Rostam Ghasemi, head of the Khatam al-Anbia military and industrial base, was one of four ministers nominated by president Mahmoud Ahmadinejad to join his cabinet last week and approved by Iran's conservative-dominated parliament. Ghasemi is currently subject to US, EU and Australian sanctions and his assets have been blacklisted by US Treasury and western powers. He took 216 votes from the 246 deputies present in the 290-seat parliament.

Iranian state media interpreted the vote as a reaction by Iran's parliament to international sanctions against the country, especially those which have targeted the revolutionary guards and the country's nuclear programme. "The clever and decisive vote of Iranian MPs for engineer Ghasemi to become the oil minister is a meaningful and crucial response to the attacks against the guards from the west's media empire," said Ramedan Sharif, the head of the revolutionary guards public relations' unit, in quotes carried by Iran's semi-official Fars news agency.

The appointment of Ghasemi as Iran's oil minister automatically makes him the head of Opec which has a crucial role in determining oil prices. As its second-largest crude oil exporter, Iran took the presidency of Opec after 36 years last October and Ghasemi's position will give the revolutionary guards a unique opportunity to influence an international organisation.

Without action, this new crisis of state competence could soon become just as damaging as its recent financial predecessor. This week's US debt deal, along with the prospect of debate on fiscal solutions in the run-up to the 2012 elections, provides some room for optimism. But America's fiscal problems have deep roots. The recession of 2007-09 stemmed from the unprecedented bust in the housing market, driven by reduced lending standards and propelled by congressional pressures on private lenders and the reckless expansions of Fannie Mae and Freddie Mac.

In the aftermath of the debt ceiling agreement there will be calls for further stimulus for America's economy. This would be a grave mistake. In the financial turmoil of 2008, bail-outs by the US and other governments were unfortunate, but necessary. However, the subsequent $800 billion American stimulus package was largely a waste of money that sharply enlarged the fiscal hole now facing our economy.

The raucous debt-ceiling debate represents a good start in forging a serious long-term fiscal plan. Substantial additional progress will be needed, sadly much of which will probably have to await the outcome of the next US election. Yet progress must be made - or the impending crises of governments, signalled by possible downgrades of US debt, will make the 2008-09 recession look mild.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country's spending commitments reached a breaking point and it threatened to default on its debt. The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit - a slightly tighter definition - was $14.53 trillion as of the end of Tuesday, rising from the previous official cap of $14.29 trillion a day earlier. Treasury had used extraordinary measures to hold under the $14.29 trillion cap since reaching it on May 16, while politicians battled over it and over addressing the country's bloating deficit.

The official limit was hiked $400 billion on Tuesday and will be increased in stages over the next 18 months. The last time US debt topped the size of its annual economy was in 1947 just after World War II. By 1981 it had fallen to 32.5 percent. Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating. Moody's said Tuesday that the government needed to stabilize the ratio at 73 percent by 2015 "to ensure that the long-run fiscal trajectory remains compatible with a AAA rating."

Last week's events on Capitol Hill in the US were very damaging. After we abandoned the gold standard, the dollar is now the globe's reserve currency - and US politicians decided to play a game of chicken with the debt ceiling. Their behaviour verged on the shameful.

The fact that an 11th hour deal was done and the ceiling was raised is a relief, but the process shattered trust and confidence in US politicians.

There is also an uncanny correlation between the gold price and the US debt ceiling. Over the past 30 years, the gold price has tracked the ceiling whenever it has been raised.

The US economy is also flat lining, with slower growth now expected - confidence in the country evaporated overnight and a frantic hour of trading on Wall Street sent the Dow Jones Industrial Average on its worst run since the financial crisis, falling for the eighth successive day.

This gloom has also raised the prospect of more money printing by the Federal Reserve. QE3 is not a certainty, but it is now more likely than it was even last week. This will further debase the value of the dollar and will cause even more investors to flee to the safe-haven currency of gold.

Prime Minister Naoto Kan has recently said the country must shift towards alternative energy sources. Meanwhile Japan is facing shortages of electricity because two-thirds of nuclear reactors are offline. Local communities are refusing to give permission for them to be switched back on after routine maintenance.

Our correspondent says confidence has been further shaken by revelations that a power company had instructed its employees to pose as ordinary members of the public to send emails backing restarts to a television debate on nuclear safety. The sackings came a day after Japan's parliament approved a plan to set up a new fund to help the Tokyo Electric Power Company (Tepco) compensate people affected by the crisis.

About 80,000 people living within 20km (12 miles) of the Fukushima plant have been forced to abandon their homes. Farmers and others business owners further afield have been ruined. As a result, claims are expected to run into billions of dollars. At the Fukushima plant itself, workers are still trying to bring the reactors under control by January at the latest. Earlier this week, Tepco said hotspots had been discovered on an exhaust pipe from the buildings, showing the highest levels of radiation recorded since the crisis began.

It found that Italy will not avoid default unless it sees an unlikely big jump in economic growth. However, it said, "there is a real chance that Spain may avoid default". Even though Italy has managed to run tight budgets, and has vowed to eliminate its deficit by 2014, the economy needs a significant boost in growth. But its economy grew by just 0.1% in the first quarter of 2011 and further growth is expected to remain sluggish.

On Wednesday, Italian Prime Minister Silvio Berlusconi addressed parliament, saying the economy was "strong" and the nation's banks "solvent". But many economists believe that the eurozone's third largest economy risks being engulfed in the debt crisis. In a report published on Thursday, the CEBR calculated that Italy's debt would rise from 128% of annual output to 150% by 2017 if bond yields stay above the current 6% and growth remains stagnant.

The conditions in Spain are better because its debt is much lower. Even under the "bad" scenario, Madrid's debt ratio would climb to no higher than 75% of national output. "Fingers crossed but there is a real chance that Spain may avoid default and debt restructuring, unless it gets dragged down by contagion," Mr McWilliams said.

Marvel editor-in-chief Axel Alonso said the new web-slinger "speaks to our rich cultural heritage" in the US. Parker died in Ultimate Spider-Man Issue 160 in June during a fight with his bitter enemy, Green Goblin. Like Parker, Morales is a geeky, working-class teenager from the boroughs of New York City. Morales lives with his black and Latino parents in ethnically diverse Brooklyn, while Parker was white and raised by his aunt and uncle in a mainly white neighbourhood in Queens.

"Going into this we knew we wanted to make a statement about the 21st century," said Alonso. The Marvel editor-in-chief, whose mother was from England and father from Mexico, said he cried when Barack Obama was elected president "partly because he was African-American but largely because of the fact that he was mixed race".

Alonso added that when Morales "peels off his mask now, he's going to have a very different look and he's going to resonate emotionally with all sorts of new readers". He told AFP news agency Spidey writer Brian Michael Bendis is Jewish and has two adopted children from Africa. "So I know for him it was definitely personal," Alonso said.

The 83-year-old is being tried with his sons, who also deny charges against them, ex-Interior Minister Habib al-Adly and six other former officials. Mr Mubarak was forced from office by mass demonstrations in February. The charge of ordering the killing of protesters carries the death penalty.

John Simpson, BBC World Affairs Editor, writes from Cairo:-

"The way the courtroom was arranged, with a heavily-barred dock set in a distant corner of the huge room, meant that scarcely anyone could really see Hosni Mubarak or the co-accused, including his two sons. But a well-placed television camera in the court did manage to pick him up and everyone could see the extraordinary pictures. Mr Mubarak was not standing up but lying on a bed, his eyes as sharp and shrewd as ever, making occasional gestures and thoroughly aware of what was going on.

At the sight of this, there was first silence in the packed courtroom, and then an audible intake of breath. I had the impression that it came not just from the journalists but from the rows of lawyers, and perhaps from the three judges themselves. For the first time ever an Arab country had, of its own volition - not after a foreign invasion as in Iraq - put its former ruler on trial."

The offer was made by senior Chinese military leaders to visiting Pakistan Army's Chief of General Staff, Lieutenant General Waheed Arshad, the Urdu daily Jang reported on Saturday, quoting defence sources. The J-10B fighters are equipped with the latest weapons and Pakistan will be the first country, after China, to have these advanced aircraft, it said.

"It is going to be a long week," said Jim Maguire Jr, a NYSE floor trader at EH Smith Jacobs. "The bid is not here in the market." The selloff accelerated into the close as volume jumped well above average. The fall was broad-based, with four stocks falling for every one rising on the New York Stock Exchange. The index also broke through its 2-1/2 year uptrend line from its bear market low in March 2009. Thursday was the index's worst day in a year.

Investors seemed to find little to cheer after the US Senate agreed to a deal to raise the debt ceiling because of the possibility it will not stave off a downgrade of the US government's triple-A rating. "Investors have made the shift from Washington to what I'm calling economic realities," said Fred Dickson, chief market strategist at The Davidson Companies in Lake Oswego, Oregon.

On Monday a survey on US factory activity suggested manufacturing stalled in July. The survey followed similarly weak reports from Asia and Europe and came after US growth calculations were sharply cut for the first half of the year. The government's key monthly jobs report for July is due on Friday and will be closely watched by investors.

European debt problems returned to the forefront after French bank BNP Paribas SA (BNPP.PA) took a $768.3 million write-down linked to Greece's debt woes.

"The way Europe is operating right now, it's what I called recently 'cognitive dissonance,'" Minerd said, or "basically doing the same thing thinking they're going to get a different outcome. They keep throwing more and more liquidity at it thinking it's going to get better and it's not," he added. Europe fails to recognize that it has a "structural problem, not a liquidity problem."

People will "flee the euro" unless they find a way to bifurcate the euro in some way where strong countries are in the euro only and the weak countries are out, Minerd explained, adding, "To be honest with you, I don't see the mechanism to do that."

The center-left Suddeutsche Zeitung writes:

"No one can forget the Civil War atmosphere in which this debt fight has taken place. It weighs on America's international reputation. From the point of view of financial markets, the dysfunctional nature of Washington is a risk factor that must be calculated for in the future. Never before in times of peace have the budgets of industrialized countries been so debt-ridden. That translates into a major weakening of the parts of the world that are still called the 'West.'"

"The countries that until recently had controlled the destiny of the world, now largely find themselves on an unsustainable financial path. The grotesque behavior in Washington over the past weeks have made that abundantly clear. But the fact that the European debt crisis has noticeably not been solved yet (also) costs Europe influence in the world."

The center-right Frankfurter Allgemeine Zeitung writes:

"Even though many liberal Democrats and their base perceive it to be true, the charge that President Obama capitulated to the right wing of the Republican party is silly. It is this war-like rhetoric that has so poisoned American politics. What should the president, who also has to think of his own re-election, and the Democratic leaders in Congress, do when the Republicans collectively turn a deaf ear to the issue of tax increases and are resolute in their opposition?"

"Should they accept partial insolvency of the United States and risk great damages to their own and the world's economies? That would have been irresponsible and would have been equal to the stubborn refusal to compromise exhibited by part of the Republican Party - for whom the agreed-upon cuts don't go far enough, and who therefore broke with the leadership of their own party. It speaks volumes that among them is a Republican presidential hopeful."

The outlook for the US grade is now negative, Moody's said in a statement yesterday after President Barack Obama signed into law a plan to lift the nation's borrowing limit and cut spending following months of wrangling between Democratic leaders and Republican lawmakers.

The compromise "is a positive step toward reducing the future path of the deficit and the debt levels," Steven Hess, senior credit officer at Moody's in New York, said in a telephone interview yesterday. "We do think more needs to be done to ensure a reduction in the debt to GDP ratio, for example, going forward."

JPMorgan Chase & Co estimated that a downgrade would raise US borrowing costs by $100 billion a year, while Obama said it could hurt the broader economy by increasing consumer borrowing costs tied to Treasury rates. The ratio of general government debt, including state and local governments, to gross domestic product is projected to climb to 100 percent in 2012, the most of any AAA-ranked country, Fitch said in April. "A downgrade is a sign that Congress is failing to address a real fiscal issue," Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said in an interview before the announcements.

China's central bank will "closely" monitor US efforts to tackle its debt, Governor Zhou Xiaochuan said in a statement today, reaffirming that his nation will diversify its foreign exchange reserves. China's Dagong Global Credit Rating Co cut its credit rating for the US to A from A+ with a negative outlook, it said in an emailed statement today.

It raises the debt limit by up to $2.4 trillion (1.5 trillion pounds) from $14.3 trillion, and makes savings of at least $2.1 trillion in 10 years. But the bill's passage failed to lift financial markets. On Wall Street stocks ended Tuesday down by more than 2%, amid poor consumer spending data for June. Japan's Nikkei index followed suit, finishing Wednesday morning down by about the same amount.

Moody's rating agency reacted to the bill by placing Washington's AAA credit score under a "negative outlook". Chinese credit agency Dagong downgraded its rating of the US from A+ to A, Xinhua news agency reported. The president said more action was needed, saying it was impossible for the US to "close the deficit with just spending cuts". He urged Congress to now look to boost the economy through measures to create jobs and increase consumer confidence. "We can't balance the budget on the backs of the very people who have borne the biggest brunt of this recession," President Obama said, reprising one of his key themes of recent weeks.

The compromise package deeply angered both right-wing Republicans and left-wing Democrats. Liberals have been unhappy that the bill relies on spending cuts only and does not include tax rises for the wealthy, although Mr Obama could still let Bush-era tax cuts for the top brackets expire in January 2013. House Republicans were displeased that the bill did not include more savings.

In a key point for President Obama, the bill raises the debt ceiling into 2013 - meaning he will not face another congressional showdown on spending in the middle of his re-election campaign next year. The deal will enact more than $900 billion in cuts over the next 10 years. It will also establish a 12-member, bipartisan House-Senate committee charged with producing up to $1.5 trillion of additional deficit cuts over a decade. Analysts have said the cuts will probably come from programmes like federal retirement benefits, farm subsidies, Medicare and Medicaid.

Friedrich August Hayek - The economy is "like a drunk throwing up the morning after the night before" Unlike Keynes, Hayek believed that genuine recovery from a post-boom crash called not just for adequate spending, but for a return to sustainable production - production purged of boom-era distortions caused by easy money. Hayek was dismissed as someone who wanted to "liquidate labour, liquidate stocks, liquidate the farmers," and so on.

But an unsustainable boom is one after which some things really do need liquidating. The straightforward recipe for the revival of healthy investment following the 2008 crisis was to liquidate. Liquidate Bear Stearns! Liquidate Fannie Mae and Freddie Mac! Liquidate, in short, the whole sub-prime bubble-blowing apparatus that was nurtured by easy monetary policy.

That would have meant letting insolvent banks that lent or invested unwisely go bust. But instead our governments chose to keep bad banks going and that is why quantitative easing has proven a failure. Quantitative easing failed because almost all the new money the government created has gone to shore up the balance sheets of irresponsible bankers. The global Great Depression was the backdrop against which Hayek formulated many of his theories - especially those which were opposed to Keynes. After the British depression of the 1920s, Hayek promoted the idea that private investment, rather than government spending, would promote sustainable growth.

Now those banks sit on piles of idle cash while other businesses starve or cannot get started for want of credit. The economy is like a drunk throwing up the morning after the night before. It is disgorging itself - or trying to disgorge itself - of bad investments it was tempted to undertake largely because of easy money.

Giving it still more money will not prevent the inevitable suffering. It might mask or delay it somewhat, but only at the cost of more suffering later. This is not the sort of advice that governments welcome. THEY WANT A PAINLESS, EASY CURE LIKE THE ONE KEYNESIANS OFFER. But, as Hayekians warned again and again, there is no painless recovery from an unsustainable boom. The only way to have no pain is to avoid the boom itself.

Full article - http://www.bbc.co.uk/news/business-14366054?print=true