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The world’s strongest economies will find themselves in a new crisis if they fail to address the dangerous imbalances in the world economy, France’s finance minister warned Friday.

But Christine Lagarde also recognized that governments have sought starkly divergent paths out of the financial crisis and their “vested interests” could endanger agreement. She spoke as finance ministers and central bank governors of the Group of 20 industrialized and fastest developing nations gathered for their first meeting this year in Paris.

The status quo of some countries building up huge surpluses while others run steep deficits “leads us straight into the wall of another debt crisis,” Lagarde said at a financial conference that kicks off the G-20 meeting.

The world’s top financial officials hope to draw up a list of indicators that best measure dangerous imbalances in trade deficits, surpluses, budget deficits or levels of debt. Inflation and national savings rates are also likely to be considered as part of the range of possible yardsticks.

“We will focus on how to use those indicators to achieve better collaboration and cooperation,” Lagarde said, adding that the G-20 meeting hosted by France would be about “more stability, less volatility, less excesses, and world governance.”

Lagarde has the difficult task of picking up the pieces of last November’s G-20 summit of heads of state in Seoul, which ended without any meaningful agreement on how to defuse long-standing tensions over trade and currency imbalances.

Her warning of the danger of imbalances was echoed by U.S. Federal Reserve Chairman Ben Bernanke. In the years before the financial meltdown of 2008, countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value, Bernanke said in his speech at the conference.

The Fed chairman called on surplus countries like China to let their exchange rates float freely, and urged nations like the United States needed to narrow their budget shortfalls and save more.

“If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world,” Bernanke said.

Emerging markets like China and Brazil have emerged from the financial crisis much stronger than some of the more traditional powers such as the U.S, Europe and Japan.

While there is widespread agreement among financial policymakers that smoothing out imbalances is key to getting the global economy back in track, how that should be done is more divisive.

The mere existence of the imbalances points to vastly different growth models among the world’s biggest economies, with each arguing that changing its strategy _ whether based on exports, exchange rate controls, or the free flow of money _ would hurt its recovery.

Officials will not even get to the more difficult question of setting thresholds for these indicators. The even more tricky question of how to enforce any thresholds that leaders eventually sign up to is yet further off the agenda.

“Name and shame” policies like those used in the fight against international tax havens would be one, albeit toothless, possibility.

Lagarde said reducing imbalances will “require cooperation, understanding of each other’s positions and vested interests.” She said the talks on Friday and Saturday should help G-20 members “move from understanding to cooperating and collaborating.” Finance ministers will meet several more times this year before France’s G-20 presidency culminates with a heads of state summit in Cannes in November.

“It’s going to be quite a task, but that’s where we need to go,” Lagarde said

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President Hugo Chavez said Sunday that he has no intention of ceasing his efforts to make Venezuela a socialist country, and he expressed confidence that his allies would take the reins of his “Bolivarian Revolution” if he died or decided to step down.

“There’s no end here, this is going to continue,” said Chavez, referring to the political movement he named after 19th-century independence hero Simon Bolivar.

Chavez, a former paratroop commander who was first elected in 1998, said his close confidants would undoubtedly assume power and continue his efforts to steer Venezuela toward socialism if he were to die or retire from politics.

“I don’t fear death,” Chavez said during an interview broadcast on the local Televen television channel, adding that he believed a younger generation of revolutionary-minded allies would persevere in Venezuela’s ongoing political tug-of-war.

Critics ranging from opposition leaders to representatives of the Roman Catholic Church claim Chavez has become increasingly authoritarian and poses a threat to the South American country’s democracy by aspiring to cling to power for decades to come unsecured personal loans.

Chavez vowed on Sunday to win Venezuela’s next presidential election in 2012.

“If they don’t kill me or if some kind of catastrophe does not occur, I’m sure _ there will be much work to be done _ that I’ll be re-elected for six more years,” he said.

Opposition lawmaker Alfredo Ramos said that a coalition of opposition parties has decided to choose a contender for next year’s vote through a primary, which will be held at the end of this year or in early 2012.

“I don’t have the slightest doubt that Hugo Chavez will be defeated in 2012 because the people, not the political parties, are going to pick a candidate,” Ramos said in a telephone interview. “Chavez doesn’t have a chance of winning.”

Chavez remains Venezuela’s most popular politician despite his administration’s failure to resolve pressing problems: a severe shortage of housing for the poor, widespread violent crime, economic stagnation, and Latin America’s highest inflation rate.

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Bank of England policy maker Martin Weale said Britain needs an increase in interest rates now to prevent higher prices becoming entrenched in the economy.

“The longer inflation stays above the target and the further it rises, the greater the risk that inflationary expectations will become built in,” Weale wrote in an article the Guardian published today. “These arguments make a powerful case for a modest rise in the bank rate” as “the costs of a small rise now would be lower than the eventual price of addressing higher ingrained inflation.”

Weale this month joined Andrew Sentance in voting for a quarter-point rate increase, after inflation accelerated to 3.7 percent in December, compared with the bank’s 2 percent target. The central bank’s Monetary Policy Committee also has to take into account signs the economic recovery is fading, after initial estimate from the statistics office showed the economy shrank 0.5 percent in the fourth quarter.

Recent gross-domestic-product figures show that the economy is “appreciably weaker than expected,” Weale said. The 0.5 percent contraction compared with economists forecast for 0.5 percent growth.

Inflation Pressures

Most of the recent increase in inflation has been due to the weakness of the pound, higher energy prices and an increase in the U.K.’s sales tax, Weale said. Still, there is a risk that some “one-off” pressures will persist, and that “continuing rapid economic development in China and elsewhere will lead to persistent upward pressure on commodity prices,” he said electronic check payday advance.

The pound was little changed against the dollar today and was trading at $1.5857 as of 9:06 a.m. in London. It weakened 0.1 percent against the euro to 85.92 pence.

While Weale and Sentance voted to increase the benchmark rate at the Jan. 13 meeting, Adam Posen kept up his call for more stimulus to aid growth. The remaining six members of the panel, including Governor Mervyn King, voted to leave the rate on hold and keep its bond-purchase program at 200 billion pounds. ($317 billion).

Britons’ expectations for inflation for the next year rose in January to their highest level since 2008, Citigroup Inc. said on Jan. 28. The median prediction for price increases in the coming 12 months climbed to 3.6 percent from 3.5 percent in December, it said, citing a survey by YouGov Plc.

“If growth resumes shortly, my concerns about inflationary expectations would remain,” he wrote. “But were the recent weakness to mark the start of a sustained new downturn, inflationary pressures would be likely to fade without a bank rate increase.”

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Economic growth continued to expand moderately over the past few weeks, the Federal Reserve said Wednesday.

In its latest snapshot of regional economic conditions, the Fed reported that manufacturing, retail and non-financial services sectors were strong in most regions.

But some sectors did not fare as well. The Fed said residential real estate market remained weak nationwide, as did commercial real estate construction.

The Fed did offer measured optimism on employment, another sector that has not matched the improvement of the economy at large. The Fed reported that the labor market "appeared to be firming somewhat" in most areas, but noted that wages remained stagnant.

Known as the Beige Book, the report summarizes economic conditions in the central bank’s 12 districts across the nation, and is released eight times a year. The report will help set the tone for the Fed policy meeting set to take place Jan. 25-26.

Across the board, retailers told the Fed that sales appeared higher in this holiday season than last year, and in some cases, exceeded expectations. That suggests consumers are opening their wallets, a trend reinforced by an increase in tourism in most parts of the nation.

Inflation remained in check, the Fed said. While some producer costs moved higher, the price increases were not passed on to consumers due to competitive pressures.

The Cleveland, Atlanta, Chicago, St. Louis, Kansas City and Dallas districts all said "activity increased modestly to moderately," the report said. Meanwhile, the economy of the Minneapolis district "continued its moderate recovery," while San Francisco "firmed further." 

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Job openings dipped in November, the latest evidence that employers remain cautious about adding new workers.

The Labor Department says employers advertised 3.25 million jobs that month, a drop of about 80,000 from October.

Openings have risen by 900,000, or 39 percent, since the recession ended ceramic flat iron. But they are still below the 4.4 million openings that were advertised in December 2007, when the recession began.

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Australia’s budget deficits will be wider this year and next than the government predicted before an Aug. 21 election as a rising exchange rate slows tax revenue from exporters, the Treasury said in a midyear review.

The shortfall in the fiscal year ending June 30 will be A$41.5 billion ($42 billion), compared with a July estimate of A$40.7 billion, a report released in Canberra today showed. The gap the following year was forecast to be A$12.3 billion, compared with a previous projection of A$10.4 billion.

The Australian dollar’s 12.8 percent rise this year to above parity with the U.S. currency is reducing taxes collected on profits earned offshore, forcing Prime Minister Julia Gillard to weigh spending cuts to keep election pledges for an end of deficits within three years. Today’s report showed the combined surpluses projected for 2013 and 2014 will be about A$1.6 billion smaller than earlier estimates.

“Commodity export earnings have been particularly affected by the recent appreciation,” the government said in its report. “The rise in the dollar has implications for both the Australian economy and taxation revenue.”

The Treasury forecast a return to budget surpluses of A$3.1 billion in 2012-13 and A$3.3 billion the following year. In July, surpluses of A$3.5 billion were predicted for 2012-13 and A$4.5 billion for the year after.

Exchange Rate

The government based its latest economic assumptions on an exchange rate of 98.5 U.S. cents, up from predictions in the May budget of 90 cents.

“The Australian economy is expected to grow above trend over the forecast horizon and, with an already tight labor market, reach capacity within the next year or so,” today’s report said payday loan lenders. “Consequently, inflation is forecast to rise,” even though a faster currency appreciation will help contain rising prices, the report said.

The Reserve Bank of Australia raised the benchmark interest rate by a quarter of a percentage point to 4.75 percent on Nov. 2 on expectations for stronger economic growth next year as shipments of iron ore and coal to China stoke a jobs boom.

Government revenue was forecast to be A$319.7 billion this fiscal year and A$355.4 billion the year after, today’s report showed, A$3.1 billion less than the combined A$678.2 billion in revenue for those two years predicted earlier this year.

Demand for the nation’s mineral wealth produced by companies such as BHP Billiton Ltd. and Rio Tinto Group helped Australia skirt recession. Swan confirmed growth would accelerate.

Australia’s unemployment rate, at 5.1 percent in September, is about half the level of joblessness in the U.S. The level probably dropped to 5 percent last month, according to economists surveyed by Bloomberg News ahead of a Nov. 11 government report on employment.

The Australian currency traded at $1.0118 as of 1:15 p.m. in Sydney, after reaching $1.0183 on Nov. 5, the strongest since exchange controls were ended in 1983.

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The Federal Reserve is likely to announce a plan to pump more money into the economy next week. But some economists worry that the move won’t work.

The Fed is expected to announce hundreds of billions of new asset purchases, particularly long-term Treasuries, in an attempt to jump start the struggling U.S. economy.

The theory is that this so-called quantitative easing will further drive down interest rates and encourage businesses and consumers to borrow and spend more. The Fed’s decision is expected to be unveiled at the conclusion of its two-day meeting next Wednesday.

Because the Fed already made about $2 trillion in similar purchases during the Great Recession, the next round has been dubbed QE2 by many economists and investors.

Critics of the Fed — and even some Fed members — point to various unintended consequences QE2, including the possibility of a new asset bubble in financial markets, a return of inflation at painful levels, and even a currency or trade war with U.S. trading partners due to a weakening dollar.

But some economists say the biggest problem with more easing is that such a move will have little if any positive effect on the economy.

Even if QE2 leads to lower rates, it’s not as if rates are high currently. Businesses and consumers aren’t borrowing or spending as much because of a lack of confidence and a desire to repair their own balance sheets.

Personal savings rates are up and businesses are sitting on record amounts of cash. Bank lending officers are reporting very weak demand for loans — and some say QE2 is unlikely to change much in the credit markets.

"I think people are wasting time talking about monetary policy," said Richard Koo, chief economist with the Nomura Research Institute in Tokyo and an expert on the massive quantitative easing efforts by Japan during the past two decades. "No one is borrowing money, even with rates near zero. So the economy has little reason to respond to QE2."

Koo’s doubts about the effectiveness have been echoed in recent days by a number of top economists and analysts, including Nobel Prize winning economist Joseph Stiglitz and Bill Gross, manager of the world’s largest bond fund at PIMCO.

Gross wrote in his most recent outlook that the economy is now in a "liquidity trap" — in which lower interest rates no longer have any impact on spurring borrowing or spending.

"Escaping from a liquidity trap may be impossible, much like light trapped in a black hole," Gross wrote. "Just ask Japan."

Fed chairman Ben Bernanke has maintained that the Fed’s earlier round of quantitative easing was successful in helping to stop the economic free-fall in 2008 and early 2009 business cards. But others question that claim.

Lakshman Achuthan, managing director of Economic Cycle Research Institute, said there’s a case to be made that unusual steps the Fed took to buy assets such as commercial paper and consumer debt after financial markets seized up in September 2008 had a more significant positive impact on the economy.

Achuthan said it is tougher to make the argument that the purchases of $1.25 trillion in mortgages and $300 billion in long-term Treasuries that started in March of last year helped turn around the economy and lift it from recession.

He added that the new round of QE may be coming too late. To have any chance to work, it needed to be put in place before the economy started to slow earlier this year.

The annual pace of economic growth in the third quarter was 2%, according to the government’s gross domestic product report Friday. That’s down from GDP growth of 3.7% in the first quarter.

"The single most important thing is getting the timing right," Achuthan said. "What we’ve seen is that with the Fed is that it is pretty reliably behind the curve all the time."

Many Fed policymakers are also not convinced that more easing is the right idea. Kansas City Fed President Thomas Hoenig, who currently is a voting member of the Fed’s policy committee, said in a speech at the University of Kansas earlier this week that trying to spur the economy through asset purchases is a "bargain with the devil."

Hoenig has consistently argued this year that the economy is slowly recovering and that further stimulus efforts from the Fed are unnecessary. He has been the most vocal in his arguments but other regional Fed presidents have also publicly stated their reservations about more easing.

Paul Ashworth, senior US economist for Capital Economics, said the lack of consensus among Fed policymakers is in itself another problem. He argues it will probably mean the Fed won’t wind up agreeing to purchase as much assets as necessary to help the economy.

"The bottom line is that we don’t believe additional quantitative easing will make any meaningful difference, particularly not in the limited amounts the Fed is likely to start with next week," he wrote in a recent note. 

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An Apple Inc. manager has been charged in a $1 million kickback scheme involving six Asian suppliers of iPhone and iPod accessories.

Paul Shin Devine, a 37-year-old Apple global supply manager from Sunnyvale, was named in federal indictments and a civil suit brought by Apple (NASDAQ:AAPL) on Friday in San Jose.

The federal grand jury indictment charges Devince, who has been with Apple since 2005, with wire fraud, money laundering and other offenses.

The indictment also names Andrew Ang of Singapore, who works for Apple supplier Jin Li Mould Manufacturing Pte. Ltd.

Court filings on Friday said that Devine was paid by suppliers in Asia for inside information they could use to get negotiate favorable contracts with Apple.

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SurModics Pharmaceuticals, a Birmingham subsidiary of SurModics Inc., has agreed to license a biodegradable polymer implant technology being developed to treat sun-induced skin disorders to an Australian pharmaceutical firm.

SurModics licensed the SCENESSE implant formula to Australian-based Clinuvel Pharmaceuticals. The two companies have collaborated on developing the formula that is a prophylactic treatment for a range of UV and light-related skin disorders for several years.

“We are very pleased to announce the execution of this important license agreement with Clinuvel,” said Phil Ankeny, interim CEO of SurModics. “This announcement demonstrates the value of our sustained drug delivery technologies and reinforces how we partner with our customers to develop and bring to market compelling products that leverage our core technologies cash advance loans.”

Drugs released from the prophylactic causes melanin production in the skin to protect from ultraviolet rays. Estimates from the Royal Bank of Scotland projects the treatment could impact as many as 7 million people worldwide, according to a release from SurModics.

“Today’s announcement represents a natural progression of our relationship with Clinuvel,” said Arthur J. Tipton, senior vice president and chief scientific officer of SurModics. “Together, our teams have solved numerous scientific and technical issues over the years culminating in the signing of this licensing agreement. Clinuvel’s product provides a novel way to treat serious skin disorders.”

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