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Tuesday, January 15, 2013

What Are Your Goals? - Chuck Missler

tragedy to tyranny

The real unemployment rate for December 2012 is closer to 23 percent

NEW YORK – The real unemployment rate for December 2012 is closer to 23 percent, not the 7.8 percent reported by the Bureau of Labor Statistics, according to economist John Williams.

Williams, author of the Shadow Government Statistics website, argues that the federal government manipulates the reporting of key economic data for political purposes, using methodologies that tend to mask bad news.

In the BLS news release Jan. 4, the unemployment rate for December 2012 was reported to have remained unchanged at 7.8 percent.

Williams recreates a ShadowStats Alternative unemployment rate reflecting methodology that includes the “long-term discouraged workers” that the Bureau of Labor Statistics removed in 1994 under the Clinton administration.

The BLS publishes six levels of unemployment, but only the headline U3 unemployment rate gets the press. The headline number does not count “discouraged” unemployed workers who have not looked for work in the past four weeks because they believe no jobs are available.

Williams has demonstrated that it takes an expert to truly decipher BLS unemployment statistics. For instance, in Table A-15, titled “Alternative measures of labor underutilization,” the BLS reports what is known as “U6 unemployment.”

The U6 unemployment rate is the BLS’s broadest measure. It includes those marginally attached to the labor force and the “under-employed,” those who have accepted part-time jobs when they are really looking for full-time employment. Also included are short-term discouraged workers, those who have not looked for work in the last year because there are no jobs to be had.

Since 1994, however, the long-term discouraged workers, those who have been discouraged for more than one year, have been excluded from all government data.

While the BLS was reporting seasonally adjusted headline unemployment in December 2012 was only 7.8 percent, it was also reporting the broader U6 seasonally adjusted unemployment in December 2012 was 14.4 percent.

In his subscription newsletter, Williams contended the “headline changes” reported by BLS for the December 2012 unemployment rate of 7.8 percent “lack statistical significance.”

“To the extent that there is any significance in the monthly reporting,” he said, “it is that the economy is not in recovery, and that unemployment has made a new high, at a level that rivals any other downturn of the post-Great Depression era.”

The only measure BLS reports to the public as the official monthly unemployment rate is the headline, seasonally adjusted U3 number.

Williams calculates his “ShadowStats Alternative Unemployment Rate” by adding to the BLS U6 numbers the long-term discouraged workers, those workers who have not looked for work in more than a year but still consider themselves to be unemployed.

Williams believes that his ShadowStats Alternative Unemployment measure most closely mirrors common experience.

“If you were to survey everyone in the country as to whether they were employed or unemployed, without qualification as to when they last looked for a job, the resulting unemployment rate would be close to the ShadowStats estimate,” Williams explained to WND.

The headline BLS unemployment rate has stayed relatively low, because it excludes all discouraged workers, Williams argues.

As the unemployed first become discouraged and then disappear into the long-term discouraged category, they also vanish from inclusion in the headline labor force numbers. Those workers still are there, however, ready to take a job if one becomes available. They are unemployed and consider themselves to be unemployed, but the government’s popularly followed unemployment reporting ignores them completely.

Here is a more complete unemployment table that includes the seasonally adjusted unemployment percentages for U3 unemployment, as well as the same for U6 unemployment, followed by the ShadowStats Alternative Unemployment rate for both December 2011 and December 2012:

Increasingly, critics like Williams believe the seasonally adjusted U3 numbers reported by the BLS as the official monthly unemployment rate do not give a reliable picture of the true magnitude of unemployment in the United States.

The definitions used by the BLS exclude from the calculation of the monthly U3 unemployment rate anyone who has not looked for work at any time during the past four weeks. Those workers are considered to be “discouraged” and “not in the labor force.”

In the U6 calculations, the discouraged workers are only those who have actively looked for work in the past year.

The BLS definitions don’t consider those who would look for work if there were a reasonable chance they could find employment.
Read more at http://www.wnd.com/2013/01/heres-the-real-unemployment-rate/#Y5MAVAoDls2WcwLf.99

Fewer in U.S. see homosexuality as sin

Because the Church is at sin......
NASHVILLE (BP) -- The percentage of Americans who believe homosexuality is a sin has fallen in the past year, according to a survey by LifeWay Research.

A November 2012 survey of adults in the United States found 37 percent affirm a belief that homosexual behavior is a sin -- a statistically significant change from a September 2011 LifeWay Research survey asking the same question. At that time, 44 percent answered, "Yes."

In contrast, the percentage of Americans who do not believe homosexuality is a sin remains nearly the same between the two surveys -- 43 percent in September 2011 and 45 percent in November, with an increase in the percentage of those unsure what they believe. Seventeen percent in the November 2012 survey answered "I don't know," an increase of 4 percent over the September 2011 survey.

Ed Stetzer, president of LifeWay Research, pointed out that halfway between the two polls President Barack Obama changed his pre-election position concerning gay marriage.

"The president's evolution on homosexuality probably impacted the evolution of cultural values -- there is a real and substantive shift, surprisingly large for a one-year time frame -- though this was hardly a normal year on this issue," Stetzer said.

The November 2012 survey also found that Americans in the South (40 percent) are the most likely to select "Yes" to the question "Do you believe homosexual behavior is a sin?" as are Americans who attend religious services at least about once a week (61 percent) and those calling themselves "born-again, evangelical, or fundamentalist Christian" (73 percent).

Americans who never attend religious services are the most likely to say they do not believe homosexual behavior is a sin (71 percent).

These findings from LifeWay Research come as Atlanta pastor Louie Giglio on Jan. 10 withdrew from giving the benediction at President Obama's upcoming inauguration in the face of criticism over a 15-year-old sermon referencing homosexuality as a sin. Stetzer noted the connection, saying, "The culture is clearly shifting on homosexuality and this creates a whole new issue: How will America deal with a minority view, strongly held by evangelicals, Catholics, Mormons, Muslims and so many others?"

Barrett Duke, vice president for public policy and research with the Ethics & Religious Liberty Committee, noted that the shift in viewpoint reflects a correlation between "faith and attitudes about homosexual behavior."

"The survey challenges the church to make sure she continues to teach the faithful about the Bible's teachings on homosexual behavior," Duke told Baptist Press. "It also provides clear evidence of the importance of the church to the moral framework of the nation. We must redouble our efforts to win the lost and make disciples of the Lord Jesus Christ, who taught that not one jot or tittle would pass from the law till all is fulfilled.

"God's Word still speaks clearly to the issue of homosexual behavior -- it is sin," the Southern Baptist ethicist said. "We must make sure we share this message in a way that communicates our genuine concern for those struggling with same-sex attractions. God has a better plan for their lives. We want them to experience it."

Bob Stith, a Texas pastor who served several years as Southern Baptists' national strategist for gender issues, commented in similar fashion to Baptist Press, "The real danger here is not so much the view of homosexuality as it is the decline in the confidence of the American people in the trustworthiness of Scripture. ...

"Some have been saying for years that this issue is the watershed issue for the church in this generation, not because of homosexuality per se but as an indicator of the degree to which the American public truly believes the Bible to be the Word of God," Stith said.

"We have gone as a people from a broad and general trust in the Bible to a nation that questions whether there really is any such thing as absolute truth."

Such trends, Stith said, "have opened the door for gay apologists to cast doubt on what the Bible really says about homosexuality. Southern Baptists must do a better job of addressing these claims. Failure to do so will further undermine confidence in the Bible."

Stith also commented on "the manner in which the subject is handled in the entertainment media. It isn't just that it is one-sided. Those who hold to a scriptural view of homosexuality are consistently portrayed as being hate-filled and ignorant.

"Evangelicals must do a better job of teaching our people to hold to a clear biblical position on homosexuality while being consistently compassionate and redemptive in our approach. But we must also accept the reality that no matter how loving and compassionate we are, many in the culture will vilify us if we dare say the Bible really does speak of homosexual acts as sin. Louis Giglio is only the latest example of this."

Baptist Press

China's space activities raising U.S. satellite security concerns

(Reuters) - The United States is concerned about China's expanding ability to disrupt the most sensitive U.S. military and intelligence satellites, as Beijing pursues its expanded ambitions in space, according to multiple sources in the U.S. government and outside space experts.

A classified U.S. intelligence assessment completed late last year analyzed China's increasing activities in space and mapped out the growing vulnerability of U.S. satellites that provide secure military communications, warn about enemy missile launches and provide precise targeting coordinates, said the sources, who were not authorized to speak publicly.

"It was a very credible and sobering assessment that is now provoking a lot of activities in different quarters," said one former government official who is familiar with U.S. national security satellite programs.

The intelligence report raised red flags about Beijing's ability to disrupt satellites in higher orbits, which could put the most sensitive U.S. spacecraft at risk, according to the sources. China has already conducted several anti-satellite tests at lower orbital levels in recent years.

Given the heightened concerns, Washington is keeping a watchful eye on Chinese activities that could be used to disrupt U.S. satellites. It is also urging Beijing to avoid a repeat of its January 2007 test that created an enormous amount of "space junk," said one senior defense official.

Details of the latest Chinese moves that have raised U.S. concerns remain classified.

U.S. officials charge that China's anti-satellite activities are part of a major military modernization that has seen Beijing test two new stealth fighters; step up cyber attacks on foreign computer networks; and launch more commercial and military satellites in 2012 than the United States.

China still lags behind the United States in most military fields.

"What we're seeing is a heightened sense in the United States that China is a potential threat and that it has the technology to be a threat if it wishes to," said Jonathan McDowell, with the Harvard-Smithsonian Center for Astrophysics.

"As China becomes a space superpower, and given that it does have a significant military component to its space program, it is inevitable that the U.S. will be concerned about threats to its most valued satellite systems, whether or not China actually intends to deploy such aggressive systems," he said.


Six years ago, on January 11, 2007, China destroyed one of its own defunct weather satellites in low-earth orbit, which created over 10,000 pieces of debris that pose a threat to other spacecraft. A less-destructive test followed on January 11, 2010.

Space experts and U.S. officials say they expect China to continue testing anti-satellite technologies, although they doubt it would repeat the 2007 test, given the massive international outcry it triggered.

Gregory Kulacki, a respected researcher with the Union of Concerned Scientists, reported earlier this month on the group's website that there was "a strong possibility" of a new anti-satellite test by China within the next few weeks.

He said Chinese sources had told him in November that an announcement about an upcoming anti-satellite test had been circulated within the Chinese government, and a high-ranking U.S. defense official confirmed in December that Washington was "very concerned" about an imminent Chinese anti-satellite test.

The Chinese Defense Ministry did not respond to emailed queries by Reuters' Beijing office on the question.

The Pentagon said it was aware of reports predicting another test, but declined comment on what it called "intelligence matters."

"We monitor carefully China's military developments and urge China to exhibit greater transparency regarding its capabilities and intentions," said Lieutenant Colonel Monica Matoush.

Sources within the U.S. government and outside experts said there was no immediate evidence pointing to the preparations for the type of satellite or rocket launches used by China for past anti-satellite tests at lower orbits.

But they said Beijing could test its anti-satellite weapons in other ways that would be harder to detect, such as by jamming a satellite's signals from the ground or issuing a powerful electromagnetic pulse from one satellite to disable another.

China could also maneuver two satellites very close together at higher orbits, replicating actions it has already taken in lower orbits in August 2010 and November 2010. Such activities could be used to perform maintenance or test docking capabilities for human spaceflight, but could clearly be used for more destructive purposes as well, they said.

The United States has continued to test its own anti-satellite capabilities. In February 2008, a missile fired from a U.S. Navy cruiser in the north Pacific destroyed an ailing American satellite in orbit.

The U.S. government said the satellite's toxic fuel posed a risk upon re-entry of the earth's atmosphere. Skeptics said the test was a message to China.

Any further anti-satellite test by China would be troubling, especially if it occurred at higher altitudes, said Bruce MacDonald, a former White House official who is now a senior director at the U.S. Institute of Peace.

The United States operates its fleet of Global Positioning System (GPS) satellites in medium earth orbit about 11,000 miles above the surface of the earth, while U.S. military communications and early missile warning satellites are located in geostationary orbit 22,000 miles above the equator.

Brian Weeden, technical adviser for the nonprofit Secure World Foundation and a former Air Force space and missile expert, said a Chinese anti-satellite test at those higher orbits would put U.S. satellites at risk.

"Some critical U.S. assets in that region have been assumed for the most part to be safe from those kind of attacks," he said. "Such tests would signal that they're not."



Vice President Joe Biden on Monday told a group of sympathetic House Democrats that the White House has identified 19 executive actions President Barack Obama can take to unilaterally act on gun control, Politico reports.

Because the Obama administration understands that enacting sweeping gun control legislation through Congress would be difficult, it has placed an emphasis on the use of executive orders to get around Congress, the elected representatives of the American people, and strengthen gun regulations.

Among the executive actions Biden is believed to have recommended to Obama are tougher penalties for people who lie on background checks, elevating gun trafficking to a felony charge and ending limits that make it harder for the federal government to research gun violence. But remember, there are reportedly 19 of them that the White House will consider.

The president’s proposals are also expected to include steps for improving school safety and mental health care, as well as recommendations for addressing violence in entertainment and video games. Pro-gun rights groups, including the NRA, have long insisted that insufficient mental health care and violent images are more to blame for mass shootings than the availability of guns.

The Blaze

British Airways employee suffered discrimination at work over her Christian beliefs

A British Airways employee suffered discrimination at work over her Christian beliefs, the European Court of Human Rights has ruled.

Judges ruled Nadia Eweida's rights had been violated under Article 9 of the European Convention on Human Rights.

She took her case to the European Court of Human Rights after BA made her stop wearing her white gold cross visibly.

Judges ruled that the rights of three other Christians had not been violated by their employers.

They had brought cases against the government for not protecting their rights but ministers, who contested the claims, argued that the rights of the employees were only protected in private.

Ms Eweida, 60, a Coptic Christian from Twickenham in south-west London, told the BBC she was "jumping with joy" after the ruling, adding that it had "not been an easy ride".

British Airways said its own uniform policy was changed in 2007 to allow Miss Eweida and others to "wear symbols of faith" and that she and other employees have been working under these arrangements for the last six years.

It said Ms Eweida did not attend work for a period of time in 2006 while an internal appeal was held into her refusal to remove her cross and she remains a British Airways employee.

Following the rulings, Prime Minister David Cameron said he was "delighted" that the "principle of wearing religious symbols at work has been upheld", adding that people "shouldn't suffer discrimination due to religious beliefs".

And the Archbishop of York said Christians and those of other faiths "should be free to wear the symbols of their own religion without discrimination".

The other cases involved nurse Shirley Chaplin, 57, whose employer also stopped her wearing necklaces with a cross, Gary McFarlane, 51 - a marriage counsellor fired after saying he might object to giving sex therapy advice to gay couples - and registrar Lillian Ladele, who was disciplined after she refused to conduct same-sex civil partnership ceremonies.

The four had made individual applications to the ECHR after losing separate employment tribunals but their cases were heard together.

They argued their employers' actions went against articles nine and 14 of the European Convention on Human Rights, which protected their rights to "freedom of thought, conscience and religion" and prohibited religious discrimination.

BBC religious affairs correspondent Robert Pigott says the judgements suggested that although people are entitled to hold religious views, that right is severely limited in the workplace when it comes into conflict with the rights of other people.

Our correspondent says the judgement also hands considerable discretion to employers to set reasonable policies and then insist that employees follow them whatever their religious beliefs.

Ms Ladele was disciplined by Islington Council, in north London, after saying she did not want to conduct same-sex civil partnership ceremonies. Her lawyers said the service could have been performed by other employees who were prepared to carry them out.

The Christian Institute said it was "disappointed" by the ruling, adding that it showed Christians with traditional beliefs about marriage were "at risk of being left out in the cold".

Mr McFarlane, a Bristol relationship counsellor, worked for the Avon branch of national charity Relate but was sacked for gross misconduct in 2008 after saying on a training course he might have an objection to discussing sexual problems with gay couples.

He told BBC News that the decision taken by European judges in his case was "a regrettable judgment" for all faiths, not just Christians, and said he would discuss his next move with his lawyers.

Ms Chaplin, from Exeter, was transferred to a desk job by Royal Devon and Exeter NHS Trust Hospital for failing to remove a confirmation crucifix on a small chain, which she had worn to work for 30 years.

The BBC's Robert Pigott said the European judges had decided that agreed health and safety concerns outweighed her religious rights.

Following the rulings, Archbishop of York Dr John Sentamu released a statement in which he said: "Christians and those of other faiths should be free to wear the symbols of their own religion without discrimination.

"Christians are not obliged to wear a cross but should be free to show their love for and trust in Jesus Christ in this way if they so wish."

He said the Equality Act 2010 "encourages employers to embrace diversity - including people of faith", adding: "Whether people can wear a cross or pray with someone should not be something about which courts and tribunals have to rule."

Meanwhile, Keith Porteous-Wood, of the National Secular Society, said: "Religious people who feel elements of their job go against their conscience can always find employment that better matches their needs. That is true religious freedom."

Shami Chakrabarti, director of human rights group Liberty, said the judgment was "an excellent result for equal treatment, religious freedom and common sense".

She said British courts had "lost their way" in Ms Eweida's case and "Strasbourg has actually acted more in keeping with our traditions of tolerance."

"However the court was also right to uphold judgments in other cases that employers can expect staff not to discriminate in the discharge of duties at work," she added.


It Begins: Bundesbank To Commence Repatriating Gold From New York Fed

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formallypull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.
Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.
It would be very ironic, if the Bundesbank, which many had assumed had bent over backwards to accommodate Mario Draghi's Goldmanesque demands to allow implicit monetization of peripheral nations' debts has just "returned the favor" by launching the greatest physical gold scramble of all time.
From Handelsblatt:
Die Bundesbank hat ein neues Konzept ausgearbeitet, wo sie künftig ihre Goldreserven lagern will. Nach Informationen des Handelsblatts (Dienstausgabe) sieht dieses Konzept, das am kommenden Mittwoch bekanntgegeben werden soll, vor, den heimischen Standort aufzuwerten, in New York dafür weniger Gold zu lagern und überhaupt kein Gold mehr in Paris zu horten.

Derzeit lagert das Gold der Bundesbank ihren Angaben zufolge in New York, London, Paris und Frankfurt. In der amerikanischen Notenbank Fed lagern 45 Prozent der insgesamt 3.396 Tonnen Gold, in der Bank of England in London 13 Prozent, in der Banque de France in Paris elf Prozent und im Hauptsitz in Frankfurt 31 Prozent. Diese Verteilung soll sich nun ändern.
We present it in the original for fear of losing something in translation, but in broad English terms the above reads as follows:
The German Bundesbank is developing a new approach as to where its gold will be stored. According to exclusive information, to be fully announced on Wednesday, the bank will in the future hold less gold in the New York Fed, and no more hold in Paris (Banque de France). As a result, the distribution of German gold, of which 45% is held in New York, 13% in London, 11% in Paris and 31% in Frankfurt, is about to change.
There is no need to explain why this is huge news (for those who have not followed our series on the concerns and issue plaguing German gold can catch up hereherehere, here, and certainly here) . At least no need for us to explain. Instead we will let the Bundesbank do the explanation. The following section is the answer provided by the Bundesbank itself in late October in response to the question why it does not move the gold back to Germany:
The reasons for storing gold reserves with foreign partner central banks are historical since, at the time, gold at these trading centres was transferred to the Bundesbank. To be more specific: in October 1951 the Bank deutscher Länder, the Bundesbank’s predecessor, purchased its first gold for DM 2.5 million; that was 529 kilograms at the time. By 1956, the gold reserves had risen to DM 6.2 billion, or 1,328 tonnes; upon its foundation in 1957, the Bundesbank took over these reserves. No further gold was added until the 1970s. During that entire period, we had nothing but the best of experiences with our partners in New York, London and Paris. There was never any doubt about the security of Germany’s gold. In future, we wish to continue to keep gold at international gold trading centres so that, when push comes to shove, we can have it available as a reserve asset as soon as possible. Gold stored in your home safe is not immediately available as collateral in case you need foreign currency. Take, for instance, the key role that the US dollar plays as a reserve currency in the global financial system. The gold held with the New York Fed can, in a crisis, be pledged with the Federal Reserve Bank as collateral against US dollar-denominated liquidity. Similar pound sterling liquidity could be obtained by pledging the gold that is held with the Bank of England.
And in case the above was not clear enough, below is the speech Buba's Andreas Dobret delivered to none other than NY Fed's Bill Dudley in early November:
Please let me also comment on the bizarre public discussion we are currently facing in Germany on the safety of our gold deposits outside Germany – a discussion which is driven by irrational fears.

In this context, I wish to warn against voluntarily adding fuel to the general sense of uncertainty among the German public in times like these by conducting a “phantom debate” on the safety of our gold reserves.

The arguments raised are not really convincing. And I am glad that this is common sense for most Germans. Following the statement by the President of the Federal Court of Auditors in Germany, the discussion is now likely to come to an end – and it should do so before it causes harm to the excellent relationship between the Bundesbank and the US Fed.

Throughout these sixty years, we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the Fed [ZH may, and likely will, soon provide a few historical facts which will cast some serious doubts on this claim. Very serious doubts]. And for this, Bill, I would like to thank you personally. I am also grateful for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed’s trusted partner in future, and we will continue to take advantage of the Fed’s services by storing some of our currency reserves as gold in New York.
Incidentally, what Zero Hedge did provide after this article, was factual evidence that the Buba's very much "trusted partner" had been skimming it on physical gold deliveries on at least one occasion, in "Exclusive: Bank Of England To The Fed: "No Indication Should, Of Course, Be Given To The Bundesbank..."
So we wonder: what changed in the three months between November and now, that has caused such a dramatic about face at the Bundesbank, and that in light of all of the above, will make is explicitly very unambigous that the act of gold repatriation, assuming of course that Handelsblatt did not mischaracterize what is happening and misreport the facts, means the "excellent relationship" between the Fed and Buba, not to mention Banque de France which will shortly hold precisely zero German gold, has just collapsed.
Also, if the Bundesbank is first, who is next?
Finally, once the scramble to satisfy physical gold deliverable claims manifests itself in the market, we can't help but wonder what will happen to the price of gold: both paper and physical?
Zero Hedge

Sunspot is so large, people are starting to notice it with their naked eyes

"The weather was very cold, -20 degrees Celsius and there was a light mist that made it possible to shoot right at the Sun without any filters," says Strand. "In the foreground you can see the downpipes on my neighbor's house."

To take the picture, Strand set his Nikon D800E digital camera as follows: 510mm/f4.8, ISO 400, 1/6000 sec. Sky watchers who wish to photograph the spot should take note of those settings, but be careful. Even when the sun is dimmed, viewing it through unfiltered optics is every dangerous. One stray beam of magnified sunlight can blind you. Use the digital viewfinder to safely align the camera.

Space weather

India PM Manmohan Singh warns Pakistan on Kashmir

Indian PM Manmohan Singh has said it "cannot be business as usual" with Pakistan after deadly exchanges along the disputed Kashmir border last week.

He said the deaths of two Indian soldiers - one of whom India says was beheaded - were "unacceptable".

His remarks follow the Indian army chief's call form troops to "aggressively" respond to firing from Pakistani troops.

Both countries claim Kashmir and have fought two wars over it.

Two Pakistani soldiers were also killed last week.

The violence has plunged the neighbours into the worst crisis in relations since the Mumbai attacks of 2008, which were blamed on militants based in Pakistan. Both sides deny provoking last week's clashes.

Claimed by both countries, Kashmir has been a flashpoint for over 60 years. Exchanges in the disputed area are not uncommon but rarely result in fatalities.'Barbaric act'

The prime minister made his remarks in the capital, Delhi, to mark Army Day.

"After this barbaric act, there cannot be business as usual with Pakistan. What happened at LoC is unacceptable," he said, referring to the Line of Control, which divides Kashmir.

"I hope Pakistan realises this. I hope Pakistan will bring the perpetrators to book."

India was set to begin a landmark visa-on-arrival deal for Pakistani seniors at the Wagah crossing, but this has been put on hold.

Officials from both countries held a meeting at the border on Monday aimed at reducing tensions. Neither side have commented on the talks.

Both countries have also summoned each other's envoys to protest about the killings of the soldiers. Pakistan denies Indian accounts of what happened.

The Indian army chief, Gen Bikram Singh, on Monday accused Pakistan of planning the attacks that killed the two Indian soldiers.

He said the 8 January attack was "pre-meditated, pre-planned activity" and urged Indian troops to be "aggressive and offensive in the face of provocation and fire" from Pakistan.

The border clash has come as a major setback to ties between the two neighbours, with the prime minister saying Pakistan was living in denial, says the BBC's Sanjoy Majumder in Delhi.

In a related development, eight Pakistani hockey players who were due to take part in a tournament in India are being sent back, our correspondent adds.

India suspended a peace process with Pakistan following attacks by Pakistan-based militants in Mumbai in 2008. Negotiations resumed in February last year.

Thousands of people have been killed in Indian-administered Kashmir since an armed revolt against Indian rule erupted in 1989. There has been a ceasefire in Kashmir since late 2003.