Scott Flanders moved to implement drastic cost cuts to appease shareholders.

Flanders, who replaced Hefner’s daughter Christie after she resigned in January 2009, reiterated his intention to continue streamlining the company. Deals with clothing makers, casinos and clubs for use of the Playboy name and bunny ears are part of Playboy’s repositioning as a “brand management” company, he added.

FriendFinder Networks, the US parent company of Penthouse magazine, posed a direct challenge to Hefner and his media empire in June with a bid worth the exact amount that secured yesterday’s deal.

Playboy hit top shelves in 1953 with a partially nude shot of a 27-year-old Marilyn Monroe. The charismatic Hefner founded the company with 0 and little more than a decade later became the archetypal bachelor, embodied by his Playboy Mansion – which he kept on the company’s books – and penchant for glamorous women.

However, the advent of the 1970s and competition from Penthouse and others sobered up Hefner’s party and began a steady decline. Hefner was forced to forgo some of his luxuries, including a private jet and kitchen-based miniature disco, after taking the title public in 1971.But while his world famous media empire has shown signs of fading away, Hefner has not. The multimillionaire lothario has kept paternal about Playboy, and last month announced his third marriage, to 24-year-old Playmate Crystal Harris.

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This article titled “BP cost-cutting blamed for ‘avoidable’ Deepwater Horizon oil spill” was written by Suzanne Goldenberg, for The Guardian on Thursday 6th January 2011 01.57 UTC

The oil spill in the Gulf of Mexico was an avoidable disaster caused in part by a series of cost-cutting decisions made by BP and its partners, the White House oil commission has concluded.

In a preview of its final report, due next week, the national oil spill commission said systemic management failure at BP, Transocean, and Halliburton caused the blow-out in the Gulf of Mexico, and warned that such a disaster would likely recur because of industry complacency.

Many of the poor decisions taken on the Deepwater Horizon drilling rig before the fatal blow-out on 20 April were taken to save time and money.

“Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),” the report said.

In a separate chart, it identified nine decisions that increased risk; seven of these saved the companies time. BP was involved in all nine decisions.

BP, which owned the well, did not enforce the proper controls to manage those increased risks, the report said. “BP did not have adequate controls in place to ensure that key decisions in the months leading up to the blow-out were safe or sound from an engineering perspective.”

It continued on the same theme, concluding: “Most of the mistakes and oversights at Macondo can be traced back to a single overarching failure – a failure of management.”

In earlier pronouncements, the commission’s chairmen have suggested a culture of complacency ruled on the Deepwater Horizon oil rig and in the oil industry.

“This disaster likely would not have happened had the companies involved been guided by an unrelenting commitment to safety first,” commission co-chairman Bob Graham, said in a statement. “And it likely would not have happened if the responsible governmental regulators had the capacity and will to demand world-class safety standards.”

On 11 January, the seven-member commission will publish its full report into the causes of the blow-out, which killed 11 men and spewed 4.9 million barrels of oil into the Gulf. Its findings could prove critical to the civil lawsuit filed last month by the US Justice Department against BP, Transocean and other companies involved in the spill for damages to the environment, as well as the hundreds of lawsuits filed by Gulf residents who have lost their livelihoods because of the spill.

The report warned that BP and the other companies could be liable for billions more in compensation to people who have lost money because of the oil spill, and for damage to natural resources.

The explosion was caused by a sudden kick of gas through the 5,000 ft riser pipe connecting the well to the Deepwater Horizon oil rig that – another investigation found – went undetected for several crucial moments. The report identified a series of mistakes that, it said, eventually made the blow-out “inevitable.”

It paid particular attention to the faulty cementing job, performed by Halliburton, at the bottom of the well. But it blamed BP for failing to exercise proper oversight over the cementing job, and for misreading a pressure test that indicated the well had not been properly sealed.

“Based on evidence currently available, there is nothing to suggest that BP’s engineering team conducted a formal, disciplined analysis of the combined impact of these risk factors on the prospects for a successful cement job,” the report said.

It also criticised BP’s choice of a long string well design. BP crew were also wrong to replace heavy drilling mud in the riser pipe with lighter seawater before the well was properly sealed, the report said.

Transocean also came in for criticism for failing to communicate to its crew the risks of deepwater drilling even after a near-miss only months earlier.

BP said in a statement that it was working with government regulators to ensure that the experience in the Gulf led to improved practices.

Transocean tried to shift the blame to BP and government. “The procedures being conducted in the final hours were crafted and directed by BP engineers and approved in advance by federal regulators,” a company statement said.

Halliburton, which has previously criticised commission lab tests finding a faulty cement seal, said the commission had made use of selective information.

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This article titled “Facebook began as a geek’s hobby. Now it’s more popular than Google” was written by Jemima Kiss, for The Guardian on Tuesday 4th January 2011 07.00 UTC

Mark Zuckerberg faced a make-or-break year in 2010. From its first incarnation in 2004, Facebook had expanded effortlessly to a point where nearly half of the global online audience had visited the site but it was beginning to face a backlash from tech geeks, who accused founder Mark Zuckerberg of going too far in declaring the age of privacy over.

Flash forward to the start of 2011 and the outlook could hardly be more different. Bolstered by Facebook hitting the 500 million user milestone in July, a 0m (£290m) backing from Goldman Sachs and immortalised on film in Aaron Sorkin’s The Social Network, Zuckerberg seems more confident, skilled and omnipotent than ever. And Facebook appears to achieved the ultimate coup: threatening to unseat the mighty Google as the superpower of the web.

There are some things money can’t buy and, for Google, they are market-leading social media propositions. Despite its position as a technology superpower and with an estimated bn in the bank, it has largely failed to deliver a convincing consumer proposition for social networking.

YouTube, which Google owns, has a vast network that reached 30 million monthly users in Britain alone last October, according to comScore, yet has little coherent, constructive community. Any enthusiasm for Google Buzz evaporated in a cloud of privacy controversy, while its Orkut site may be a Brazilian favourite but has failed to gain ground in Google’s home market.

Google is very far from anything like a crisis but it has been slowly undermined by Facebook’s audacious and rapid development, the realisation of Zuckerberg’s plan to reconfigure the web through social navigation and Facebook’s exploitation of its popularity to recruit some of Google’s hottest talent.

Google has never underestimated Facebook. In 2007 it attempted a major investment in Facebook but was beaten by Microsoft, which took a 1.6% stake for 0m. Facebook’s extraordinary, exponential growth – up to 633 million global users by October, according to comScore – is positioning it as the most powerful site on the web. Already secured as the busiest website in the world, Zuckerberg envisages a future where we will navigate the web through our social graph – our network of friends and contacts – with recommendations rather than searches determining what we buy, watch and discuss.

The statistics, as estimated by comScore, speak for themselves. By October 2010, Facebook had already become the UK’s largest display advertising publisher, showing 24.4bn ad impressions, or five times as many as Microsoft, to about 30 million web users. The number of advertisers tripled in a year. Revenues are estimated at bn for 2010, which would mean Facebook has raised revenues faster than Yahoo and almost as fast as Google.

Facebook also had the third highest number of video viewers, behind YouTube and just behind the BBC, with 9.4 million unique users. And 47% of the global online population visited the site in 2009. Facebook’s UK audience hit 31.6 million unique users for October.

“Facebook, along with Google, is now one of the titans of the internet universe,” said Simon Carmichael, of merchant banking firm Torch Partners. “Look at the audience it has and how they monetise that; advertisers are already very keen and they are creating a whole ecosystem around Facebook.”

Peter Thiel, an entrepreneur and hedge fund manager who was an early investor in Facebook, said in September that the company would not go public until 2012 at the earliest. Carmichael agrees. “Facebook doesn’t need to IPO to raise capital as its stock is already very widely spread, and there’s a very lively secondary market for Facebook stock in the US. But it would be good for the tech industry and an IPO at that level would make it easier for bn businesses to get out.”

Investors cannot get enough of Facebook on these secondary markets, which allow Facebook shareholders – though not current staff – to cash in on their stock. Trading has surged since November when Accel, one of Facebook’s largest investors, sold 15% of its stake for 7m, valuing the company at bn.

Under US law, firms with more than 500 different shareholders must go public but Facebook won an exemption in 2008 by stating that most shares were held by staff. Regulators are looking again at these markets because of the volume of trading. Facebook’s stock is by far the most popular and trades hands at rates valuing it at more than bn.

With investors convinced the Facebook phenomenon is only just beginning, how does the firm plan to grow? Zuckerberg has said that Facebook is “almost guaranteed” to reach the one billion user mark – and is attacking on every front.

The list of Facebook products introduced in the past 12 months testifies to Facebook’s ambitions to move beyond a simple network of social connections to become the default navigation tool for our online experience. From dominating photos and gaming, as well as expanding its email system, Facebook has now added features designed to add revenue potential to gaming and local commerce, including credits, deals, places, and a Q&A tool.

Juniper’s principal analyst, Windsor Holden, says Facebook’s future domination depends on mobiles. “Mobile usage is far more engaging because it taps that dead time, like waiting for a train. Previously it was sitting on a desktop – a primary activity – but now it is like snacking.” He says augmented reality, where images and information services are overlaid on a phone’s camera, will explode in 2011. “The industry so far has catered for a niche community but there are 100m augmented reality-capable smartphones in use. That could be powerful for Facebook’s advertising as it’s a natural fit for advertisers.”

Facebook faces challenges in reaching one billion users, not least because Europe and North America will soon reach Facebook saturation, and markets such as China and Russia are dominated by domestic rivals. But the developing world is a huge opportunity for Facebook and one it has already begun to address by working with at least 50 local operators to offer Facebook Zero, a pared-down version of the site that users can access for free via mobiles.

Already the web’s biggest photo site, Facebook has disrupted sites such as Photobucket and Yahoo-owned Flickr. Facebook has provided a vast platform that allowed games studios Zynga and Playfish to flourish; Zynga’s revenues alone are estimated at 0m for 2010.

Television is lined up next; Facebook is an important app being built into many internet-connected TVs from Samsung’s Smart TV to Yahoo’s Connected TV that will allow users to Facebook message friends about the shows they are watching together, finally giving TV the potential for targeted advertising.

The volume of information generated by Facebook globally is daunting. In any 20 minutes, Facebook typically sees 1m shared links, 2.7m photos uploaded and 10.2m comments. Facebook also records 7.7m “likes” every 20 minutes, generated not just by users on facebook.com but on more than 2m other sites across the web that have embedded Facebook’s commenting tools.

More than 10,000 sites are adding Facebook’s tools each day, and about a third of users access the site this way at least once a month. Facebook hopes this strategy will make the site ubiquitous by allowing users to take their Facebook identity with them throughout the web.

Until Facebook goes public, its priorities will be growth in users and revenues, which means more of these aggressive plans to expand. Those plans have just been boosted by a fresh investment round. With momentum like that behind Zuckerberg’s plans to dominate the web, it might be easier to ask what isn’t a target for 2011?

“In the next five years almost every major product vertical [specialist industry] is going to get rethought to be social,” Zuckerberg said, revealing his vision to the Web 2.0 Summit in November. “You’re either going to have an incumbent turn their business around, or some creative entrepreneurs with great engineers who are rethinking the product from scratch. Get on the bus.”

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This article titled “Booming China tries to rein in lending” was written by Phillip Inman, for The Guardian on Friday 10th December 2010 18.19 UTC

China’s central bank today tightened bank lending for the seventh time this year after data showed the economy surging to new highs.

Beijing raised the amount of cash that banks need to hold in reserve in a concerted effort to restrict lending and prevent the economy from overheating.

Figures for November showed a trade surplus of bn (£14.5bn) after exports soared 35% over the same month a year earlier. The rise was steeper than forecast and was widely seen as a sign that demand from western countries was growing.

China’s leaders believe strong growth is needed to power the economy and maintain rising living standards. Economists estimate growth needs to run at 7% to 8% just to keep pace with the country’s rising population.

But fears that a growth spurt will trigger a spike in inflation over the coming months was believed to be behind the central bank’s move to mop up excess cash in the economy.

China has come under intense pressure to calm its growing economy following fears that it could repeat the mistakes of the US, Ireland and Spain by allowing an unsustainable property bubble to balloon out of control.

Much of China’s wealth is being diverted into a speculative wave of housing and business developments in its major cities. Analysts warn that China risks creating domestic asset bubbles and infuriating the US, which has argued that China’s growth is being powered by a low fixed currency.

The country’s stock markets have shed more than 10% over the past month on concerns that the government would ratchet up its tightening of monetary policy in the face of rising inflation.

Lombard Street Research said: “China’s trade and monetary data showed unwelcome buoyancy. The inability or unwillingness of the authorities to rein in money and credit growth shows China’s precarious addiction to borrowing. The expanding trade surplus and Beijing’s refusal to allow faster yuan appreciation risk American protectionist retaliation.”

Data out tomorrow is expected to show China’s inflation is picking up. Inflation in October jumped to 4.4%, well above the government’s 3% target.

Last week, China’s state council said the description of monetary policy in 2011 would change from “moderately loose” to “prudent”. A rise in interest rates due later this month could be followed by further rises, said analysts who feared the economy was running out of control.

But Capital Economics said concerns about China were overblown. It argued that while the headline rate of consumer price inflation had continued to rise, core inflation remained low and stable. “Meanwhile, monetary conditions are no longer as loose as many think. Indeed, the [central bank] has been injecting funds into the financial system in recent weeks to offset the squeeze on liquidity in the interbank market.

In the US, which has struggled to grow in the last year, consumer confidence data for last month revealed an improving situation, while the country’s trade balance narrowed. A keenly watched survey also showed inflation expectations had declined, reinforcing the message from the US central bank that a lack of growth was a problem and not inflation. The US needs to grow by more than 2% to 2.5% a year to create jobs, the Fed chairman Ben Bernanke has said.

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I’ve heard that Social Security is out of money. The Cold War was completely financed by the money withheld between 1946 and 1986. Trillions of dollars were taken from the general fund for spending on the military.

By not isolating Social Security deductions from hundreds of millions of paychecks our elected leaders had all the money they needed to do whatever they wanted. If there was never a separate account – IT CAN’T BE BROKE! The beneficiaries of this spending were stockholders and upper management of the defense industry.

Had this not happened, there would be a surplus so large it would pay larger checks with complete medical coverage and prescriptions for generations to come.

So what can we say about people that knew they were ruining our country while they passed their midnight acts where no could see what was going on? For that matter why doesn’t the government make sure their spending is below their income like we have to do all our lives. If they over-spend, all they do is ask the Federal Reserve to print a few billion and then agree to pay 13% interest. Wouldn’t it be smarter to not over-spend? I’d go without a lot before I would borrow at 13%.

The corruption that builds up over 200 years is so entrenched that another constitutional convention is called for. It could take quite some time to develop an alternative to the current system but it would be well worth the effort. Something extreme needs to happen or America will end up looking like a fourth world country indebted to the world.

By Lloyd H. Frye
Op-Ed Columnist
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