America avoids the Fiscal Cliff, as Britain and Europe tumble over it.

America didn't go over the fiscal cliff. That's good news, right? Well, the stock market seemed to think so: the FTSE rose over 6,000 for the first time in eighteen months. And it was surely a good thing to see investors here, and in the rest of the world, celebrating an increase in taxes for the rich - or at any rate those earning over $450,000 a year.

This was a victory for President Obama, of that there is no doubt. Refusing to blink as the Tea Party Republicans took America to the brink, he managed to avoid any big cuts - at least for now - in federal spending on tax credits to the low paid or welfare to the long-term unemployed, who stood to have their benefits cut completely. The US is a slightly fairer country as a result. The Republicans have been left divided and confused, with the budgetary super-hawk, Paul Ryan, voting with Obama.

But isn't it just a little odd that hedge fund managers and other stock market money men here should find this all so positive? Presumably, they believe that these measures, the avoidance of deep spending cuts, mean that the world economy is now in better shape. But that isn't the economic logic they have been applying on this side of the pond. In the UK, the Coalition decided to go over its own voluntary fiscal cliff in 2010 when the Chancellor, George Osborne, announced that he was going to put through the deepest spending cuts in half a century and eliminate the deficit in five years. 'Cheers!', said the stockmarket suits. 'Just we need to put the country on course for recovery'. Unfortunately, the UK economy went into a triple dip recession which looks like lasting well into 2013. So, why is a fiscal cliff good here but not in America?

In Europe, they went even further over the cliff and plunged Mediterranean countries like Spain, Greece and Portugal into crushing economic depressions. Why? The US is in just as serious a debt hole as the eurozone. America has a £16.4 trillion debt, and its annual deficit – the amount the governmen has to borrow each year – is nearly 9% of GDP. That's higher than ANY eurozone country's deficit and 3 times the 3% ceiling in the EU “stability pact”. Yet, the ECB and the German bankers were yesterday also celebrating the fact that America had decided not to do what they've been doing. Perhaps they could learn something.

Europe's trades unionists have won the argument even if they haven't won the streets

 Last week' pan-european strike was the biggest show of trade union solidarity since the creation of the European Union. 40 trades unions in 23 countries took to the streets in protest at the austerity policies being pursued by European countries under the direction of the IMF and the European Central Bank. The organisers should be very pleased with the response, even though it largely passed Britain by.

The turnout demonstrates that, even though the vast majority of workers in countries like in Spain are not members of trades unions, it is possible to mount an effective protest against austerity across southern Europe at least. However, protest is all it was. This was not a general strike or anything like it, and we shouldn't exaggerate its impact. The EU bureaucrats are not exactly shaken to the core. Nor is Angela Merkel likely to open the coffers of the Bundesbank because of a few clashes with police. The demonstrations will make very little difference to the fate that awaits a generation of young people as Europe languishes in economic depression.

This is despite the fact that in many ways the unions have won the argument. The intellectual case for continuing with the austerity measures in the eurozone has been seriously undermined by the deepest economic contraction in  since the Second World War. Greece's economy has shrunk by 25% since 2009, and the contraction is accelerating: Greece shrank by 7.2% in the Third Quarter of 2012, which is unprecedented in any European country in peacetime. Countries like Spain, where unemployment is now running at 25%, are caught in a ruinous fiscal trap: cuts lead to economic contraction, which leads to more unemployment, which leads to collapse of tax revenues, which leads to more debt and more cuts. It is a vicious spiral the significance of which the northern eurozone countries seem unable to grasp - even though Germany is now beginning to feel the consequences as its exports to the rest of Europe dwindle.

Now I know why Cameron wears that condom

I’ve never quite understood the cartoonist Steve Bell’s caricature of David Cameron wearing a condom over his head, except for the rather obvious suggestion that he is, well, a male member.  However, following the row over how many children benefit claimants should be allowed to have, I finally do get it.  Vote Tory and stop one.