2 August 2011 Last updated at 23:04 GMT
Keynes v Hayek: Two economic giants go head to head
John Maynard Keynes and Friedrich August Hayek were two prominent economists of the Great Depression era with sharply contrasting views. The arguments they had in the 1930s have been revived in the wake of the latest global financial crisis.
The contemporary relevance of their ideas has even been debated in a rap video. More than 1,000 people attended a BBC Radio 4 debate at the London School of Economics to hear supporters of the two economists argue their case.
PROFESSOR GEORGE SELGIN ON FRIEDRICH HAYEK
When discussing Hayek it is important to correct a misconception: Hayek's is not a "do nothing" theory.
It does not deny that we should maintain spending when boom turns to bust. But it goes further.
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.
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.
LORD SKIDELSKY ON JOHN MAYNARD KEYNES
Keynes's theory was forged in the Great Depression of 1929-1932 - the biggest economic collapse of modern times.
As their economies contracted, governments responded to their mounting budget deficits by raising taxes and cutting spending.
The Great Depression bottomed out at the end of 1932, with British unemployment having reached 20%, American unemployment even higher.
Keynes wrote the General Theory in 1936 to explain why the recovery was so feeble.
His revolutionary proposition was that following a big shock - usually a collapse in investment - there were no automatic recovery forces in a market economy.
The economy would go on shrinking until it reached some sort of stability at a low level.
Keynes called this position "under-employment equilibrium".
The reason was that the level of activity - output and employment - depended on the level of aggregate demand or spending power.
If spending power shrank, output would shrink.
In this situation it was the government's job to increase its own spending to offset the decline in public spending - that is by running a deficit to whatever extent necessary.
To cut government spending was completely the wrong policy in a slump.
When an economy is booming, a hair shirt at the Treasury is the right policy, when it is stagnating it is the wrong policy.
Keynes's message was: you cannot cut your way out of a slump; you have to grow your way out.
Eighty years on we have still not fully learnt the lesson.
Three years after the collapse of 2008, our economy is flat: there are no signs of growth, nor can the Osborne policy of a thousand cuts produce any.
It was Friedrich Hayek, who represented the orthodox theories which Keynes attacked.
According to Hayek the main cause of slumps was excessive credit creation by the banks leading to overspending.
The boom was the illusion; the slump the reality.
The situation following an injection of money by the banking system would be similar to that of a people on an isolated island, if, after having partially constructed an enormous machine… they found they had exhausted all their savings before the new machine could turn out its products.
They would then have no choice but to abandon, temporarily, the work on the new process and to devote all their labour to producing their daily bread without any capital.
That is, go back to growing their own food - much as the Russians did when their economy collapsed in the early 1990s.
Keynes was scathing in his comment on Hayek's book, Prices and Production, which he called "one of the most frightful muddles I have ever read".
"It is an extraordinary example of how, starting with a mistake, a remorseless logician can end in Bedlam."
Hayek gave up serious economics, though not serious writing.
He and Keynes developed a wary respect, and even liking, for each other. "We get on very well in private life", Keynes wrote. "But what rubbish his theory is."
Keynes's magnetism made a deep impression on Hayek, but he never stopped believing that his influence on economics was "both miraculous and tragic".
16 December 2014 Last updated at 00:45
Is China's economy really the largest in the world?
For the first time in more than 140 years, the US has lost the title of the world's largest economy - it has been stolen by China, according to the IMF. But how reliable are the statistics underpinning this claim? The BBC's economics editor, Robert Peston, explains lower down why China matters to all of us.
The Chinese economy is now worth $17.6 trillion, slightly higher than the $17.4 trillion the International Monetary Fund (IMF) estimates for the US.
So for the first time since 1872, when it overtook the UK, the US has been knocked off the top spot.
The IMF calculated these figures by using purchasing power parity (PPP) which enables you to compare how much you can buy for your money in different countries. As money goes further in China than in the US, the figure for China is adjusted upwards.
Without the PPP adjustment, the IMF estimates that China's economy is worth far less - $10.3 trillion.
But how much faith can be placed in the accuracy of GDP figures supplied by China when even the current premier, Li Keqiang has doubted their validity in the past?
A declassified US diplomatic cable revealed that in 2007, Li, who was then secretary general of Liaoning Province, had told the US ambassador that Chinese GDP statistics were "man-made" and "for reference only".
But with a population of 1.36 billion people, China really should be the world's largest economy, argues Matthew Crabbe, author of Myth-Busting China's Numbers. He's spent more than 20 years looking at the country's figures and the facts behind them.
His reaction to China's new title: "So what?"
He points out that if you look at per capita spending power - the value of all goods and services produced within a nation in a given year divided by the average population for the same year - then, even adjusted for PPP, China ($11,868) is still lagging a long way behind not only the United States ($53,001) but also the likes of Turkmenistan ($12,863) and Suriname ($16,080).
So how easy is it to accurately measure the size of the Chinese economy or even just parts of it?
Not very, says Crabbe. "One of the key things that has to be understood is that distortions that happen at the village and provincial levels become amplified as they go out the statistical gathering chain.
"Year on year the GDP figures for each province grew faster than the national total, which logically and mathematically could not be."
He attributes part of this discrepancy to corruption but also says that inaccuracies became exacerbated by the sheer size of the country and the rate at which it was growing.
Inaccurate GDP figures can have serious consequences for companies that base investment decisions on them. Crabbe has a cautionary tale.
In 2005 the Chinese government readjusted its GDP figures and the statistics on which they were based, including retail sales. The consensus in the retail community at the time was that nobody really understood the true size of the retail market in China.
"I went through each of the sectors to see what the real size of each of those would be, how fast they were growing and therefore what the real size of the retail market was.
"My conclusion was that the real retail market at that time was half the value of the official government figure," he says.
Crabbe discovered there were problems with definitions of what retail goods actually were. The government figures included wholesale sales of consumer goods, some government procurement, and some business to business sales - so not everything that had been included was strictly retail.
It's difficult to gauge whether the accuracy of definitions and the data have really improved in recent years. But the IMF forecasts growth of 7.4% in China for 2014 and 7.1% in 2015, compared to US growth of 2.2% this year and 3.1% next year.
This means that the Chinese are unlikely to relinquish their number one status soon. In fact the IMF predicts that by the end of this decade the Chinese economy will be worth $26.98 trillion - 20% bigger than the US at $22.3 trillion.
But while the US held the top spot for 142 years, China may not be able to match that record - long term financial forecasts from the IMF and others indicate that by 2100 India could overtake them both.Why China matters Robert Peston, BBC Economics Editor
The most important number in the world, for the past 30 years and next five years, is China's growth rate. For 30 years its economy grew at a mind-boggling rate - roughly 10% a year but that stopped when the global economy hit problems in 2008 and it fell very sharply.
Then the Chinese government did something remarkable and persuaded its banks to lend as if there was no tomorrow. They lent for investment and investment went up from an already extremely high 40% or so of GDP, to about 50% and the growth rate picked up again. There's been nothing like it in the history of capitalism. It's astonishing.
The Chinese have worked out that this new way of growing through debt funded investment rather than exports can't go on forever and is actually potentially quite dangerous. So they are trying to reconstruct the economy but it's not going desperately well and growth is now around 7%.
I'm not sure whether we can trust these numbers to be honest though. I think most of us would say that if we're slightly uneasy about most government statistics, then we're profoundly uneasy about China's statistics. We do know that China is slowing down and there is a big debate about how fast that should be happening.
But the big story that has influenced all our lives in the last 30 years has been the economic revolution in China. For years it improved our living standards by making the things we buy cheaper and cheaper. It gulled central banks everywhere into thinking they had inflation under control so they kept interest rates way too low for too long.
China generated these enormous surpluses, which it then lent to the US to finance its colossal deficit. China was the big economic force in the world - and it still is - but it's moving in the opposite direction and the speed at which it slows down and the way that it slows down influences all our lives.
We should be under no illusion that the really big thing in the world, which will have an impact on our living standards is what happens in China. Nothing else really matters in comparison.
14 December 2014 Last updated at 22:26
UN climate deal in Peru ends historic North-South split
Unexpectedly, for a city that is in a desert area, rain drizzled from the night-time sky over Lima early on Sunday.
Just as unexpectedly, the gavel came down on UN climate talks that had almost collapsed because of wide gaps between the positions held by rich and poor nations.
So how was the agreement reached? And does it take the world any closer to dealing with climate change?
The Lima deal can be seen as a dry run for a much greater Paris compact. Ostensibly it was about how countries should format their intended national pledges on climate change.
In reality, it was about much weightier issues. It asked the 194 countries that came to the Peruvian capital if they were really serious about a long-term global climate deal.
It the answer was Yes, then some sacred cows would need to be sacrificed.
Prime among them was the binary view of the world that the UN convention on climate change brought into being in 1992.Distinction ditched
It divided the world into rich and poor (Annex 1 and Non-Annex 1, in UN jargon). The richer countries would take on carbon-cutting commitments - the poorer ones would not.
Here in Lima, that old fashioned view of the world was consigned to history, though not without a desperate struggle.
Developing countries resolutely fought to keep this sense of differentiation firmly in the text. They were very upset when the original text about the pledges countries will make next year, used the word "shall".
It seemed to them that poor African countries and small island states were being corralled into making the same level of commitment on climate change as the big boys.
No one seriously expects the countries in sub-Saharan Africa will have to do the same as the US and the EU. Eventually the "shall" became a "may".
But when you have a situation where countries like Singapore, with a gross domestic product per capita larger than Germany, are still classed as a Non-Annex 1 ("poor") country, you can see why there were calls for reform.
So there is no mention of Annex 1 parties anywhere in the document. To make it clear there are different strokes for different folks, the text reiterates the importance of "common but differentiated responsibilities", or CBDR in the jargon.
But it adds an important rider: "in light of different national circumstances."
I am told that both China and the US supported this addition. Essentially it means there will be no fixed positions anymore. Countries can and do develop, and with that development will come a different level of commitment on climate change.Hope for Paris
According to the executive secretary of the UN Framework Convention on Climate Change, Christiana Figueres, this was extremely significant.
"There are three pieces of that concept," she said. "One is the historical responsibility, which is undeniable, of industrialised countries; next is the respective capacities and capabilities of countries, which are an ongoing process; and the third part is actually the national circumstances.
"From a political and operational point of view it is a very important breakthrough that actually opens the way towards a Paris agreement."
Others agreed. This change was painful for some but it had to happen, said Liz Gallaher, from the think tank E3G.
"What we've had in the past is this north-south divide, and what this text does is to break that up, it's much more fluid," she added.
"There is lot of sense of differentiation, how do you apportion responsibility between countries rather than this north versus south which is great."
Green campaigners, though, are very upset with the Lima process. Too little had been achieved, too many decisions had been kicked down the road, they said.
"These talks delivered basically nothing for the poor and vulnerable in developing countries," said Harjeet Singh from Action Aid International.
"More exciting than the negotiations were the sheer number of impacted peoples marching in the streets in Lima and staging actions at the talks - the people who have the most to gain or lose from these talks. How long will governments continue to ignore people's demands?"
While the focus has undoubtedly been on the issue of pledges and the arguments about them, another important concept has quietly crept into the broader document.
This is the idea that a long-term goal for climate change might not be just keeping temperatures below 2C, but zero emissions from fossil fuels by 2050.
The idea has the backing of scientists, and now it is in the rough negotiating text.
It that was to remain in the final deal in Paris, it would be an idea that could, quite literally, change the world.
But there is a long way to go.
The ghosts of Copenhagen are everywhere in this talks process. One of the reasons Lima has been so important is that it got everyone to say what they will do, before they arrive in the French capital next year. That hopefully overcomes one of the key problems that saw efforts founder in Denmark five years ago.
But despite that, the Lima deal does have a critical weakness. There is, as yet, no meaningful way of ratcheting up the commitments countries make. That was sacrificed to keep the developing nations on board.
It is not the only can that has been kicked down the road and the big danger is that leaving too much to the last minute in Paris will ensure a repeat of the failings of Copenhagen.
16 December 2014 Last updated at 18:00
The largest vessel the world has ever seen
Climbing onto the largest vessel the world has ever seen brings you into a realm where everything is on a bewilderingly vast scale and ambition knows no bounds.
Prelude is a staggering 488m long and the best way to grasp what this means is by comparison with something more familiar.
Four football pitches placed end-to-end would not quite match this vessel's length - and if you could lay the 301m of the Eiffel Tower alongside it, or the 443m of the Empire State Building, they wouldn't do so either.
In terms of sheer volume, Prelude is mind-boggling too: if you took six of the world's largest aircraft carriers, and measured the total amount of water they displaced, that would just about be the same as with this one gigantic vessel.
Under construction for the energy giant Shell, the dimensions of the platform are striking in their own right - but also as evidence of the sheer determination of the oil and gas industry to open up new sources of fuel.
Painted a brilliant red, Prelude looms over the Samsung Heavy Industries shipyard on Geoje Island in South Korea, its sides towering like cliffs, the workforce ant-like in comparison.
Soon after dawn, groups of workers - electricians, scaffolders, welders - gather for exercises and team-building before entering lifts that carry them the equivalent of ten storeys up.
On board Prelude, amid a forest of cranes and pipes, it is almost impossible to get your bearings. Standing near the bow and looking back, the accommodation block that rises from the stern can just be made out in the distance.
The yard, one of the largest in the world, is a mesmerising sight with around 30,000 workers toiling on the usually unseen infrastructure of the global supply of fossil fuels: dozens of drilling ships, oil storage tankers and gas transporters.Park and produce
Prelude is not only the largest of all of these to take shape in this hive of activity - it also pioneers a new way of getting gas from beneath the ocean floor to the consumers willing to pay for it.
Until now, gas collected from offshore wells has had to be piped to land to be processed and then liquefied ready for export.
Usually, this means building a huge facility onshore which can purify the gas and then chill it so that it becomes a liquid - what's known as liquefied natural gas or LNG - making it 600 times smaller in volume and therefore far easier to transport by ship.
And LNG is in hot demand - especially in Asia, with China and Japan among the energy-hungry markets.
To exploit the Prelude gas field more than 100 miles off the northwest coast of Australia, Shell has opted to bypass the step of bringing the gas ashore, instead developing a system which will do the job of liquefaction at sea.
Hence Prelude will become the world's first floating LNG plant - or FLNG in the terminology of the industry.
In Shell's view, this means avoiding the costly tasks of building a pipeline to the Australian coast and of constructing an LNG facility that might face a long series of planning battles, and require a host of new infrastructure on a remote coastline.
So Prelude will be parked above the gas field for a projected 25 years and become not merely a rig, harvesting the gas from down below, but also a factory and store where tankers can pull alongside to load up with LNG.
The computer animations make it look easy. In practice, the engineering challenge is immense. To speed up construction, the key elements of the processing system are being assembled on land before being installed on the vessel.
During our visit, we witnessed the extraordinary sight of a 5,500-tonne module being winched into position on the deck. Like a massive jigsaw piece, it was a tight fit - given that Shell is planning to squeeze the LNG plant into one quarter of the space you would expect on land.
This was the third of 14 modules.
The installation took less than a day and was successfully completed but there's clearly a lot of work still to do, which is why Shell officials are coy about committing to a date for when Prelude will actually start work. It looks like being several years at least.Bridge too far?
The Shell pitch is that gas, as the cleanest of the fossil fuels, is set to become more important in the coming decades as a far more climate-friendly alternative to coal.
And as China tries to clean up its polluted air, largely caused by coal-burning power stations, as I reported in January, switching to gas would surely make a difference.
Only up to a point, however: the gas-is-cleaner argument only works if the new supplies of gas actually replace coal rather than become an additional source of fuel.
And the UN's Intergovernmental Panel on Climate Change concludes that while gas would be a welcome "bridge" between coal and low-carbon energy for the next 20 years or so, in the long term it will need to be phased out, like all fossil fuels, unless a way is found to capture the carbon dioxide that burning it releases.
Shell is banking on gas being in such demand that prices will remain high enough to justify Prelude's cost - which has not been stated but must run into billions.
Obviously there are risks. The gas price might collapse, if China's economy dips, or Japan restarts its nuclear power stations, closed since the Fukushima disaster, and suddenly needs less gas.
Shell's ambition is to launch a fleet of future Preludes to pioneer a new chapter in the story of fossil fuels by opening gas fields previously thought to be too tricky or expensive to tackle.
As our lift brings us back down to the quayside, the winter sun bathes the dockyard in golden light and convoys of buses ferry the multitude of workers home.
During the night, specialist teams will check for the strength of the welds and the quality of the work. A project of this kind has never been tried before and, like all firsts, Prelude is something of a gamble.
16 December 2014 Last updated at 20:46
Virtual galleries open new markets for art
Every year in December, Miami Beach becomes the epicentre of the art world. Tens of thousands of people flock to Art Basel where sales of art reportedly top $3bn (£1.9bn).
In the hyper-party atmosphere billionaires rub shoulders with struggling artists and serious collectors vie with amateurs to spot a potential masterpiece. Thanks to the internet, art has never been more accessible and new markets are opening up around the world.
"China is a really exciting opportunity for us," says Carter Cleveland, the 28-year-old founder of Artsy, an online database featuring works by 25,000 artists and more than 2,000 galleries around the world.
Officially launched in 2012, Artsy has attracted $26m in funding and has some big name backers such as Paypal cofounder Peter Thiel. The site makes money by charging galleries a monthly subscription to list their art.
The company has an office in Hong Kong but has yet to establish a presence in mainland China. In an effort to make contacts and pave the way for expansion, Artsy hosted a celebrity bash where the star of the party was Chinese choreographer and artist Shen Wei.
"China is a lot more challenging because they have their own infrastructure and their own social media and their own search engines," says Cleveland. "So when you want to expand into mainland China it takes a much more thoughtful approach."
China's contemporary art market didn't exist much before 2000. It has now overtaken the US, according to Berlin-based Artnet, another online platform that specialises in art auctions. In fact, growth in China appears to be driving the global art industry, which is worth an estimated $66bn.
Underscoring the boom in sales, several Chinese galleries staged exhibitions at Art Basel, including newcomer Beijing Commune. Director Lu Jingjing says the gallery is considering joining Artsy but is still weighing the benefits.
"Search engines are very well developed too so you have to measure whether it's worth the investment," she says.
Beijing Commune currently uses WeChat - a mobile messaging app that has 438 million users, mainly in China.
"It's not a selling tool like Artsy or Artnet. But you can make your own newsletter about your exhibitions and you know how many people have read it," says Lu Jingjing.
Hsinke Lee is head of exhibitions at Long March Space, another Chinese gallery at Art Basel. She thinks digital platforms are a "positive" development and predicts they will have a greater role in the Chinese art market.
She says many people already buy most things through Taobao, the Chinese equivalent of Amazon, and art is no different.
"I've noticed a lot of collectors purchase works without viewing them first in person. I myself have clients like that. Even when the work is worth close to a million dollars, they don't need to see it," she says.
But the international art market is largely unregulated and other experts warn that buying online poses hazards for the unwary.
"You're only as safe and secure as the ethics of the particular dealer you're dealing with," says Art Basel exhibitor Rhonda Long-Sharp, a former lawyer who now owns an eponymous gallery in Indianapolis. Ironically, she switched careers after buying a fake Picasso online.
"From that I learned a great deal about the art market and the art world," she says."When a collector looks online and says he wants a Warhol, he's going to find hundreds of galleries that purport to handle Warhol.
"But you don't know if they're a legitimate gallery, you don't know if the piece is authentic and you don't know if the condition is outstanding or if it's been restored so much that the value is really a smidgen of what it should be."
Nevertheless, she pays Artnet "a fair amount of money" for a gallery page. She says it is an important marketing tool for Long-Sharp Gallery and good for collectors who want to learn more about a piece.
"Online impacts fairs like this because if you see something here that you like you can go online and look at other works by the artist. People often come here with their cameras, snap a shot of the piece and snap a shot of the name tag. You'll hear from them maybe two months later."
Far from competing with physical fairs such as Art Basel, digital and social media have become an integral part of the event. In addition to 73,000 visitors, Art Basel Miami has 300,000 Facebook followers, 150,000 Twitter followers and 100,000 on Instagram.
Organisers also tapped into that online community to launch a crowdfunding campaign for non-profit art organisations that generally don't attract major investment but are seen as essential incubators for emerging talent.
Big businesses are also entering the digital art world. The Swiss bank UBS, a major sponsor of Art Basel, hopes to meet the surging demand for information with the launch of Planet Art, an app that aggregates news about contemporary art.
Peter Dillon, head of global art platforms at UBS, says it cuts through the clutter in a complicated market. "It expands access to the art world and the art market. For somebody who is new to it, this is a great way to get real-time information," he says.
"It's data led so it's objective. It's based on an algorithm that uses the facts in articles to index and organise them. It's applying a skill set that we have as a bank to the art world."
But although UBS has a massive corporate art collection, Dillon says the bank does not advise clients on buying art as an investment. A sentiment echoed by Art Basel director Marc Spiegler.
"The whole issue of art as an investment makes me somewhat queasy," he says. "A lot of people have tried to do art funds, almost all of them have failed. Historically the collections that appreciated the most are the ones that went against the market. There is always a speculative market, there's always a bubble - but it's small.
"Our fair is not about monetising mini-bubbles; our fair is about building a sustainable support base for the careers of artists and their galleries. I think people should buy work that they like."
17 December 2014 Last updated at 01:21
Made in Ghana, bass-ed in London
A blend of Ghanaian highlife and rhythms are becoming bass music remix hits on dance floors in the UK, writes Chris Matthews.
Electronic, dance and bass music is reverberating around the UK. Dance music represented the second largest number of singles sales last year, and with success of artists like Calvin Harris, Disclosure and Rudimental, it has gone mainstream.
This mass appeal has created a production line of computer-generated sound, often reused and recycled across multiple genres.
But for two young London producers, the beat-making process has been a remarkable and unique journey.
From their London studio to the urban centre of Ghana's capital, Accra, the pair have explored sounds and terrain far beyond the confines of a keyboard.
Under the name, The Busy Twist, childhood friends Gabriel Benn and Ollie Williams have spent three years intertwining Ghanaian highlife - the country's popular music form - and an array of other African sounds with bass and electronic rhythms from the UK.
"The whole direction of the sound is to fuse the cultures together. We've always wanted to create music and beats that people from all over the world can dance to," says 23-year-old Williams.
The pair, who grew up in Twickenham, southwest London, have been creating music and DJing together since they were 16.
However, it was Benn's visit to the West African nation in 2010 that opened their ears to the richness of the Ghanaian music scene.What is Ghanaian highlife?
- Popularised in the 1950s and 1960s by the likes of Nana Ampadu, The Tempos and The Black Beats, highlife music is a Ghanaian institution.
- Highlife - also prominent in Sierra Leone and Nigeria - was born out of marrying traditional local music with western rhythms from Europe and the Caribbean during the colonial 1900s.
- The term, which was coined in the 1920s, is thought to be a reference to parties by the European upper-class.
- Originating in coastal towns, the genre started out as the music of elite society - performed by local bands at foxtrots, ballrooms, and waltzes.
- It was initially associated with dance orchestras, but soon developed another, more guitar-based style, which was adopted by the rural population and was widely popularised in the mid-20th century.
Teaching in Ghana's Eastern region, Benn spent six months in the country and met a host of local musicians, including chance encounters with singers Malaika and Eugene at a beach in Accra.
"There was something bringing us together, it was just energies connecting," he says from his Twickenham studio.
Using a dictaphone, he recorded a raft of local artists. Back in London, he headed the few hundred yards from his home to share the recordings with Williams.
"He was pretty blown away by them and how talented the artists were," says Benn.
"And so we decided then and there that we were going to go back together."
Later that year, they made their first trip together and spent three weeks recording with Malaika, reggae musician Yaga Yo and others in Accra.
Inspired by the breadth of music in the country and the "joyfulness and energy" of its people, the pair embarked on their cross-continental music mission.
"Malaika showed us a Fela Kuti track and then he was like, 'You guys should put your house music over it, one of your English beats.'
"And as soon as he said that, it just opened the door to us," says Benn. "From then on, we were always thinking about African rhythm and English dance and electronic music."'Cultural bridge'
The pair travelled during university holidays to record with local musicians, taking inspiration from the highlife, reggae and dance sounds emanating from the country's streets and clubs.
It was in renowned percussionist Francis Osei's Accra studio that the group's Friday Night EP was honed during the Easter of 2011.
The debut release combined the feel-good inflections of Ghanaian highlife with a UK bass-and-funk sound, fine-tuned back in the London studio.
Unlike the readymade samples and rhythms available instantaneously online, The Busy Twist's sound breaks a digitally driven mould.
"With the energy and rhythm there is in the country there was just a natural connection, and a bridge for us to build between those genres," says Williams.
It celebrates multiple cultures, rather like highlife itself, which - in the words of musician and University of Ghana lecturer, John Collins - is a "cultural bridge for the modern and traditional, imported and indigenous".
With a rented boom box, the pair took to the streets to shoot a video for the EP's title track, filming passers-by in Accra, schoolchildren in Akim and the landscapes of the Kwame Nkrumah Memorial Park.
"People were just so excited and happy. When people hear music and a beat they want to dance. You don't have to ask - they will just come and dance and jump in front of your camera," Williams says.Park rave
After the success of the Friday Night EP - released on Soundway Records in 2012 - the duo returned once more to Accra, and it was during this trip that they were introduced to the Labadi Warriors.
A renowned drumming troupe from the area, the Labadi Warriors provided the inspiration for the pair's latest record.
After months of planning and with clearance from the local chief and head of police, The Busy Twist transformed Accra's Labadi Park into a Ghanaian rave for their next video shoot.
The video, combining the drumming and chanting of the Labadi Warriors with a more southern African sound, is featured on the appropriately named Labadi Warrior EP, which was released in October.
"It was so much fun being out there making the music and just so exhilarating. A big part of our job was like being half-producers and half-project managers. It is not just like sitting at home and making beats, it is a real project," Benn says.
Energised by the success of their Ghanaian journey, the pair have recently returned from Colombia, which will be the focus for their next project.
With ambitions for exploring Angola and South Africa as well as a return to Ghana, The Busy Twist and their original beat-making process is far from over.
As Williams says: "Any country you go to, you know you are going to get a whole new sound to be influenced by and a very different output. There will be a next chapter and it will be bigger and better."
14 December 2014 Last updated at 00:37
The delicate material that takes months to weave by hand
Bangladesh is often associated with cheap clothes produced for the mass market, but the delicate and much more expensive jamdani fabric is also made here. The people who weave the material are highly sought-after employees.
On the banks of the River Lakshya - just outside Dhaka, Bangladesh's capital - the sun is heating the tiny corrugated iron factory I am standing in to oven-like temperatures.
Inside, under a string of bare light bulbs, six master weavers sit in pairs, barely breaking a sweat at their bamboo looms.
The men are shirtless. The women wear neon-coloured salwar kameez - a traditional South Asian garment. All of them rest their arms on cheap white cotton, protecting the delicate muslin they are working on.
This dirt-floor workshop might not hint at luxury, but the special jamdani fabric made here is highly coveted and incredibly expensive.
The factory owner, Anwar Hossain, walks me past the looms. Whiplash thin and just over 5ft (1.5m) tall, he doesn't disturb the workers as he pauses to let me admire the work of one young woman who sits below us.
Her hands, spinning like furious atoms, interlace silky gold thread into a sheer muslin cloth the colour of oxblood.
"Jamdani is expensive since it requires dedicated work and special skills," Hossain says, flicking a bejewelled hand over the peacock feather motif that the young woman works on. "My weavers don't use patterns, they create only from memory."
I first heard the word "jamdani" across the border, in India. On a sticky pre-monsoon night in the south-west state of Kerala on the Malabar Coast, a retired Keralan banker called Harry told me how he missed his old job in Calcutta, almost 1,500 miles (2,500km) away.
How he longed for the poetry of Rabindranath Tagore and tangy Bengali street food. But most of all, how he missed the Dhaka-made saris that he would buy his wife from Calcutta's markets.
"She loves jamdani saris," Harry said, "and I do too. They are so light it is like they've been woven in air. I would save up to buy them for her."
It is the detail of the motifs - the intricate jasmine flowers, marigolds and geometric patterns - that are neither embroidered nor printed, but which are painstakingly sewn in by hand when the fabric is still on the loom, that really ups the price.
The very finest sell for hundreds of pounds in Bangladesh and India, often to brides.
Around us turquoise, yellow and white expanses of the finest gauzy muslin billows in the breeze that - like a cool blessing - comes off the river through the latticed bamboo walls.
A bead of sweat rolls down my face and I am struck by the silence. There are no factory sounds. No shuttles zooming back and forth. No machinery of any kind.
The air inside the factory is hushed and filled with concentration. It is a stark contrast to the chaos and din of Dhaka - a raging bull of a city that forces visitors to adapt or perish.
Hossain tells me that his workers are the most celebrated craftspeople in the riverside settlement of Demra. Below them are the dyers, the spinners and the makers of the looms. They all live together in this community, much as they have done for hundreds of years.
It is no accident that the jamdani weavers live in the settlements of Rupshi and Demra right on the riverbank. The saturated soil is particularly fertile and during the British rule - in the 19th century - the villages here produced the finest of cottons.
Today, huge jute mills dominate the area, but a few factories like Hossain's still remain.
Luxurious it is not, but this gentle environment is worlds away from Dhaka's dire mass-market sweatshops that churn out fast fashion for High Street shops all around the world.
In Hossain's labour-intensive workshop - where each sari takes three to four months to make - female weavers are able to work flexible hours to collect school children, and there is no exploitative child labour.
His weavers, he tells me, benefit from the pride and identity their work gives them, unlike the workers toiling over cheap ready-to-wear clothes in Dhaka's often dangerous garment factories.
"My weavers are in charge, not me," Hossain chuckles. Jamdani expertise is a dying skill and factory owners like Hossain know that to keep these workers on they have to offer benefits.
Emerging from the workshop, I ask him what makes a master jamdani weaver.
"Firstly," he begins, "they must be children of the loom, taught by their fathers. Secondly, they must also have strong backs and dedication.
"Lastly, and most importantly of all, they should possess magic fingers - and that is very, very hard to find."
3 December 2014 Last updated at 22:58
Afghanistan: Can pomegranates power the economy?
As delegates gather in London for a conference on Afghanistan, the prospects for reducing the reliance on foreign aid are increasingly focused on two sectors of the economy: agriculture and hydrocarbons.
Harvest time is coming to an end in the fruit orchards of Kandahar, a province now more associated with the Taliban than its famous pomegranates.
Amid shouts of "Ya Allah! Ya Allah!" fruit pickers are urging care as they pass the valuable crop from the tree tops to catchers on the ground.
The weather is still mild and ideal to let the fruit sweeten. Packed in boxes or jute sacks, the fruit make its way to markets and warehouses, some goes to Pakistan and the Middle East.
But for Afghanistan to profit from one of its key crops, it needs to reach more profitable markets in Europe and beyond.Learning curve
In a factory in southern England, cartons of pomegranate juice are rolling off the production line.
The Pomegreat juice company buys quality pomegranate concentrate from all over the world and now has its sights set on Afghanistan.
"Pomegranates from Afghanistan are amongst the best in the world," says its boss Adam Pritchard. "But the logistical challenges are also amongst some of the most difficult."
At this week's London Conference on Afghanistan, Mr Pritchard has signed a multimillion pound supply agreement with the Kabul-based Omaid Bahar Fruit Processing Company to buy 1,000 tonnes of pomegranate concentrate.
It could prove a blueprint for Afghan agriculture in the years to come if all goes to plan.Plenty of challenges
In an office in central Kabul, Najlla Habibiyar, head of Afghanistan's Export Promotion Agency, is realistic about the extent of the challenge facing Mr Pritchard and his Afghan partners.
She is only too aware of how tough it is for Afghan farmers to make a living from pomegranates, in contrast to the illegal mainstay - opium.
Pomegranates need "work, time and a good market", she says. "But with poppies, farmers know they'll get paid, even if their crops get eradicated. It's less hassle."
Opium production was up 17% this year - as poor security further dented efforts to stamp out poppy growing.
Pomegranate production is also on the rise. But while poppy farmers can expect the buyers to come to them, pomegranate growers face big obstacles getting their fruit to market.
"The main challenges are to have proper facilities for cold storage, processing and packaging", says Najlla Habibyar. "And unfortunately we don't have an internationally recognised body to do the final quality checks and certify the product."
When Pomegreat first looked at buying juice concentrate from Kabul, these complications meant the final product was just too expensive.
But Adam Pritchard hopes things will be different now.
"We're trying to work with the manufacturing facility to help them develop a process which allows their product to become more commercially viable and to compete in the world market," he says.Oiling the economy
In northern Afghanistan, foreign investors are also working with local companies to kickstart the economy.
In this case, the end product is oil.
In the basin of the Amu Darya, one of the region's great rivers, the Kashkari oil field is one of three being developed by China's National Petroleum Company in partnership with Afghanistan's Watan Group.
The 25-year profit-sharing deal was signed in 2011. Three years on, there are brand-new looking installations on show, but progress is slow.
There are thought to be around 80 million barrels of oil in these fields.
It is not much in global terms, but it would be enough to fuel the local economy if the oil could be exploited and processed more quickly.
Daily production so far is just a fifth of what was expected, according to the mines ministry.
There is no processing capacity on site and the crude oil has to be transported to the nearest refinery in Hairatan, a dangerous four-hour drive.
Lal, one of the lorry drivers who does the trip regularly, says he and his colleagues have no choice.
"We are paid just $200 to take this route," he says. "When we are attacked, it's for $200. If we get wounded, we get just $50 compensation."
Lal is one of a few hundred people benefiting from the employment opportunities oil exploration has brought.
The Chinese-Afghan consortium is also training local engineers and technicians as part of the production agreement.
But apart from that the local economy has yet to feel real benefits in terms of cheaper petrol and energy supplies.
Even so, Rafiq Siddiqui from the Mines and Petroleum Ministry says oil, gas and Afghanistan's other commodities are the way ahead.
"With the plans the national unity government has, and with good management, we believe that the way to economic stability is through natural resources. And that's not far away," he says.
Experts agree that mining could be the game-changer for the Afghan economy in the long run.
In the meantime agriculture, the sector that employs most Afghans, will have to plug the gap.
Adam Pritchard thinks top-quality produce like pomegranates can help to fulfil that need.
"If Afghanistan is to stand on its own two feet, it can't rely on subsidies and charity," he says.
"The English apple is synonymous with England. We process it and make juice out of it. There's no difference with pomegranates in Afghanistan, and I have no doubt that in time it will be a decent industry for the country."
-----------------------------------------------------------------------------------------------------------4 December 2014 Last updated at 00:01
How Ikea assembled a win in Poland
Enter the home of any young person in any Polish city and there's a high chance you'll settle down on a piece of furniture made by Ikea.
Poland is Ikea's fastest growing market in the European Union, and is behind only Russia and China in the rest of the world.
Of the most powerful foreign brands in Poland, Ikea is number three, beaten by Google and Coca-Cola, according to research carried out for the BBC by the international consultancy Millward Brown.
So why is the flatpack furniture company such a sensation in Poland and how did it manage it?Space race
"We have created a very deep understanding of how people live," Evelyn Higler, the chief executive of Ikea Retail in Poland, tells the BBC.
"The starting point is to listen to people and be in their homes because we do thousands of home visits yearly. We look at what their needs and dreams are. We are actually creating products that fit people's home lives."
Looking around the small mocked-up living room in the store, I can see what she means.
More than half of Poles live in homes with just one bedroom, Ikea's research shows, which means parents often sleep in the living room.
"Half of our room settings consist of a sofa bed because we know that it's relevant for people at home," Mrs Higler says.
"Of course our products need to be well-designed and functional but at a price that many can afford them."Shared history
Unlike many global firms Ikea can trace its routes in Poland back to the early 1960s.
Swedish founder Ingvar Kamprad began the business in 1943, selling postcards and pencils.
He added furniture five years later with the idea to produce functional, well-designed products at a low price by placing large orders with suppliers and reducing costs.
But his competitors put pressure on Swedish suppliers, forcing him to look elsewhere and in 1961 he placed his first order for chairs with a company in the Polish city of Radom.
Ikea has been present in Poland ever since and now the country is the company's second largest supplier in the world.
But it was more than 30 years until an Ikea store actually opened in the country.
When communism fell in the late 1980s and it became clear that the changes were here to stay, foreign companies began to enter the market and Ikea opened its first small outlet in 1993 selling home furnishing accessories.
"The Polish economy was particularly weak in three areas - exports, financial services and retail sales," says Stanislaw Gomulka, an economist and former finance minister.
"Investors started to look for opportunities and they knew what the weaknesses of the Polish economy were. Now Poland's sales market is dominated by large companies like Ikea and Tesco," he says.Flatpack plans
With its eight stores Ikea now reaches about half of Poland's households. "It's not good enough," Mrs Higler says, adding that a new store is scheduled to open next year.
The company has big plans. It wants to increase last year's turnover of 2.38bn zloty (£453m; $711m) eight-fold by 2035 by adding new stores and services.
Customers may soon find they don't have to struggle to assemble their own furniture too.
Poland's population is shrinking and ageing. More than two million mainly young Poles have left for places such as the UK or Germany since Poland joined the EU in 2004. The country also has one of the lowest fertility rates in Europe.
Ikea is aware of the trend and is planning accordingly, Mrs Higler says.
"When we talk about an ageing population then our concept development is adapting to those needs. Where we used to be very strong in cash-and-carry concepts we are now entering the whole service offer very strongly, so you don't always need to assemble everything yourself," she says.
For now though the formula works for the people in the store.
"I like the colours. There's a lot of stuff for kids, for adults and home decoration. You can find here anything you like," Anna, a 29-year-old physiotherapist, says as she shops in a Warsaw store.
"If you want to buy something quick, I come here," says 41-year-old Krzysztof as he scans the warehouse shelves for his flatpacked furniture.
"Second, the design is quite modern and thirdly, I live nearby."
19 December 2014 Last updated at 00:09
Is Putin to blame for the plunging rouble?
Vladimir Putin accused the US and EU of conspiring to weaken Russia at his end-of-year news conference on Thursday, but as the country's economy tanks he has nobody to blame but himself, argues Russia analyst Ben Judah.
Russia blames the West. Not only for the war in Ukraine - the result, it says, of a revolution orchestrated by Western powers - but for the slump in the oil price, and the collapse of the rouble. There is talk in the Kremlin of an American-Saudi conspiracy and Nato economic warfare.
But in reality the war and the rouble crisis could have been avoided, and nowhere is this more evident than in relation to the oil-dependent economy.
The Kremlin has known, ever since the oil boom took off 10 years ago, that a political system was being built on the basis of the one thing in Russia that Vladimir Putin could not control - the price of oil. The Kremlin's own accounts estimate that sales of oil and gas accounted for 50% of Russia's federal budget revenue in 2013. And ominously, roughly half the Russian population lives off the state budget - either as state employees, pensioners or as benefit claimants.
This means that a collapse in the oil price threatens the fragile foundations of the current system, in which the Kremlin buys the loyalty of the majority with state handouts. The Kremlin needs the price of oil to remain high, and even to rise if it is to continue to deliver rising living standards.
Instead Russians may now have to face austerity.
"If the situation continues to develop unfavourably like this, we will have to adjust our plans, and it is certain that cuts in some areas will have to be made," Putin said at his news conference.
Russia's 2015 spending plans had assumed that oil would remain over $100. The country can only balance its budget with the oil price around that mark. The Kremlin may soon no longer have the cash to buy Russians' enthusiastic patriotism with television extravaganzas like the Sochi Olympics (price tag $50bn), or the sudden invasion and annexation of Crimea ($75bn, according to one estimate).
For the masses, the association between Vladimir Putin and rising living standards may soon be broken, while for the elite the Russian president no longer looks like a guarantor of economic stability. Within government there is talk of significant cutbacks and even mass lay-offs at state corporations like Gazprom. There is also a risk that to escape the currency crisis Russia may face a period of inflation, inflicting further wounds on ordinary people's living standards. Russia's middle classes are already facing onerous mortgage repayments, and the imported goods and foreign holidays they enjoy may become unaffordable.
At his news conference, Putin accused the West of conspiring to weaken Russia, and building a "virtual" Berlin Wall to contain it. In the Kremlin, the allegation is being made that Washington DC and Riyadh have conspired to collapse the price of oil in order to weaken Russia and Iran.
But even this would not absolve Vladimir Putin of responsibility for Russia's crisis. One of the main topics of debate in Moscow over the past decade, in both liberal and conservative circles, has been how to build a new economy able to withstand wild oscillations in the price of oil. The vulnerability of the rouble was well understood - there is consensus among the political elite that as long as more than 60% of Russia's export revenue continues to be drawn from oil, the currency will never be treated by markets as more than "paper oil".
There were reports from the intelligence services and from liberal think-tanks such as the Institute of Contemporary Development (INSOR) warning that an oil-dependent economy was hostage to Western financial markets and to possible manipulation.
50% of Russia's government revenue comes from oil and gas
68% of Russia's total export revenues in 2013 came from oil and natural gas sales
33% of these were crude oil exports, mostly to EuropeAP
Putin ignored advice from Yegor Gaidar, the former Russian prime minister who took up his post immediately after the collapse of the Soviet Union in 1992. He wrote a book-length appeal to Putin, The Collapse Of An Empire, arguing that the Soviet Union had financially imploded due to the sudden collapse in the oil price - thanks to American-Saudi agreements to increase production - and that the new Russia was repeating its mistakes.
Moscow was to blame, he wrote, for basing its economy on barrels of oil, whose value could so easily be manipulated by its worst enemies. He drew a parallel with Spain, which became addicted to gold and silver in the 16th and 17th Centuries, and then slid into insolvency and lost its empire when the value of bullion tumbled.
Russia's own government knew that an oil crash was inevitable. Vladimir Putin ignored the government's Strategy 2020, which proudly announced that "structural diversification of the economy will become evident in the composition of exports". He ignored the pleas of Prime Minister Dmitry Medvedev, then serving as titular president, who in 2009 rhetorically asked the Russian public: "Can an economy based on raw materials and endemic corruption take us into the future?" Even the powerful Kremlin aide, Vladislav Surkov, currently leading on operations in Ukraine, warned in 2010: "We are not like Kuwait… We are unable to be a small prosperous emirate. We are a great big country that oil will be unable to feed. We must learn to make money from our brains."
The projects proposed by Russia's conservatives to invest in new industrial stock were ignored. The idea pioneered by Dmitry Medvedev and Vladislav Surkov to create a science park at Skolkovo outside Moscow grew into little more than a Potemkin village. Vladimir Putin, meanwhile, has often seemed to prefer the fast-paced dramas of Ukraine and Syria to the difficult work of fostering infant industries, promoting new technologies or small businesses.
"We found ourselves in a perfect storm and I guess it's not an accident, because in some way we prepared this storm ourselves," Economy Minister Alexei Ulyukayev told the Vedomosti newspaper on Thursday.
Putin, meanwhile, said: "We have not done much of what we were planning to do and saying we would do to diversify our economy for the past 20 years."
He added that "life itself" would now ensure the work was done.
But at the same time, he blames the West. It would be more accurate to say that responsibility lies with the Russian president and the politicians who failed to challenge him - and missed the opportunity to build a robust economy for Russia while they had the chance.
Ben Judah is the author of Fragile Empire: How Russia Fell In And Out Of Love With Vladimir Putin. He is now writing a book about London as a global city.
18 December 2014 Last updated at 18:56
Is Putin right?
Russian President Vladimir Putin says that even if oil plummets to $40 per barrel, his country's economy will manage - and rebound in two years.
The key is what happens to the rouble, a currency that has hit historic lows against the dollar and is very volatile, and whether Russia can afford to repay its debts.
Unlike in 1998, when it was rescued by the IMF, Russia has a floating currency. By not being pegged to the dollar, the currency can take the brunt of the adjustment, instead of costly interventions or painful hits to the economy. Not completely of course, but it is less pressurised than having to defend the currency that's been a part of most emerging market balance-of-payments crises.
Well, Russia sped up a planned float for the currency that was slated for the end of the year. In November, the central bank decided that after spending $30bn to stabilise the currency, it wasn't working as capital left the country in the wake of the Ukraine crisis and the rouble fell to 46 per dollar. Since then, it has sunk beyond 80 per dollar.
The concern then was that foreign exchange reserves had fallen to $421bn, down 16% from half a trillion at the start of the year. It fell below a level that's considered to be critical - having enough to cover 6 months of imports.
Now, FX reserves have dropped even further to $416bn and the Russian government has just committed reserves to shore up systematically-important banks to the tune of 1 trillion roubles. That's among other commitments already made, which could total over $100bn next year.
But, not having to defend an exchange rate like in the prior crisis isn't the only concern. Whether Russia can pay its creditors is key. Recall in 1998 that Russia defaulted on its debts, which made for a messy rescue.
Russia owes about $700bn to external creditors, which comes to some 35% of GDP. In terms of upcoming payments, most analysts say that the country can afford its repayments of around $200bn due in the next couple of years.
That's the period of time that Putin says is needed for the economy to get going again.
A big problem is if money continues to leave the country - capital has flowed out for 17 consecutive quarters - then it weakens the currency further. It makes it more expensive for companies to repay their foreign currency-denominated debts, which analysts estimate exceed what the government owes next year, and that could lead to bankruptcies. That in turn hurts the banks, and there's already reports that ordinary Russians have learned from prior crises and are taking their cash out.
This exerts more pressure on those reserves, as the Russian government will be hard pressed to not support its banks and help the economy. Russia may then not have a couple of years if they run out of money to repay debts.
There's always a lot of "ifs" and "maybes" when it comes down what could trigger a default and rescue. Recall in 1998 that interest rates shot up to 150% from a considerable 30% and that wasn't enough to keep the cash inside Russia's borders. So, confidence has a great deal to do with it.
Putin's annual press conference was intended to instil some of that today. We'll find out soon enough if it has worked.
19 December 2014 Last updated at 00:36
EU needs 'long-term' Russia strategy, says Donald Tusk
The EU needs a long-term strategy on Russia instead of simply reacting to events, the new EU summit chairman Donald Tusk has said.
Mr Tusk said he had been "really moved" by the leaders' discussion of the Ukraine crisis.
Earlier, the EU tightened sanctions against Russia over its support for armed separatists in eastern Ukraine.
"We need a plan for years… we're not too optimistic, we have to be realistic," Mr Tusk said.
"Russia is our strategic problem, not Ukraine," said Mr Tusk, the former Polish Prime Minister. "The biggest challenge is Russia's approach not only to Ukraine but also to Europe.
"Our discussion [on Ukraine at dinner] showed Europe united as never before. Russia's behaviour needs a pragmatic solution, a united, common position."
Poland, bordering on Ukraine, has long had tense relations with Russia, and is among the most vocal critics of Russian President Vladimir Putin.Crimea targeted
Pro-Russian rebels in eastern Ukraine still have heavy weapons including tanks and rockets, despite demands by Ukraine and the West for them to disarm. Continuing clashes in the Donetsk region have undermined peace efforts.
Under the latest measures against Russia, all EU tour operators will be barred from operating in Crimea and European investment there will be banned. Russia annexed Crimea in March.
Italy's Prime Minister Matteo Renzi said "we must work with Russia to push it out of Ukraine".
And EU Commission President Jean-Claude Juncker stressed that the EU's channels of communication with Russia must remain open.
There was much surprise among the summit journalists that Mr Tusk managed to reduce the expected two-day summit to one afternoon and evening. Usually EU summits go on hours longer than planned, often into the early morning.Investment plan
The other main topic was Mr Juncker's plan to generate €315bn (£250bn; $392bn) of private investment for infrastructure projects in the EU.
It got the leaders' approval, and the aim is to launch it next June.
Mr Juncker said the commission would "look favourably" on government participation in big investment schemes, and would "neutralise" national contributions to the new fund. That suggests more lenient deficit targets for governments that boost investment.
Italy, burdened by colossal debts and high unemployment, warmly welcomed the Juncker plan.
Mr Renzi said investment decisions would involve "politicians, not only technocrats" and he stressed that for years Italy had been urging flexibility in reaching budget targets set by the commission.
"Growth and not only austerity is the legacy of the Italian presidency [of the EU]," he said.
He and French President Francois Hollande - both centre-left leaders - have urged Germany and other pro-austerity states to encourage much-needed growth, by allowing a monetary stimulus in the eurozone.
19 December 2014 Last updated at 01:17
How are Venezuelans coping with tumbling oil prices?
Falling global oil prices have been a headache for many oil-producing countries, with exports now failing to bring in cash they used to just six months ago.
On Thursday, the price of Brent crude was just below $63 a barrel, while US crude was near $58.
The price of Venezuelan oil, which is very heavy by international standards, was even lower - at $57.53 a barrel for the week ending 13 December.
The dramatic downward slide started in June.
Six months of falling prices have hit Venezuela particularly hard - the country is heavily dependent on oil money, with 96% of export revenues coming from oil, according to reports.
BBC News has been speaking to a selection of Venezuelans on the streets of Caracas to find out how they have been personally affected by the fall in oil prices.Oil down, goods up
Alex Hernandez, a businessman in Caracas, says the problem is exacerbated by a lack of foreign currency.
In 2003, the Venezuelan government set a fixed rate for foreign currency exchange.
The move was designed to keep government control over prices and to make certain basic items, such as bread and rice, more affordable to the poor.
Under the currency controls, people and businesses can receive US dollars at the official rate only by applying to a government currency agency, and then only for the purpose of importing goods or to pay for foreign travel.
Mr Hernandez believes the fall in oil prices has made it even harder for businessmen like himself to get hold of the foreign currency needed to buy the imported goods he sells.
A falling oil price means fewer dollars flowing into Venezuela's government coffers, and less to spend on paying for imports.
As Mr Hernandez mentioned, prices for goods in Venezuela have been rising
The most recent official figures put the inflation rate at 63.4%.
The figures were the first Venezuela's central bank had released since May, which led critics to accuse the government of withholding data for political reasons.
Neither did the central bank publish its scarcity index, a measure of goods that are missing from store shelves, but it is clear the difficulty of getting hold of basic products is a source of discontent for many.Daily hunt
Housewife Eugenia Martinez says she sometimes has to queue all day to get what she needs for her family. She says the queues have got longer and longer as the price of oil has tumbled.
Mechanic Enrique Moreno says his business is also hit by the scarcity of replacement parts. But in his view, the situation cannot just be blamed on the falling oil prices.
Mr Moreno believes that given Venezuela's riches the country should be a lot better off than it is, even if the current price per barrel is low.
Mr Moreno says he can feel a general mood of unhappiness in the streets of Caracas.
That mood is reflected by opinion polls which suggest the approval rating for President Nicolas Maduro has been falling along with falling oil prices.
Venezuela's generous social programmes are largely financed through oil revenue.
The government is reluctant to cut them back - both out of an ideological commitment to the legacy of its late socialist leader, Hugo Chavez, and out of the knowledge that a drastic cut could erode the support of those Venezuelans who voted the government into power.
With Venezuela's credit rating lowered on Thursday by three notches to CCC, the country is getting closer to default.
And with no sign of oil prices rising, the headache for its government of how to counter the drop in revenue looks set to get worse.
18 December 2014 Last updated at 20:04
Asians flock to social networks for shopping sprees
Singaporean student Dora Soh posts her "outfit of the day" online every day, to connect with fellow fashionistas and inspire her nearly 10,000 followers on Instagram.
The 22-year-old's shopping habits have become so influential that online retailers are now sponsoring her to wear their clothes, in hopes that her posts will boost their brand and sales.
"On social media, I can interact with strangers and share fashion inspiration by following their accounts and liking their photos," Ms Soh says.
While this sounds like a simple formula to keep up with the latest fashion trends, the avid shopper is at the forefront of a rapidly growing business in Asia - social shopping.
Global retailers are pulling out all the stops to increase their presence on social networks with technology that allows you to broadcast your latest fashion find online, even before it rings through the register.
For example, on Singapore-based social network and shopping website clozette.co, users can upload a picture of an item, or focus in on someone else's post, and hit search to find similar outfits for sale.
It is as exact as narrowing in on nail art on someone's finger nails, to search on the website's database of two million items from nearly 5,000 global brands.
"I truly believe we're the first company in the world to do that - intelligent visual recognition," says the website's co-founder and chief executive Roger Yuen.Social platforms take off
Mr Yuen says growth has skyrocketed on his social media platform, which allows users to create and share their personal wardrobes, as well as buy and sell items from each other and retailers in Asia.
"We have close to 400,000 registered members in the region, and as a company we have a reach of about seven million unique users a month," he says.
The firm launched in 2010 with just under 80,000 users in its first year.
Singapore based beauty box start-up Vanitytrove.com/sg has also seen tremendous growth since it launched its user content-driven platform earlier this year.
Co-founder and chief executive Douglas Gan says about 100-150 new members join the website every day, to browse or post about new products, and chat with like-minded beauty experts.
"We have over 60,000 female members on the platform in Singapore, Indonesia and Thailand," he says. "We figured that if we want consumers to make a conscious decision before they buy something, we should give them a platform."'Word of mouth'
Rapid growth for such fashion-based social networks is not surprising considering recent figures that showed more and more Asians are turning to social media to shape their shopping habits, outpacing other regions of the world.
In a study of 10,000 consumers worldwide, consulting firm AT Kearney found over 95% of people aged between 16 and 45 in China said the chatter on social networks has at some point influenced their online shopping decisions.
Meanwhile, 61% of Chinese respondents said they "frequently" based purchases on what was happening in their social network - almost double the global average of 32%.
In consumer giant India, over 82% of people aged 16-35 said happenings on their social network influenced their buying habits.
Even among the older generation - those aged 65 and over - more than a quarter said their purchases were frequently influenced by social media - much higher than the global average of 5% for that age group.
Torsten Stocker, Shanghai-based partner at AT Kearney, says word of mouth referrals is the major reason why more Asians rely on social media for shopping, in a world of fake goods and knock-offs.
"There's obviously a history of information control, particularly in China, and I think that extends to some extent to advertising," he says.
"I think there's also a high prevalence of counterfeit, fake and low quality goods - so that it automatically reduces the trust people have in official communication."
Trusting someone who has your best interests in mind, like a close friend or acquaintance, or even someone that is slightly more removed but in your network, is much more compelling, he adds
"If you look at China in particular, there's been so many food scandals, and so many items that may be counterfeit, and may not deliver what they promise. In general the level of trust [in retailers] is lower."Retailers' virtual push
As a result, a lot of consumer goods companies and retailers in Asia are trying to engage with consumers through social media, and create word of mouth in the virtual world.
Retailers that have been successful in creating a buzz online are using a range of tactics from promising shoppers discounts if they post "selfies" wearing their merchandise, to creating online communities based on competitions or events.
Outdoor clothing outlet The North Face's strategy in China this year gained momentum after it launched a competition for consumers to be "The Next Explorer", and win a trip to the US.
The competition resulted in more than 200,000 new members to its online community, where participants talk about products and connect with each other to organise events such as hiking trips.
"It has taken on a life of its own. North Face is behind it, but it's not necessarily advertising for its products," says Mr Stocker.
"It's made them more visible, and helped create more interest in the category... and hopefully people will buy more products."
The North Face sales in China jumped more than 20% in 2013 from the year before.
Meanwhile, as retailers try to come up with innovative ways to engage with consumers online, Singaporean online shopper Chelsea Lin says that overall, it is just easier to get more feedback on purchases through social networks versus going into a physical store.
"It becomes quite addictive, to the point where it's a weekly thing that I would buy something," the 30-year-old office worker says.
"It's like you can shop everyday if you shop online."
19 December 2014 Last updated at 10:11
Has President Xi Jinping achieved his China Dream?
A China year is never short of changes, but one things that stays the same is the leadership's love of a political slogan.
2014 was a year with two: The China Dream and The New Normal.
The China Dream was not strictly a 2014 slogan but this year saw it put on weight.
It's counter-intuitive to suggest that a dream should feature a succession of handcuffed middle-aged men weeping piteously in a courtroom, but the dream narrative could not possibly take hold amidst the greed, cynicism and depravity of the Party machine which Xi Jinping inherited from his predecessors.
So his China Dream had to be launched on a tide of tearful corruption confessions.
The fall of the once-mighty has been a yearlong spectacle only slightly less savage than the tumbrels and guillotines of the French Revolution and precisely designed to avoid China's Communist leadership going the same way as the French aristocracy.
The key takedown was the former security chief Zhou Yongkang.
China watchers spent much of the year arguing about whether President Xi had the political clout to grapple this "tiger" into court, and whether his objective was cleaning up the system or just clearing out political rivals.
But by year-end, there were criminal charges against Zhou and a stream of sensational anti-corruption investigations in the top ranks of the People's Liberation Army, the state-owned enterprises, police, judiciary and media.
President Xi's China Dream was about resuming a place at the forefront of the world and through purges, austerity and "rectification", he spent the political year trying to build the resilient authoritarianism to get China there.Dreaming different?
But this is still one man and one dream, both of them carefully wrapped in the national flag.
Those of his fellow citizens who dared to dream a different dream in 2014 had a terrible year.
Political liberals, Christian pastors, Uighur academics, internet activists, even those inside the establishment who the state deemed too ready to share their opinions with foreigners - they all found themselves behind bars.
It's no accident either that this was the year President Xi published a book on governance.
His message was that due to its special history, culture and circumstances, China has always and will always follow a different path.
In November, he told US President Barack Obama that "the gene of traditional Chinese culture is deeply planted in the mentality of modern Chinese". The Central Party School began teaching Confucius as well as Marxism Leninism.
There were some ironies in all of this.
For example, in 2014 China celebrated its first Constitution Day, but its biggest search engine Baidu banned internet forums about the constitution.
Similarly, the Communist Party Plenum in October focused on the theme of rule of law without mentioning that some of the country's most prominent lawyers are now behind bars.
China, the world's biggest internet censor, held its first world internet conference.'When dictatorship becomes a fact, revolution becomes a duty'
But ironies are less glaring where there's only one point of view, and the central project of the China Dream is shaping the minds of its young citizens before they're exposed to alternative viewpoints.
On this score, the key lessons of 2014 were delivered not on the Chinese mainland but in Hong Kong.
"When dictatorship becomes a fact, revolution becomes a duty", read the T-shirts of some of the young Occupy Central protestors, in a jarring challenge to the China Dream slogan.
It must have been unsettling for Beijing to observe that the younger and better-educated the citizens of Hong Kong, the more pessimistic they seemed about their future under Chinese rule.
But as week followed week in the Occupy encampment, the Chinese government played its cards adroitly, making no concessions on the key electoral demands and letting local government take the heat.
Crucially there was no major flare up of sympathy protest on the mainland, underlining the importance of the "patriotic education" campaign in schools and universities, an education which reminds young mainlanders of the humiliations of their history and the benefits of unity and political stability under the firm leadership of the Communist Party.
To drive home that message, 2014 saw the introduction of two new national remembrance days, one to commemorate the defeat of Japan and the other the Nanjing massacre.
And it was no surprise that Beijing used all the propaganda tools at its disposal to convince the wider mainland public that foreign hostile forces were behind Occupy Central.
But Beijing has no direct access to young minds in Hong Kong and 2014 demonstrated how limited Chinese soft power is without it.
A lesson taught not just in Hong Kong, but also in Taiwan, which saw its own dramatic student protest in the late spring.
Like Occupy Central, Taiwan's Sunflower Movement was also driven by distrust of Beijing and distrust of local politicians seen as advancing Chinese objectives against the interests of their own citizens.
It was surely one of 2014's big China paradoxes that China was determined to paint these movements as the work of hostile powers, whereas in fact the opposite was true. Both the Occupy and Sunflower protests flourished despite an almost complete absence of international encouragement.
Should Beijing be more worried that this generation of Chinese citizens had the political grit to do it for themselves? Or more satisfied that its swelling economic might allowed it to quell the unease of democratic governments? It's hard to judge.'The new normal'
But that brings me to economics and China's other big slogan of the year: the new normal.
2014 was the year the International Monetary Fund declared that China's economy had overtaken the United States on one key measure of scale, purchasing power parity.
Beijing pushed ahead energetically with plans for the Asian Infrastructure Investment Bank, the Free Trade Area of the Asia Pacific and the Silk Road Economic Belt, all fertile territory for the China Dream, projects designed to signal to the rest of the region where its future interests lie.
And the Apec forum in Beijing in November provided the perfect stage for Xi Jinping to deliver that message, and to tone down a rivalry with Japan which was hurting business and diplomacy.
But behind another year of mesmerisingly huge China numbers - from infrastructure investment to naval build-up and internet growth - is the most important economic story and the one that will decide the future of the China dream: economic reform.
The new normal is Beijing's signal that however painful, it intends to put economic reform before high speed growth. For three decades China has grown at an average of nearly 10% a year but pressure on the environment and the social fabric means that is no longer possible.
President Xi has said 7% "is not scary" and Prime Minister Li Keqiang now says "reform will be the stimulus".
Even if it underperforms on its 7.5% target for 2014, China's economy will still have seen a growth rate much higher than any developed country.
But many of the structural economic reforms pledged at the end of 2013 had not taken place by the end of 2014, while growth was still relying on debt-funded investment, casting a darkening cloud over property and land prices.
Without high land sales, local government revenues are in trouble, and the house of cards that is local government debt may jeopardise financial stability.
Despite dire warnings that there will be no bailouts, Beijing has not made an example of any major state enterprise or local government, presumably for fear of both the immediate protest which might follow and the damage to confidence in the entire financial edifice.
Which brings us back to the tearstained courtroom where we started: anti-corruption as the first act of the economic reform drama, removing the robber barons at the top of the state sector and then breaking up their monopolies so that a more innovative and entrepreneurial private sector can step into the gap to drive a new growth in consumer and service industries.
In this brave new normal, local governments would have a secure fiscal base no longer dependent on land sales, and infrastructure and property investment would no longer be the addictions they are today.
But building this new normal is a race against time.
In 2014, Beijing managed to deftly paper over the contradictions of the old but the longer this economic rebirth takes, the more painful it promises to be.
In short, the China Dream can't get much further until the new normal is born.
Next week, Carrie will look at China's prospects in 2015.