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Mario Draghi at Davos

ECB chief says bond markets are overestimating the risk attached to many euro zone countries' sovereign debt

An interesting week in the euro zone crisis is over. Most of the important players made it to Davos so nothing definitive was being decided. As I wrote yesterday, Davos isn't a place where policy is made.

It's clear it has been a week where the center held and the sense that a corner has been turned continued to frame the week's activities. Even Greece and her creditors inability to reach final agreement on debt reduction hasn't ruffled feathers.

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Davos takes on euro zone crisis

Old arguments about how to solve the euro zone crisis are re-hashed at World Economic Forum annual meeting
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Davos: the euro zone crisis followed the leaders to the Alps (FABRICE COFFRINI/AFP/Getty Images)

Davos. The name, the place, what it stands for is a challenge to an ideal of journalism. It seems to be one of those events that become a story not because of any intrinsic news value but because a bunch of famous people get together and allow journalists to mingle among them.

There are many national leaders at the World Economic Forum's annual meeting in Davos but no treaties are signed, nor are there joint declarations of policy made. That would be news and worth reporting. There are titans of industry in Davos, but no products are launched or companies acquired. That, too, would be news etc.

It can't be news because the comments about the year to come actually shape events. I came across this article from The Washington Post a couple of years ago on Google about some famously wrong predictions made by the rulers of the planet at the World Economic Forum. It's pretty amusing. (For that matter, did anyone at Davos in 1996 or 97 predict there would be something like Google (founded in 1998) and that a search engine would upend all previously known models of information aggregation and dissemination?

Anyway, the leaders are at Davos, journalists are tweeting like fan-boys and girls about rubbing shoulders with them. 

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Scottish Independence, pt. 5: Burns night politics

Scottish Government begins consultation on independence referendum without asking Parliament's permission

Scotland's First Minister Alex Salmond chose Burns Night, the national celebration of Scotland's greatest poet, to publish a consultation paper, "Your Scotland, Your Referendum," which is the first step of the legislative process that will lead, ultimately to a vote in autumn 2014 on Scottish independence.

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Austerity bites, pt. 2

Second thoughts about austerity cuts as the cure for what ails Europe's economies
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Retired hedge fund manager George Soros at Davos today. He expressed concern that the euro zone's austerity policies would create social unrest that would engulf Europe. (VINCENZO PINTO/AFP/Getty Images)

Austerity cuts seems to be the theme of my blog posts today. Heavily indebted European governments need to "deleverage," as the current buzz word has it, but how far and, crucially, how fast?

In Britain, despite warnings from the opposition Labour Party about the pace and size of cuts doing more harm than good, Britain's Conservative-led coalition government has reduced the size of government spending with abandon. Predictably Prime Minister David Cameron's austerity program has landed the country on the door-step of a double-dip recession. The economy contracted in the last quarter of 2011 by 0.2 percent.

At Prime Minister's Question Time today, Cameron contemptuously swatted away criticism from Labour leader Ed Miliband. But that is party politics. The IMF's chief economist Olivier Blanchard is no left-wing politician and he told the BBC today it would be wise for Cameron and his Chancellor of the Exchequer George Osborne to slow down the pace of the cuts.

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Conservatism British style

Conservatives in South Carolina and Conservatives in Britain, what do they have in common?
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British Prime Minister David Cameron trying to put his finger on what's wrong with capitalism at keynote speech in London yesterday (MATTHEW LLOYD/AFP/Getty Images)

Yesterday, British Prime Minister David Cameron, set out his vision of free markets and capitalism. Since Cameron is the leader of the Conservative Party you might think it was pretty obvious what he thought.

But as I blogged yesterday, he spoke of the crisis of capitalism and was even - critical of the free market. My guess is the average American who has been following the Republican party debates from Iowa to South Carolina would quickly reach the conclusion that Conservative means something very different over here. Cameron did not speak of capitalism and the free market as a gift from God, nor conflate sexual morality with good business practice.

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"Crisis of Capitalism?" Europe: daily economic round-up

Cameron speaks, Stock markets up, bonds sell

The "crisis of capitalism" is a phrase more associated with Marxists than Conservative politicians like British Prime Minister David Cameron, but with the public still dismayed by what it sees as the excesses of the financial services industry - particularly bankers' pay and bonuses - and with bonus season about to get underway, Cameron needed to address the issue.

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Phone-hacking scandal: payday

18 Phone-hacking victims receive more than a million dollars combined from Rupert Murdoch's News International
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Phone-hacking victim Jude Law smiling at a London premiere last month. He is probably smiling again today after receiving damages in excess of $200,000 for having his phone-hacked from Rupert Murdoch's News International (Tim Whitby/AFP/Getty Images)

UPDATE:  The total number of plaintiffs who settled with News International is now 37. Only 15 have had their names made public including Jude Law.

Phone-hacking victim Jude Law received the largest pay-out: £130,000 ($201,264). Law's attorney  read a statement to the court on the actor's behalf, "no aspect of my private life was safe from intrusion by News Group newspapers, including the lives of my children and the people who work for me."

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IMF needs more money. Europe daily economic round-up

Cash calls, rhetoric and continued stable markets.
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British Prime Minister David Cameron and his Italian counterpart Mario Monti at Downing Street today (DANIEL SORABJI/Getty Images)

The big European news of the day came from IMF headquarters in Washington. The IMF announced it had begun discussions with members about raising an additional $500 billion for the fund. The IMF believes it needs $1 trillion on hand, according to its statement.

"Based on staff's estimate of global potential financing needs of about $1 trillion in the coming years, the Fund would aim to raise up to $500 billion in additional lending resources. This total includes the recent European commitment of about $200 billion in increased Fund resources."

This led to the quote of the day (courtesy Daily Telegraph) from the IMF's Olivier Blanchard:

"Post the 2008-09 crisis, the world economy is pregnant with multiple equilibria—self-fulfilling outcomes of pessimism or optimism, with major macroeconomic implications."

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Britain: Unemployment reaches 17 year high of 8.4 percent

2.68 million people are out of work, a rise of 118,000 in the three months to November.
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A trip to the job center is becoming almost as common as a trip to the pub for many in Britain. Unemployment is now at a 17 year high. (FACUNDO ARRIZABALAGA/AFP/Getty Images)

In some ways, this is the least surprising economic news of the week. Economists had expected the unemployment rate to reach 8.3 percent, a slight tick upwards isn't shocking. Not even the record youth unemployment or the record number of people working part-time because they cannot find full-time jobs seems unusual.

Nor is it surprising to critics of the Conservative-led coalition's austerity program. From the time it was announced back in October 2010 unemployment was predicted to jump.

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Queen Elizabeth II may still get a yacht

The Queen's supporters plan to raise private funds to give Her Majesty a fitting present to celebrate her 60th anniversary on the throne.
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Queen Elizabeth's old yacht, Britannia, in dry dock last week. The ship, which left Royal service in 1997, is now a tourist attraction in Scotland. The Queen's supporters want her to have a new one. (Jeff J Mitchell/AFP/Getty Images)

When I first blogged about this yesterday I didn't expect I would be blogging about it again. But the Queen is a special case and her Diamond Jubilee is a special occasion.

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