As reported by the Ethiopian government, last week, during Niebel's visit to Addis Ababa, Prime Minister Meles Zenawi made reference to the development of the situation in Somalia, which, in his opinion, calls for "serious initiatives". Niebel then invited him to attend the Munich Security Conference. Since some time, the Ethiopian government has been seeking to play itself up as the West's stabilizing power at the Horn of Africa, which is why it is being groomed by Berlin.

Human rights organizations' grave accusations against Addis Ababa have dissipated without effect. The most recent accusations are about the leasing of gigantic plots of Ethiopian land to foreign - including German - agro-businesses for the low-priced cultivation of agricultural export goods, while Ethiopians are starving. At his meeting with the Ethiopian Prime Minister, German Development Minister Niebel called for legal safeguards favorable to German investors, to induce more profitable German activities in this East African country.

The discussion of possible new operations against Somalia is taking place at a time when Berlin is worrying about maritime traffic off the Somali coast, not just because of pirates, who, in spite of the multi-national naval presence in those waters, are still occasionally successful in hijacking vessels. German naval experts are pointing to the fact that India and China are strengthening the presence of their fleets in the Indian Ocean, which, perspectively, would include the area off the coast of Somalia and the entry to the Red Sea. In addition, the Yemeni government is losing control over a portion of its territory to anti-Western forces.

Before arriving in Addis Ababa last week, Development Minister Niebel visited Yemen to initiate new stabilization measures. Niebel warned that, if the situation in the country gets out of hand, both countries at the entrance to the Red Sea - Somalia and Yemen - would no longer be accessable. "That is one of the reasons for our engagement and our aid in stabilization." The Red Sea is the transit route for a large portion of German commerce with Asia, which is constantly growing in significance, particularly thanks to the booming economy of the People's Republic of China.

It didn't: on balance they still preferred to spend Germany's money rather than earn their own. Now Angela Merkel has made it obvious she is fed of trying to get the rest of the continent out of bed in the morning. But the merest hint that she might stop paying the bills has spooked the financial markets. That is the fundamental flaw at the heart of the euro which has fuelled the wave of speculation against it in recent days. The markets do not believe you can have a lasting monetary union without a political union which allows you to make such payments.

If the decision were to be taken by economists, the eurozone would probably break up - or contract into an inner core of honorary Germans alongside the genuine article. But the euro is nothing if not political in origin and purpose: it was born of a desire by the leaders of Germany and France to weld their countries together so they would no longer fight but could create a bloc powerful enough to stand up to the US. That desire is as strong as ever.

Would it matter if Merkel lost her battle with the markets and the euro disappeared? Doomsters in the City say it would be worse than the collapse of Lehman Brothers because the break-up would be a prelude to wholesale devaluation by the weaker governments. These could then no longer afford to keep up the payments on their euro-denominated debt with their relaunched but devalued drachma, pesetas or escudos. There would be wholesale default. It would cause chaos.

But it is the kind of chaos the world has experienced before, as in 1982 when Mexico, Brazil, Argentina and Zaire all defaulted within weeks of each other. It hurt the banks, but it was a far more orderly meltdown than the collapse of Lehmans: everyone knew where the debt was and who to avoid. And in more recent times, when Yugoslavia, Czechoslovakia and the Soviet Union broke up, the collapse of their single currencies was the least of their worries. Did anyone even notice?

What everyone needs to grasp is that when debt is the problem, inflation can be the least painful solution, and when crunching economic readjustment is necessary, inflation can oil the moving parts to make the transition smoother and less painful. Economists have known this for years - at least since Keynes in the 1930s - but, like so much else, it has been forgotten in recent times.

Tax revenues rise as people move into higher income bands, business can scale back wage costs by pegging pay increases to less than the inflation level, and these measures reduce demand without the additional pain of unemployment. And all the time the real value of the debt burden is eroded.

Indeed, one reason this global debt problem is proving harder to resolve than the others which have happened down the centuries is that this time inflation in most parts of the word is so low. Indeed, it is the absence of inflation in Japan for almost 20 years that has saddled the country with a debt burden of almost 200% of GDP, and no chance of lightening it.

Inflation running at 4% reduces the overall debt burden by almost 25% in five years and virtually halves it in nine years. Obviously it is not a free lunch. Inflation rewards the feckless and indebted but PUNISHES PRUDENT SAVERS AND THOSE ON FIXED INCOME. It can also get out of hand and rise to a point where its evils more than cancel out its beneficial effects. But not provided it is held at modest levels.

As the economists Franco Modigliani and Robert Solow suggested 30 years ago, society as a whole probably functions better and is happier with 5% inflation and 5% unemployment than with 1% inflation and 9% unemployment.

The decision came from Judge Lawrence Zatkoff, who changed his perspective on the issue and said just last week that he would dismiss a constitutional challenge brought by Kevin Murray against the US government's bailout of AIG, the insurance giant. That company used more than "$100 million in federal tax money to support Islamic religious indoctrination through the funding and promotion of Shariah-compliant financing. ...SCF is financing that follows the dictates of Islamic law," said officials at the Thomas More Law Center.

TMLC is representing Murray in his challenge to the use of federal tax money to promote Islam in the United States. And its chief, Richard Thompson, warned of the precedent. "Judge Zatkoff's ruling allows for oil-rich Muslim countries to plant the flag of Islam on American soil," he said. "His ruling ignored the uncontested opinions of several Shariah experts and AIG's own website, which trumpeted Shariah-compliant financing as promoting the law of the prophet Mohammed and as an ethical product and a new way of life."

BP's forecast shows that over the next 20 years OPEC will become as powerful as it was in 1970s - the decade when the cartel presided over a series of oil shocks and shortages. The OPEC nations' share of global production is likely to rise from 40 per cent to 46 per cent over the period covered. In fact, 75 per cent of all growth in oil reserves over the next two decades is expected to come from OPEC nations, which include Kuwait, Iran, Angola, Libya, Saudi Arabia, Iraq and Nigeria.

On Wednesday, Bob Dudley, BP's chief executive, was upfront about the fact that oil majors from BP and Royal Dutch Shell to Chevron and ExxonMobil will have to change their model. He advocates striking new deals with state-backed oil companies as the best way of taking advantage of the shifting balance of power.

"We welcome China's rise," Mr Obama said at a press conference at the White House with Chinese President Hu Jintao. "I absolutely believe that China's peaceful rise is good for the world, and it's good for America." He added, "We just want to make sure that that rise occurs in a way that reinforces international norms and international rules, and enhances security and peace, as opposed to it being a source of conflict either in the region or around the world."

The president also pointed out that China's rise gives the US an opportunity to boost exports. "We want to sell you all kinds of stuff," Mr Obama said to laughter. "We want to sell you planes, we want to sell you cars, we want to sell you software. And as President Hu and his government refocuses the economy on expanding domestic demand, that offers opportunities for US businesses, which ultimately translates into US jobs."

Mr Obama noted that the United States economy is still three times larger than China's, despite the US having one-quarter of China's population. While China has a long way to go to catch up the US, he said, its growth means increased trading opportunities between the two nations.

"How does it feel to lead a country away from democracy and toward a dictatorship?" asked Austrian Socialist Joerg Leichtfried, making the kind of remark Orban called "a slap in the face of the Hungarian people." It was a raucous and rather unpromising start to the eastern European nation's six-month EU presidency. Coming in for particular criticism were Hungary's new media law, which was criticized as stifling free expression, and Orban himself, who was accused of trying to undermine democratic ideals in a European Union nation.

"This debate in the plenary was almost like holding it on Mars," Orban said after a caustic confrontation in parliament centering on the media law. At the start of Orban's speech to kick off the six-month presidency, some EU legislators covered their mouths with duct tape and held banners reading "Censored." In a debate marked by raised voices and finger-pointing, Socialist lawmakers demanded that Orban immediately withdraw the media law, while the Greens questioned his democratic credentials.

The leaders of Iceland, Norway, Latvia, Sweden, Finland, Denmark, Lithuania and Estonia are at the London summit. Mr Cameron said it would boost trade with the countries, currently worth almost 54 billion pounds a year. The government denied the summit is a gathering of EU-wary nations looking for alternative paths as some critics have suggested.

BBC diplomatic correspondent James Robbins said Mr Cameron's mantra last week had been "Look East", when Chinese vice-premier Li Keqiang was visiting the UK, but now it was "Look North". "David Cameron says the summit is about opening up the flow of ideas, of trade and investment, particularly in green technology, as well as social policy," our correspondent says.

"But there's a hard political edge as well. Only two of today's participants use the euro: two others aren't even members of the European Union: some see this as the 'Cold Europe' Club of sceptical nations."

Last time the big players fled the mortgage market and everything that depended on it, as well as the US Dollar; today they are fleeing all financial stocks, Treasury bonds and other public debts. Therefore, we have to wait for a time between Spring and Autumn 2011 for the explosion of the quadruple bubble of Treasury bonds, public debt, bank balance sheets and real estate (American, Chinese, British, Spanish) and commercial, all taking place against a backdrop of a heightened currency war.

The inflation induced by US, British and Japanese Quantitative Easing and similar stimulus measures of the Europeans and Chinese will be one of the destabilizing factors in 2011... What is now clear with respect to what is happening in Tunisia, is that this global context, especially the rise in food and energy prices, now leads on to radical social and political shocks. The other reality that the Tunisian case reveals is the impotence of the French, Italian or American "godfathers" to prevent the collapse of a "friendly regime".

History is usually a "good girl". She often gives a warning shot before sweeping away the past. This time, it gave the warning shot in 2008. We estimate that in 2011, it will do the sweeping. Only players who have undertaken, even painstakingly, even partially, to adapt to the new conditions generated by the crisis will be able to hang on; for the others, chaos is at the end of the road.

Chancellor Angela Merkel has categorically stated that Germany will not abandon the euro and reintroduce the deutsche mark. Her comments are intended to quell speculation that Germany's love of the common currency is flagging in the wake of expensive bailouts of troubled euro-zone members Greece and Ireland.

In an interview to be published in Germany's weekly Stern magazine on Thursday, Merkel also rejected the idea of splitting the euro zone into north and south zones, reaffirming Germany's commitment to an economically united Europe. "There can be no return to the deutsche mark," she said, adding that Germany would "continue to do everything necessary to guarantee a stable euro." She told the magazine that, while she took citizens' concerns very seriously, she was convinced that "we in Germany can handle everything."

She expressed strong support for the common European currency and dismissed talk of splitting the euro zone into economically stronger northern countries and weaker southern countries. "Not on my watch. On behalf of Germany I say a clear 'no'." She explained her adamant opposition to a north-south division, saying that the situation within Europe "is not so black-and-white anyway."

"These economies are clearly overheating and governments are putting measures in place to slow them down to fight inflationary pressure. More than anything else, food inflation is a problem," Gijsels told CNBC.com. "In countries where 70 percent to 80 percent and sometimes more of a family's budget goes to food, explosive price rises risk to destabilize these societies. Remember the old saying: 'hunger starves civilizations,'" he added.

"We believe that some of these governments will be quite aggressive in their inflation fight. And we do not even want to think about the consequences if this year were to have a disappointing monsoon," Gijsels said.

But researchers warned that leaders must be wary of new credit "hotspots", where too much lending takes place, as the world emerges from a financial catastrophe blamed in large part "to the failure of the financial system to detect and constrain" these areas of unsustainable debt.

"Pockets of credit grew rapidly to excess - and brought the entire financial system to the brink of collapse," said the report, written in conjunction with consulting firm McKinsey. "Yet, credit is the lifeblood of the economy, and much more of it will be needed to sustain the recovery and enable the developing world to achieve its growth potential." The global credit stock has already doubled in recent years, from $57 trillion to $109 trillion between 2000 and 2009, according to the report.

The WEF said the continued demand for credit could be met "responsibly, sustainably - and with fewer crises". However, it cautioned that to achieve this goal, financial institutions, regulators, and policy makers need more robust indicators of unsustainable lending, risk, and credit shortages.

The Palestinians made the symbolic gesture as they continue a push for international recognition that is complicating the Obama administration's efforts to restart stalled Mideast peace talks. "Raising this flag in DC is part of the Palestinian leadership's scheme to manipulate international acceptance and diplomatic recognition of a yet-to-be-created Palestinian state while refusing to directly negotiate with Israel or accept the existence of Israel as a democratic, Jewish state," said Representative Ileana Ros-Lehtinen, Republican for Florida.

"I remain deeply disappointed that the Palestinian leadership continues to reject the opportunity to negotiate directly and in good faith with the Israeli government to resolve all outstanding issues and achieve security and peace," she said in a statement. "Instead, Palestinian leaders reject negotiations, they make excuses and they seek shortcuts to statehood."

At a brief ceremony, the Palestinian's chief envoy to the United States, Maen Areikat, hoisted the red, green, white and black banner outside the PLO General Delegation office. He expressed hope it would help in the Palestinian quest to win support for independence with or without a peace deal with Israel.

The six additional states, all with Republican attorneys general, joined Florida and 19 others in the legal action, Florida Attorney General Pam Bondi said. "It sends a strong message that more than half of the states consider the health care law unconstitutional and are willing to fight it in court," she said in a statement. The states claim the health care law is unconstitutional and violates people's rights by forcing them to buy health insurance by 2014 or face penalties.

In the Florida case, the states also argue the federal government is violating the Constitution by forcing a mandate on the states without providing money to pay for it. They say the new law gives the state's the impossible choice of accepting the new costs or forfeiting federal Medicaid funding.

Joining the coalition in the Florida case were: Iowa, Kansas, Maine, Ohio, Wisconsin and Wyoming. The other states that are suing are Alabama, Alaska, Arizona, Colorado, Georgia, Indiana, Idaho, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.

Mr Schauble appeared to put the brakes on plans to increase the size and scope of the 440 billion euros ($588 billion) European financial stability facility, at the end of ministerial meetings in Brussels.

Ralf Preusser, head of European Rates Research at BofA Merrill Lynch Global Research, said: "Every time policymakers see an improvement in market sentiment, even if in anticipation of policy action, they feel they are justified in stepping back from support. The market had traded positively because of hopes that we would get meaningful changes to the size and scope of the EFSF. This has now not materialised."

Mr Schauble's comments also hit other peripheral bond markets, with yields rising sharply in Greece and Ireland and a bond auction in Belgium. Belgium, which is also under market scrutiny because of high debt levels and political uncertainty, raised only 3 billion euros in 10-year bonds compared with 4 or 5 billion euros in the past.

Sales of short-term debt by Spain and Greece had been successful earlier in the day amid rising hopes that Europe was ready to take action. It was also announced that the EFSF would launch its first bond on January 25. EU policymakers hope this will reassure markets.