Prices rise as European Central Bank battles solvency crises

William Ickes

Agence France Presse

FRANKFURT, Germany: Inflation is on the rise as the European Central Bank tries to deal with diverging euro zone economic trends and China positions itself as a potential friend for indebted governments.

The E.C.B. has been battling solvency crises in peripheral euro zone countries and supplying commercial banks with cash to ensure lending to the 17-nation economy but must now again consider its primary mandate: price stability.

Euro zone inflation was expected to hit 2.2 percent in December, the first time in two years that it will have breached the central bank’s target of just below 2 percent.

Climbing energy and food prices indicate inflation can no longer be considered a back-burner issue, complicating the E.C.B.’s task as it works to help banks strengthen their reserves and capitals to solidify their finances.

If confirmed, the latest reading would oblige the E.C.B.’s president Jean-Claude Trichet to take another look at what he says is the only needle on his compass.

“The E.C.B. faces the tough task of balancing a raft of bad news from the euro zone’s periphery with the more positive developments elsewhere and the fact that inflation has risen above target,” said Ben May at Capital Economics.

He and other economists nonetheless expected the inflation increase to be short-lived as it stemmed in large part from a spike in energy and food prices.

And there was good news for central bank policymakers as well since euro zone economic sentiment and business activity are picking up, the economies of heavyweights France and Germany are growing, and China says that it is here to help.

Vice Premier Li Keqiang visited Spain and Germany last week, and Spanish daily El Pais quoted government sources as saying that Beijing is willing to buy about 6 billion euros ($7.8 million) worth of Spanish public debt.

Goldman Sachs chief European economist Erik Nielsen was doubtful however that China or other sovereign funds would provide rescue financing to euro zone countries.

“Highly unlikely,” he exclaimed. “The political cost – implicit or explicit – would be too big for core Europe to accept the arrival in the euro zone of financial rescuers from China, the Middle East or Russia.”

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Experts Call On UN To Prepare For Extraterrestrials

The United Nations (UN) should prepare a course of action, just in case the Earth should ever be contacted by extraterrestrials, scientists say in a new, extraterrestrial focused edition of the journal Philosophical Transactions of the Royal Society A.

The special issue, according to Guardian Science Correspondent Alok Jha, focuses on "all aspects of the search for extraterrestrial life, from astronomy and biology to the political and religious fallout that would result from alien contact."

The issue is currently available online and is dated February 13, 2011.

In one article, Professor John Zarnecki of the Open University and Dr Martin Dominik of the University of St. Andrews say that "a lack of co-ordination can be avoided by creating an overarching framework in a truly global effort governed by an international politically legitimated body." The UN's Committee on the Peaceful Uses of Outer Space (COPUOS) is ready made for the task, they argue.

According to the organization's official website, COPUOS was established by the UN General Assembly in 1959 in order to "review the scope of international cooperation in peaceful uses of outer space, to devise programs in this field to be undertaken under United Nations auspices, to encourage continued research and the dissemination of information on outer space matters, and to study legal problems arising from the exploration of outer space."

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Gerald Celente's Financial Forecast for 2011

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You're insane if you don't own gold, investors told

Not owning gold during the current financial turmoil is "a form of insanity", according to an investment analyst at a leading City firm.

By Richard Evans

Robin Griffiths, a technical strategist at Cazenove Capital, told CNBC: "I think not owning gold is a form of insanity. It may even show unhealthy masochistic tendencies, which might need medical attention."

He added that the dollar was heading for "oblivion".

Mr Griffiths predicted that gold's 10-year bull run would continue and even intensify. "Although it's been a top performer for each of the last 10 years, it's still in a linear trend," he said. "Eventually it will go exponential and make more in the last little bit than the whole of the 10-year trend."

He said investors should regard any short-term falls in the gold price as a buying opportunity, adding that gold was still not an "over-owned trade".

His comments come against the background of the US Federal Reserve's huge monetary stimulus from quantitative easing, which many believe will result in inflation and a fall in the value of the dollar.

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Iran Vows to Boost Missile Arsenal

Iran's parliament speaker, Ali Larijani, says his country plans to further boost its missile program.

He said Tuesday that Iran does not hide its weapons intentions to defend itself against "possible aggressions" from Israel and the West. His comments confirm Western analysts' views that Iran has developed short- and mid-range missiles capable of striking Israel and possibly parts of Europe.

Larijani's comments come as Iran's Defense Ministry says it has armed its navy with new coastal cruise missile systems.

Iranian Defense Minister Brigadier General Ahmad Vahidi said at a ceremony Monday that the new missile systems will help safeguard the country's naval borders.

He said the systems include missile launch pads, target detection and radar to guide the missiles. The range of the new missiles was not mentioned, although Iran has been testing missiles with increasingly longer reaches.

World powers are locked in an eight-year dispute with Iran over its nuclear energy program. Some Western officials suspect Iran's development of more sophisticated missiles may be part of efforts to develop a nuclear weapon. 

Iran says its nuclear aims are peaceful. hostgator coupon 2011

S.Korea, Japan Seek 1st-Ever Military Pact

Japanese Defense Minister Toshimi Kitazawa will visit Seoul next week for talks with his South Korean counterpart Kim Kwan-jin over agreements on mutual military support and the sharing of military secrets. 

Seoul and Tokyo reportedly plan to sign the agreements this year. They would mark South Korea's first-ever military pacts with the former colonial power following several memorandums of understanding in the past.

The Korean Navy and Japan's Self-Defense Forces conduct a joint search and rescue drill in the sea between the two countries in June 2007.

Military experts believe the aim is to deal with an emergency on the Korean Peninsula including the collapse of North Korea, but the Defense Ministry denies the plans.

Responding to a Japanese media report, a South Korean Foreign Ministry official said, "We have not considered or discussed the new declaration with Japan." The Yomiuri Shimbun reported the two countries are preparing a joint declaration to be signed when President Lee Myung-bak visits Tokyo in the first half of this year.

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When will America Collapse?

From February 2010


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