Who Owns America’s Debt?

As the U.S. continues to rack up more than $1 trillion of new debt every year, Americans are beginning to worry about who we owe this money to and how much power our creditors have over us.
According to Barry P. Bosworth, a senior fellow at the Brookings Institution, our two biggest foreign creditors are Japan and China.
Although it may seem as though our debt to these countries renders us a puppet on strings, Bosworth says this fear is overblown. The U.S. market is very important to China's economy, so China would be loathe to do anything that might exacerbate tensions or disrupt trade between the two countries. And the same can be said for Japan. China owns $1.15 trillion of U.S. government debt -- more than any other country -- but U.S. taxpayers actually owe less money to China compared to recent years. China holds 10% of U.S. Treasuries, down from 12% two years ago.
Related: China's Slow Growth 'Marks An End of an Era' But No Hard Landing
And what about all the anti-China rhetoric that we hear about on the campaign trail?
Republican Presidential Nominee Mitt Romney has been promising the country that he will declare China a "currency manipulator" on the first day of his presidency--and then enact tariffs as necessary until he forces China to level the trading playing field. Is that something that Romney is actually likely to do if he gets elected?
No, says Bosworth.
Tough talk with respect to China has become standard rhetoric for any presidential challenger. If and when Romney becomes president, his position will likely mellow.
Bosworth also says that the problem with the U.S.-China trade relationship is not, as is commonly believed, that China doesn't play fair. China has actually addressed lots of its unfair practices over the past decade, Bosworth says, while the U.S. is still pursuing the same old self-destructive habits. Until we stop consuming so much and start producing more, Bosworth says, we're in no position to demand anything.

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Earnings from McDonald's, Microsoft sink stocks

NEW YORK (AP) -- Poor earnings reports from three companies in the Dow Jones industrial average — Microsoft, General Electric and McDonalds — sent indexes down sharply Friday, marking a sour end to an otherwise strong week in the stock market.
McDonald's led a broad drop in the Dow, falling 3 percent. The Dow was down 151 points at 13,397 shortly after noon.
"I'm concerned about corporate earnings, but I'm not alarmed yet," said Doug Cote, chief market strategist at ING Investment Management in New York.
Cote cautions that it's still early in reporting season, but what's worrying is that companies have reported an overall drop in earnings so far. "And once you get one quarter of negative earnings, it's a precursor," he said. "It's the cockroach theory: if you find one, there's probably many more."
The Standard & Poor's 500 sank 17 points to 1,440 and the Nasdaq composite dropped 52 points to 3,020. All 10 industry groups in the S&P 500 fell, led by materials and technology stocks.
McDonald's profit sank as a strong dollar hurt international results, which account for two-thirds of its business. The fast-food giant's stock lost $3.51 to $89.35.
Microsoft's income fell 22 percent as PC sales took a dive and as troubles in Europe took their toll. Its stock lost 67 cents to $28.82.
General Electric, another economic bellwether, fell 3 percent. The company reported stronger profits early Friday but its revenue missed Wall Street's expectations. Orders for new equipment and services sank, mainly because wind turbine orders have fallen because a key U.S. federal subsidy for wind power expires at the end of the year.
GE's stock lost 60 cents to $22.21.
Analysts currently expect companies in the S&P 500 to post their worst earnings results since the third quarter of 2009, according to S&P Capital IQ. Banks and consumer discretionary companies are projected to report the best growth. Analysts expect companies dealing in metals and other materials to report the worst results, followed by energy companies.
But it's technology companies like IBM, Intel and Google whose weak results have grabbed the most attention so far.
Weak earnings from Google and a rise in claims for unemployment benefits helped pull the stock market lower Thursday. That snapped a four-day run of gains for the Dow. Google fell again Friday, giving up $14.14 to $680.86.
The Dow is still up 0.6 percent for the week. The S&P 500 up is up 0.8 percent.
In other Friday trading, the yield on the 10-year Treasury note slipped to 1.77 percent from 1.83 percent late Thursday.
Among other stocks making big moves, Chipotle Mexican Grill plunged 14 percent after the burrito chain forecast that revenue growth would slow sharply next year. The stock had been a favorite among investors thanks to super-fast growth in recent years. The stock fell $41.32 to $244.61.

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McDonald's Canada Reveals How They Make Famous Fries

McDonald's Canada is at it again, demystifying their french fry recipe "from the farm to all the way to the fryer."
In their new behind-the-scenes video, Scott Gibson, manager of the company's supply chain, takes customer questions on their world-famous fries.
Gibson addresses the first question asking whether or not the potatoes used by the fast food restaurant are real. Standing in the middle of the Levesque farm with farmer Angelo Levesque, the two discuss how the potatoes are harvested and sorted at the farm. Then they are then brought to McCain, the company's fries supplier, to be prepped before heading to stores.
SLIDESHOW: Fast Food Ads vs. Reality: How Do They Size Up?
Mario Dupuis, production manager at McCain, describes how they prepare the fries by washing the potatoes to remove the rocks and the dirt and put them through a "peeling system."
Afterwards, they are cut and blanched "to remove the natural sugars from the strips, this will prevent some variation in the color once we cook the product," said McCain.
Next they are washed in a textural solution to give it the "nice even coat we see in the restaurants," said McCain, adding they also use an ingredient on the strips to prevent the fries from greying or oxidizing. Afterwards, they are then dried and fried for 45 to 60 seconds. Finally, they are frozen, packaged and shipped to stores.
Once in stores, the fries are deep-fried in 100 percent vegetable oil. They are salted with about 1 tablespoon of salt per four orders of medium fries. For those concerned about salt intake, Gibson suggests that customers can order their fries without the salt.

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Apple’s New iPad Mini Is Pricey but That Won’t Deter Fans: TechCrunch’s John Biggs

It's officially here: The iPad mini, the subject of endless speculation and rumors over the past year, made its debut Tuesday at the California Theater in San Jose, Calif. The iPad mini starts at $329 and hits store shelves Nov. 2. Pre-sales begin Oct. 26. It boasts a 7.9-inch display, weighs 0.68 pounds and is 7.2mm thick. The design closely resembles the iPod Touch and comes in both black and white.
Related: Get Ready for a Big Week in Tech: Apple & Facebook Earnings, Mini iPad, Windows 8 & More
As is the case with all Apple products, there is an option to pay up for more hardware. Here are the price points:
$329 for 16GB
$429 for 32GB
$529 for 64GB
In mid-November Apple will roll out the Wi-fi and 4G mini for $459 for 16GB, $559 for 32GB, and $659 for 64GB.
The iPad mini screen measures 1,024x768, the same resolution as the iPad 2. It also includes a dual-core A5 processor, a front-facing FaceTime HD camera, Apple's "Lightning" connector and a 5-megapixel back camera. A fully charged iPad mini will get 10 hours of battery life.
Apple (AAPL) stock was trading nearly two percent lower after the iPad mini presentation.
Related: Why Apple's Stock is Dropping
John Biggs, East Coast editor of TechCrunch, says the Apple event lacked the shock and awe of previous product announcements.
"Everybody was expecting an iPad mini and we got an iPad mini," he says in an interview with The Daily Ticker. "To see an iPad mini pop up is no huge surprise."
Biggs says the new mini may be pricey but it would not deter Apple devotees and tech "dorks" from adding to their Apple collections. The smaller screen will attract consumers who use tablet devices for reading -- "it's Apple's e-reader" -- Biggs says, and the new mini is not likely to cut into sales of the larger iPad versions, which still feature bigger screens and a higher resolution display.
The starting price for the iPad mini is $130 more than the Kindle Fire HD and Nexus 7 — Apple's two main competitors in the e-reader space. Most Apple insiders and analysts were expecting a lower entry point for the mini, says CNET's Brian Tong, and consumer sticker shock could drag down sales expectations. The mini's price would have been even higher if Apple made it with a retina display, he adds.
"It will sell well but won't break records," Tong says. "It will sell because it's Apple. Never underestimate the Apple consumer."
Microsoft will unveil its first tablet device, Surface, next week.
Related: Microsoft Launches Its Own Tablet--and Admits Apple Was Right
Biggs says the Surface's size and user-face are more conducive to typing, an important feature for some consumers. The tablet market may be expanding but there's still only one winner, according to Biggs — Apple. "You're getting the premium product," he says.

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US economic growth improves to 2 pct. rate in Q3

WASHINGTON (AP) -- The U.S. economy expanded at a slightly faster 2 percent annual rate from July through September, buoyed by an uptick in consumer spending and a burst of government spending.
Growth improved from the 1.3 percent rate in the April-June quarter, the Commerce Department said Friday.
The pickup in growth may help President Barack Obama's message that the economy is improving. Still, growth remains too weak to rapidly boost hiring. And the 1.74 percent rate for 2012 so far trails last year's 1.8 percent growth, a point GOP nominee Mitt Romney will emphasize.
The report is the last snapshot of economic growth before Americans choose a president in 11 days.
The economy improved because consumer spending rose 2 percent in the July-September quarter, up from 1.5 percent in the second quarter. Spending on homebuilding and renovations increased more than 14 percent. And federal government spending expanded sharply on the largest increase in defense spending in more than three years.
Growth was held back by the first drop in exports in more than three years and flat business investment in equipment and software.
The economy was also slowed by the severe drought this summer in the Midwest. That sharply cut agriculture stockpiles and reduced growth by nearly a half-point.
The government's report covers gross domestic product. GDP measures the nation's total output of goods and services — from restaurant meals and haircuts to airplanes, appliances and highways.
The first of three estimates of growth for the July-September quarter sketched a picture that's been familiar all year: The economy is growing at a tepid rate, slowed by high unemployment and corporate anxiety over an unresolved budget crisis and a slowing global economy.
While growth remains modest, the factors supporting the economy have changed. Exports and business investment drove growth for most of the recovery, but are now fading. Meanwhile, consumer spending has ticked up and housing is adding to growth after a six-year slump.
Consumer spending drives nearly 70 percent of economic activity.
Businesses have grown more cautious since spring, in part because customer demand has remained modest and exports have declined as the global economy has slowed.
Many companies worry that their overseas sales could dampen further if recession spreads throughout Europe and growth slows further in China, India and other developing countries. Businesses also fear the tax increases and government spending cuts that will kick in next year if Congress doesn't reach a budget deal.
Since the recovery from the Great Recession began in June 2009, the U.S. economy has grown at the slowest rate of any recovery in the post-World War II period. And economists think growth will remain sluggish at least through the first half of 2013. Some analysts believe the economy will start to pick up in the second half of next year.

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Disney buying Lucasfilm for $4.05 billion

LOS ANGELES (AP) — Disney is paying $4.05 billion to buy Lucasfilm Ltd., the production company behind "Star Wars," from its chairman and founder, George Lucas. It's also making a seventh movie in the "Star Wars" series called "Episode 7," set for release in 2015, with plans to follow it with Episodes 8 and 9 and then one new movie every two or three years.
The Walt Disney Co. announced the blockbuster agreement to make the purchase in cash and stock Tuesday. The deal includes Lucasfilm's prized high-tech production companies, Industrial Light & Magic and Skywalker Sound, as well as rights to the "Indiana Jones" franchise.
Disney CEO Bob Iger said in a statement that the acquisition is a great fit and will help preserve and grow the "Star Wars" franchise.
"The last 'Star Wars' movie release was 2005's 'Revenge of the Sith' — and we believe there's substantial pent-up demand," Iger said.
Kathleen Kennedy, the current co-chairman of Lucasfilm, will become the division's president and report to Walt Disney Studios Chairman Alan Horn. Lucas will be creative consultant on new "Star Wars" films.
Lucas said in a statement, "It's now time for me to pass 'Star Wars' on to a new generation of filmmakers."
The deal brings Lucasfilm under the Disney banner with other brands including Pixar, Marvel, ESPN and ABC, all companies that Disney has acquired over the years. A former weatherman who rose through the ranks of ABC, Iger has orchestrated some of the company's biggest acquisitions, including the $7.4 billion purchase of animated movie studio Pixar in 2006 and the $4.2 billion acquisition of comic book giant Marvel in 2009.
Disney shares were not trading with stock markets closed due to the impact of Superstorm Sandy in New York.

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Has Obama Been Good for Millionaires?

The question of whether Americans are better off than they were four years ago depends, of course, on the American.
For the 12 million unemployed, the answer is most certainly no.
But for many of America's millionaires, the answer may be more affirmative.
A new study from WealthInsight, the London-based wealth-research and data firm (and yes, they are non-partisan), showed that the United States added 1.1 million millionaires between Jan. 1, 2009 and the end of 2011, the latest period measured. There were 5.1 million millionaires in America at the end of 2011, compared with around 4 million at the end of 2008.
That works out to more than 1,000 millionaires a day under the Obama administration. (They defined millionaires as people with total net worth of $1 million or more, excluding primary residence).
(Read more: Rich Will Spend More Under Romney: Poll)
"It's true that Obama has been good for millionaires, at least in absolute terms," said Andrew Amoils, analyst at WealthInsight. "He certainly hasn't been bad for millionaires."
Amoils said that quantitative easing and financial bailouts especially helped the finance sector, which accounts for the largest share of millionaires. It also helped that markets recovered in 2009.
The timeframe is worth noting. Measured against the 2007 peak, when 5.27 million Americans had a net worth of at least $1 million, the nation lost 165,360 millionaires. Their combined wealth is down six percent, to $18.8 trillion from a peak of more than $20 trillion in 2007.
We don't know how 2012 will turn out, though if stock markets continue to strengthen, the millionaire count for 2012 is likely to increase. Wealth Insight says the number of millionaires in America will grow to more than six million by 2016, and their combined fortunes will jump 25 percent over the same period.
(Read more: Millionaires Give Nine Percent of Income to Charity)
Where did all the millionaires come from between 2008 and 2011?
Mainly from retail, tech and finance -- and in both blue and red states.
Of the sectors adding the largest number of people worth $30 million or more, the retail, fashion, and luxury goods sector ranked first. That was followed by energy and utilities, then tech, telecoms and finance. Transportation and construction saw the biggest drops.
The number of people worth $30 million or more grew 26 percent in Connecticut since 2008, 20 percent in Kansas, 12 percent in Michigan, showing that the wealth creation was nationwide.

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Obama Wins 2012 Election: Why Your Taxes Are Going Up

When President Obama and the new Congress begin to tackle important legislation and federal policy in January, one of the key issues will be how to reform America's byzantine tax code.
Obama campaigned on a platform to raise taxes on the wealthiest Americans, declaring that millionaires and billionaires need to "pay their fair share." The president proposed the highly controversial "Buffett Rule," which would make sure those individuals earning more than $1 million a year would pay at least 30% of their income in federal taxes.
Related: Do the Rich Have a Moral Obligation to Pay Higher Taxes? Gov. Jerry Brown Says 'Yes'
The top individual tax rate is currently 35% but few U.S. households and individuals actually pay that much; various tax deductions and loopholes reduce one's tax burden.
According to the Obama campaign, the richest 400 taxpayers in 2008 (who each made more than $110 million that year) paid an average income tax rate of just 18%. In 2009 over 20,000 U.S. households with more than $1 million in income paid a federal tax rate of less than 15%.
Obama has vowed to raise the top income tax rate for individuals to 39.6% and let the Bush-era tax breaks end for the highest income earners. The majority of Americans — those who are lower to middle class — could also see a 2% tax increase if Congress allows the temporary payroll tax holiday to expire at the end of the year.
Related: Here's Why Your Taxes Are Going Up 2% Next Year: Just Explain It
Nearly half of voters support raising taxes on incomes over $250,000, according to Tuesday night's exit polls.
Len Burman, a professor of public affairs at Syracuse University and a co-founder of the bipartisan Tax Policy Center, believes higher tax rates play just a small role in resolving the nation's budget woes.
"In the long term [Obama] is going to need to raise taxes on more than just the rich," Burman says in an interview with The Daily Ticker. "The budget problem isn't going to be solved without broader-based tax increases, preferably done in the context of tax reform and also serious entitlement reform. We're not going to be able to solve this on the tax side alone."
Burman, who recently co-wrote the new book "Taxes in America: What Everyone Needs to Know," says tax rates do not need to be raised for any income group if Congress and the White House would agree on one simple change: raising the capital gains rate, i.e. the profits from the sale of an investment. Assets, such as stocks, art or real estate, that are held for at least a year are currently taxed at a special 15% rate; Obama wants to raise that to 20%.
"The problem with a low tax rate on capital gains is not that it allows Mitt Romney and Warren Buffett to pay very low taxes but that it creates this huge opportunity for tax sheltering," he notes. "There's a whole industry that's devoted to coming up with these schemes. [Raising capital gains rates] could make the tax system more progressive and allow for lower tax rates" and a reduction in the deficit Burman says.
Obama's tax proposal also targets the Alternative Minimum Tax, the Estate Tax and as well as many personal tax credits and itemized deductions. Obama would make permanent the 2007 AMT patch and index it for inflation. He would raise the estate tax to 45% from 35% on estates worth more than $3.5 million. He would lower the corporate tax rate to 28% from 35% and provide a refundable $3,000 credit per added employee for companies that expand their workforce. He would tax carried interest as ordinary income.
Related: Corporate Tax Loopholes=Corporate Socialism: Pulitzer Prize Winner David Cay Johnston
A divided Congress refused to compromise with Obama during his first term and could very well dismiss the president's tax reforms for the next four years. Republicans are loathe to raise taxes by even a penny and Obama has said he would veto any budget bills that did not include tax increases. Neither party wants to raise taxes in a weak economy. But the options available for reducing the deficit and generating new revenue are few and far between

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Senators Watch ‘Lincoln’ with Steven Spielberg and Daniel Day-Lewis

Grab the popcorn: Its movie night tonight in the Senate.

The Senate has taken an official recess from floor debate for a few hours to screen the movie “Lincoln” in the Capitol Visitors Center within the Capitol complex.

Appearing with director Steven Spielberg and actor Daniel Day-Lewis on Capitol Hill this evening, Senate Majority Leader Harry Reid, D-Nev., said that he hopes the message of the movie with resonate with senators and the American people.

“I hope everybody who shared his anti-political mood will go out there and see Lincoln. The movie portrays a nobility of politics in exactly the right way,” Reid said.

All senators and their spouses were invited to tonight’s special screening. Without mentioning the fight over the fiscal cliff going on within the halls of Congress as the clock clicks closer to a deadline, Reid said tonight’s screening is an opportunity for “bipartisanship,” among the members.

“For me, it’s what I work with every day but it’s good the American people have seen or will see what the great Abraham Lincoln did to get things done,” Reid said. “It’s remarkable.”

Spielberg said he was honored to show his movie in the Senate and to be able to see ‘”both sides sitting in the same room watching a president put the people out in front of the abyss.”

Because even senators need snacks, a special waiver was granted by the Senate Rules Committee to allow popcorn in for the screening.

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Videogames under fire, Hollywood lays low after school shooting

LOS ANGELES (Reuters) - The multi-billion-dollar videogame industry came under scrutiny on Wednesday after Hollywood canceled, postponed or played down a slew of movies and TV shows with violent content in the wake of last week's shooting at a Connecticut elementary school.

In Washington, Senator John Rockefeller called for a national study of the impact of violent videogames on children and a review of the rating system.

Although investigators in Newtown, Connecticut, have given no motive for Friday's shooting rampage, some U.S. media have reported that the 20-year-old gunman played popular videogame "Call of Duty" - in which players conduct simulated warfare missions - in the basement of his home.

The gunman, Adam Lanza, killed himself at the scene after gunning down 20 young children, six school employees and his mother.

Rockefeller said he had long been concerned about the impact of violent games and videos on children.

"Major corporations, including the video game industry, make billions on marketing and selling violent content to children. They have a responsibility to protect our children," Rockefeller said in a statement.

The Entertainment Software Association, which represents the $78 billion U.S. videogame industry, on Wednesday offered its "heartfelt prayers and condolences" to the Newtown families.

But it said in a statement that "the search for meaningful solutions must consider the broad range of actual factors that may have contributed to this tragedy.

"Any such study needs to include the years of extensive research that has shown no connection between entertainment and real-life violence," the association said.

NEW 'CALL OF DUTY,' 'HALO' GAMES RAKE IN BILLIONS

Activision Blizzard's latest title in its "Call of Duty" franchise - "Call of Duty: Black Ops II" - hit $1 billion in sales two weeks after its launch last month.

Other popular videogames include Microsoft's "Halo 4," in which players kill evil aliens. The game racked up $220 million in global sales on its launch day in November.

Mike Hickey, an analyst at National Alliance Capital Markets, said backlashes against videogames were not rare, but he was unaware of an instance of games being pulled off store shelves in the past.

When the Columbine school shooting happened in 1999, there was a similar outcry because the two perpetrators were students who played the shooter game "Doom," Hickey told Reuters.

Executives at Hollywood movie studios and TV networks have mostly laid low this week as Americans seek answers to the Newtown slaughter, and discuss how to prevent similar gun violence.

However, content seen as sensitive has been pulled from the airwaves, including an episode of the SyFy TV series "Haven" that contained violent scenes in a high school setting, and the premiere next week of a TLC show called "Best Funeral Ever."

Discovery Channel canceled a third season of its reality series "American Guns" about a family of gun makers. Some radio stations stopped playing pop star Ke$ha's bubbly new single "Die Young" to avoid any potential offense.

Glitzy red carpet premieres for violent upcoming new movies "Jack Reacher," starring Tom Cruise, and "Django Unchained" starring Jamie Foxx, were canceled out of respect for the Newtown victims, but both movies will open in theaters as planned in the next seven days.

INSENSITIVE TODAY, OK TOMORROW?

The Parents TV Council praised the response of the entertainment industry this week, but said it shouldn't be confined to the immediate aftermath of such tragedies.

"If a television network changes its programming because of content that could be insensitive today, why would that same content be appropriate at a later time?," council president Tim Winter said in a statement.

"If producers and performers rightly question whether their industry is complicit in creating a violent media culture that feeds real-life tragedies, why would there be a later time to produce and distribute more of it?," Winter added.

Most major Hollywood stars have remained silent about the potential influence of violent movies on U.S. society. But "Django Unchained" star Foxx was quoted as saying the movie industry should not shirk its responsibility.

"We cannot turn our back and say that violence in films or anything that we do doesn't have a sort of influence," Foxx was quoted as saying while promoting the film in New York.

Director Quentin Tarantino called the Newtown shootings "a horrible tragedy," but in an interview with CNN on Monday he declined to link screen violence with real life events.

"This has gone back all the way down to Shakespeare's days ... when there's violence in the street, the cry becomes 'blame the playmaker.' And you know, I actually think that's a very facile argument to pin on something that's a real life tragedy," Tarantino said.

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'Homeland' star Claire Danes gives birth to first child

LOS ANGELES (Reuters) - Emmy-winning actress Claire Danes has given birth to her first child, a boy, the publicist for the "Homeland" star said on Wednesday.

Cyrus Michael Christopher Dancy was born on Monday to Danes, 33, and her husband, British actor Hugh Dancy.

Danes' performance as CIA operative Carrie Matheson on Showtime's "Homeland" series scored her an Emmy win in September, while the psychological thriller won the TV industry's highest honor of best drama series.

Danes is nominated for her second Golden Globe award in the role at the Hollywood awards show in January. She also has won multiple awards for her past work on 2010 TV film "Temple Grandin," and as a 15-year-old on the 1990s coming-of-age television drama "My So-Called Life."

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'Lincoln' at the Capitol draws director and star

WASHINGTON (AP) — Today's lawmakers might be excused for thinking they've seen this movie: A recently re-elected president spars with a quarrelsome Congress over an issue that roils the nation.

The so-called fiscal cliff wasn't at the core of the film screened Wednesday in the Capitol for lawmakers. The movie "Lincoln" explores the political machinations involving President Abraham Lincoln and Congress in 1865 as they considered the 13th Amendment, which abolished slavery.

On hand before the evening screening at the U.S. Capitol Visitors Center were the movie's director, Steven Spielberg, and its star, Daniel Day-Lewis, who portrays Lincoln. Both also met privately with Senate Majority Leader Harry Reid.

Earlier Wednesday, reporters and congressional staff members filled a Senate corridor to get a view of Day-Lewis, considered a top contender for an Oscar.

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Book Talk: The sin of envy on a small Greek island

TOKYO (Reuters) - After a Greek bride is abandoned at the altar and her prospective bridegroom is found blinded from an acid attack, local villagers are baffled until Hermes Diaktoras, a portly man in white tennis shoes, arrives to help.

So begins "The Doctor of Thessaly," the third in a series of detective stories by British-born author Anne Zouroudi that feature Hermes, who even as he works to unravel the crime has more than a hint of mystery about himself.

Zouroudi, who married a Greek fisherman and lived for a while in the remote Greek islands, spoke with Reuters about the origins of her sleuth and the themes that underpin her series.

Q: What started the series?

A: "When I came back to England with my tail between my legs and a failed marriage and a small child in tow, I wrote the first book in the series, 'The Messenger of Athens' kind of to get the issues out for myself, to understand for myself what had gone wrong and why it hadn't been this idyll. I was expecting to live the rest of my life there. So I think 'The Messenger of Athens' is quite a bleak book, really, sort of explaining to myself and to the world what I found in a very isolated and very tiny Greek community.

"But the lead character in that book is obviously slightly worldly and I based him on my interest in Jungian archetypes, actually. The idea of this figure of justice had immense appeal to me and I think he really appealed to readers as well. So when the first book was published, Bloomsbury really liked that character and said, come on, we can do more with him.

"So because the first book was based around lust and love, and there were very blurred lines between lust and love, I thought, you know, lust is supposed to be a sin so we could go through the seven deadly sins. That's how the series was born."

Q: You said you were working through issues, why choose the detective story form?

A: "Because I wanted to write something that I would like to read, and I love to read crime ... When I travel, I like to read books that are about the place that I'm visiting, and yet I could find very few novels of any description based in Greece.

"It seemed to be a market where there was a bit of a dearth, actually. So I really wrote originally a book that I would like to read, and happily other readers seemed to like them too."

Q: You said Hermes was kind of a Jungian archetype - how else did you come up with him?

A: "The story of his appearance is actually quite an interesting one. In the Greek islands in winter, there isn't very much to do. One Sunday afternoon, my ex-husband and I took a walk to the local cemetery because where else are you going to go? When we got there, there was another couple there, and one of them was a man I didn't know. I hadn't seen him before, which once again is very unusual in small Greek islands in winter.

"He was a very elegant man. He was wearing a suit and a raincoat, and he had owlish glasses and a quite distinctive hairstyle, distinctive longish gray curls. He was standing on the cemetery wall and looking down onto the sea. He was such a striking character that when I came to think of a description of Hermes he immediately came to mind. But rather unglamorously, he turned to out to be the new manager of the bank of the island where I was living ... I should say, though, that the bank manager was not wearing the white tennis shoes, they were another quirky detail that came from childhood."

Q: So then he gradually developed?

A: "The fact is, through the books Hermes never changes because it's the nature of who he is and what he is, not to change. Readers can make of him what they will, but to me, he is an incarnation of the god Hermes. My theory on the gods is this: as we have slowly forgotten about them, the immortals have begun to age, very slowly. So over millennia Hermes has begun to age and become quite portly, he is going a bit gray. My theory is that if we started to remember the old gods -- and I think to an extent that's happening (and) the Greek myths are becoming quite voguish at the moment -- perhaps he might reverse and revert to his original golden youth and become young and dashingly handsome again."

Q: Are you doing books on all the seven deadly sins?

A: "Yes, I've just finished the seventh. It's out next June in the U.K. So we're at a bit of a crossroads with Hermes right now, where should we go next?"

Q: So you're not finished with him?

A: "No, I don't think so, because I have a quite big fan base here in the U.K and abroad. People are just loving the character. They love the idea of this character who just turns up from nowhere, fixes everything and then quietly melts away ... It's at the heart of all crime fiction, really, but I think because Hermes is not a policeman and it's based more on natural justice rather than legal justice, people find that really appealing. But now having done the seven deadly sins, where should he go next? I'm thinking the Ten Commandments, maybe. We're still thinking about it."

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