Economic « Tikkunista!

4. What’s Gone Wrong with Capitalism?

Oct-07-2011 | Comments (0)

Bird’s Eye: It’s clear that the protests wouldn’t be happening if people were all employed, and getting richer, and the future looked rosy. So why doesn’t it? A week after the BBC ran the interview that swept the net, a corporate trader saying the system was irrevocably doomed, that question seems critical. We start by looking at Leopold Kohr, and his economic predictions that increasing size of corporate power presaged a global collapse. Will Hutton looks at capitalism world-wide, and sees disaster coming. And the current New Yorker looks in detail at the implications of the possible collapse of the euro.

* This Economic Collapse Is A ‘Crisis Of Bigness’ Paul Kingsnorth The Guardian

Leopold Kohr warned 50 years ago that the gigantist global system would grow until it imploded. We should have listened

Living through a collapse is a curious experience. Perhaps the most curious part is that nobody wants to admit it’s a collapse. The results of half a century of debt-fuelled “growth” are becoming impossible to convincingly deny, but even as economies and certainties crumble, our appointed leaders bravely hold the line. No one wants to be the first to say the dam is cracked beyond repair.

To listen to a political leader at this moment in history is like sitting through a sermon by a priest who has lost his faith but is desperately trying not to admit it, even to himself. Watch Nick Clegg, David Cameron or Ed Miliband mouthing tough-guy platitudes to the party faithful. Listen to Angela Merkel, Nicolas Sarkozy or George Papandreou pretending that all will be well in the eurozone. Study the expressions on the faces of Barack Obama or Ben Bernanke talking about “growth” as if it were a heathen god to be appeased by tipping another cauldron’s worth of fictional money into the mouth of a volcano.

*The Ailing Euro Is Part Of A Wider Crisis. Our Capitalist System Is Near Meltdown Will Hutton The Observer

Eighty years ago, faced with today’s economic events, nobody would have been in any doubt: we would obviously be living through a crisis in capitalism. Instead, there is a collective unwillingness to call a spade a spade. This is variously a crisis of the European Union, a crisis of the euro, a debt crisis or a crisis of political will. It is all those things, but they are subplots of a much bigger story: the way capitalism has been conceived and practised for the last 30 years has hit the buffers. Unless and until that is recognised, western economies will be locked in stagnation which could even transmute into a major economic disaster.

Simply put, the world has trillions upon trillions of excessive private debt financed by too many different currencies whose risk is allegedly mitigated by even more trillions of financial bets which in aggregate do not minimise the systemic risk one iota. This entire financial edifice, underwritten by tiny amounts of capital, has been created over three decades backed by the theory that markets do not make mistakes. Capitalism is best conceived and practised, runs the theory, by hunter-gatherer bankers and entrepreneurs owing no allegiance to the state or society.

This is nonsense.

* Greek Debt, Angela Merkel, and the European Central Bank The New Yorker

Outsiders to the world of money who start to take an interest in it soon notice that most of the things that alarm and outrage the wider public are taken by insiders to be perfectly routine and unremarkable. Consider the sums that bankers get paid, or the disruptive impact of hot money zipping around the world at the click of a mouse, tearing up industries and whole economies at will. To moneymen, those are just givens of the way the world works, and have to be accepted, in the absence of a credible plan to go off to found a new system on another planet.

Once in a great while, though, something happens that reverses the loop, and has the moneymen more scared than the rest of us. That happened in late 2007, when the credit crunch began, and it’s happening again now. The cause is the crisis affecting the euro, and the risk that the economic difficulties of the seventeen euro-zone countries will break up the European Union. That prospect once seemed like an alarmist fantasy. Today, it is something that reasonable people see as a possibility—and if it did happen it would cause a financial convulsion that would make the collapse of Lehman Brothers seem like a theme-park ride.

6. The Best of Times

Aug-26-2011 | Comments (0)

Bird’s Eye: But there are sound reasons for hope as well. And here we left out that Germany is eliminating nukes, and France has banned fracking.

* Fewest War Deaths in 100 Years Joshua S. Goldstein Foreign Policy

The early 21st century seems awash in wars: the conflicts in Afghanistan and Iraq, street battles in Somalia, Islamist insurgencies in Pakistan, massacres in the Congo, genocidal campaigns in Sudan. All in all, regular fighting is taking place in 18 wars around the globe today. Public opinion reflects this sense of an ever more dangerous world: One survey a few years ago found that 60 percent of Americans considered a third world war likely….

In fact, the last decade has seen fewer war deaths than any decade in the past 100 years, based on data compiled by researchers Bethany Lacina and Nils Petter Gleditsch of the Peace Research Institute Oslo. Worldwide, deaths caused directly by war-related violence in the new century have averaged about 55,000 per year, just over half of what they were in the 1990s (100,000 a year), a third of what they were during the Cold War (180,000 a year from 1950 to 1989), and a hundredth of what they were in World War II. If you factor in the growing global population, which has nearly quadrupled in the last century, the decrease is even sharper. Far from being an age of killer anarchy, the 20 years since the Cold War ended have been an era of rapid progress toward peace.

* Global poverty rate falling, says UN Mark Tran The Guardian

The world is still on track to signficantly lower poverty rates despite setbacks from recent economic, food and energy crises, but progress has been uneven, the UN said on Thursday.

The overall poverty rate is expected to fall below 15% – well below the 23% target set in the millennium development goals (MDGs) – by 2015, fulfilling the target of the first MDG of halving between 1990 and 2015 the proportion of people living on less than $1 day. The gains come despite the economic and financial crisis of 2008 that began in the US and Europe. That the world remains on track is due to the momentum of growth in the developing world. In absolute numbers, the number of people in developing countries in extreme poverty (living on less than $1.25 a day) is projected to fall below 900 million

* Iceland’s On-going Revolution Daily Kos

As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here’s why…

Protests and riots continued, eventually forcing the government to resign….What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.

Of course the international community only increased the pressure on Iceland. Great Britain and Holland threatened dire reprisals that would isolate the country. As Icelanders went to vote, foreign bankers threatened to block any aid from the IMF. The British government threatened to freeze Icelander savings and checking accounts. As Grimsson said: “We were told that if we refused the international community’s conditions, we would become the Cuba of the North. But if we had accepted, we would have become the Haiti of the North.”…In the March 2010 referendum, 93% voted against repayment of the debt.

* Hungary Destroys All Monsanto GMO Maize Fields Planetsave

In an effort to rid the country of Monsanto’s GMO products, Hungary has stepped up the pace. This looks like its going to be another slap in the face for Monsanto. A new regulation was introduced this March which stipulates that seeds are supposed to be checked for GMO before they are introduced to the market. Unfortunately, some GMO seeds made it to the farmers without them knowing it.

Almost 1000 acres of maize found to have been grown with genetically modified seeds have been destroyed throughout Hungary deputy state secretary of the Ministry of Rural Development Lajos Bognar said. The GMO maize has been ploughed under, said Lajos Bognar, but pollen has not spread from the maize, he added. Unlike several EU members, GMO seeds are banned in Hungary.

4. Europe Swings Right

Jun-17-2011 | Comments (0)

Bird’s Eye: It is stretching to call Berlusconi’s defeat a rightward swing (more likely the Italians got tired of too much bungle-bungle), but the left in Greece in on the verge of collapse, in Portugal they’ve been ousted, in Turkey Erdogan (centre-right) consolidates his power, and everywhere (except Turkey, obviously) the anti-Islamic parties are gaining support. Here are some analyses, starting with specifics and moving to the general.

* Portugal swings right The Guardian

Portugal has moved sharply to the right after a general election saw socialist prime minister José Sócrates ousted by opposition leader Pedro Passos Coelho as the country voted under the shadow of a €78bn euro bailout package….Sócrates admitted defeat and said he would stand down as party leader. “The Socialist party lost these elections,” he said.

The vote saw yet another left-wing government ejected from power in Europe because of the economic crisis, with the socialists paying heavily for the sharp downturn that forced the country to seek a financial rescue package. Only five left-wing-led governments now remain among the 27 member states – in Spain, Greece, Austria, Slovenia and Cyprus.

* Greece In Turmoil As Papandreou Tries To Salvage Government The Guardian

The economic and social mayhem gripping Europe’s peripheries appeared to have claimed the scalp of another government after the Greek prime minister admitted he could not drive through reforms to shore up the beleaguered economy, and offered to make way for a government of national unity.

After a day on which tens of thousands marched on parliament to oppose the swingeing austerity measures designed to stave off bankruptcy, George Papandreou effectively conceded that he had not been able to muster enough support in parliament for the swingeing cuts required by international creditors to enable Greece to balance its books.

* Turkey: Admiration And Apprehension The Guardian

Turkey’s prime minister, Recep Tayyip Erdogan, boasts an election-winning record of which other European leaders can only dream. Sunday’sgeneral election victory for his AKP party was not just his third in a row. It was also his most emphatic yet. When the AKP first won power in 2002, it got 10.7m votes and a 34.3% share. On Sunday, on an 87% turnout that puts other countries to shame, Mr Erdogan hoisted those figures to 21.4m (double his 2002 support) and a 49.9% share. Bizarrely, under Turkey’s idiosyncratic proportional representation system, this means the AKP now has 326 members in the 550-seat parliament, compared with 363 in 2002. But this decline in AKP seats, though politically very important, should not detract from a stellar electoral achievement.

Mr Erdogan commands the Turkish political scene thanks to one factor above all – the economy. Turkey continues to grow at around 9% a year; GDP per head has nearly doubled since 2002; and Turkish exports have nearly tripled. In particular, the AKP has delivered a transformation in life chances for the largely rural, predominantly religiously conservative but highly entrepreneurial Anatolian Turks who form its power base. Life across many parts of central and eastern Turkey is incomparably better today than 20 years ago. In the election campaign Mr Erdogan promised major new public works to carry the momentum further. While other European politicians battle to avoid the blame for economic downturn, Mr Erdogan claims the credit for economic success and as a result surges onward politically.

* Berlusconi’s nuclear power plans crushed The Guardian

The anti-nuclear movement won a crushing victory in Italy on Monday when well over 90% of voters rejected Silvio Berlusconi’s plans for a return to nuclear power generation.

The result represented an overwhelming setback for the prime minister, who had tried to thwart the outcome by discouraging Italians from taking part. The referendum needed a turnout of at least 50% to be binding. Interior ministry figures projections indicated that more than 57% of the electorate had taken part. Greenpeace called it a historic result. Quorums were also reached in three other referendums held simultaneously – the first time in 16 years that a quorum had been achieved in any referendum in Italy.

Official projections showed more than 95% of voters rejecting water privatisation and a law allowing Berlusconi and other ministers to cite government business as a reason for delaying trials in which they were defendants. The expected majority against nuclear power was 94%…. The ballot was also the latest, and most persuasive, evidence that a majority of Italians have turned against their flamboyant prime minister.

* While The European Left Dithers, The Right Marches Menacingly On Will Hutton The Observer

The longer the left’s response is confused, the more the populist right has begun to make anti-immigrant attitudes culturally acceptable. Unless a quick response can be found to the economic dislocation, uncertain job prospects and sense that European states cannot offer their populations security that is feeding the current mood, noxious attitudes will start to become culturally and politically entrenched. …For what is unifying all Europe’s populist right is outright hostility to Muslims. What has triggered the attack on the Schengen Agreement is fear of another wave of Muslim immigrants from north Africa. But immigration controls are only as strong as their weakest link – and every national European politician is prey to electors’ fears that the EU or another country is just that weakest link. Thus the descent into beggar my neighbour anti-immigration policies. But these quickly become beggar my neighbour tax and trade policies. It is a culture of closure, negation and mutual suspicion.

To stop this movement becoming a stampede, the European left has to find a more certain voice. It must argue passionately for a good capitalism that will drive growth, employment and living standards by a redoubled commitment to innovation and investment. It must spearhead the case for new international rules of governance that can make citizens believe that globalisation is not a terrifying threat; it need not be a charter for bankers making dynastic fortunes for doing nothing valuable, nor an unstoppable force homogenising national cultures.

7. Know Your Enemy

Apr-01-2011 | Comments (0)

Bird’s Eye: It may be helpful, whether you’re depressed or not, to know exactly who the enemy is.That’s why the CIA has a team who try to analyze leaders who might be the enemy, someday. To Paul Farrell, the super-rich are the enemy. In an earlier piece he quotes Warren Buffet,“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Here he discusses what’s needed. And if these aren’t your enemies, sing along with the Toronto Complaints Choir live, and maybe you’ll find them lurking in one of the verses.

* C.I.A. Profiling Delves Into the Minds of Global Leaders New York Times

He is a delusional narcissist who will fight until his last breath. Or an impulsive showman who will hop the next flight out of town when cornered. Or maybe he’s a psychopath, a coldly calculating strategist — crazy, like a desert fox…..At least one group has tried to construct a profile based on scientific methods, and its conclusions are the ones most likely to affect American policy. For decades, analysts at the Central Intelligence Agency and the Department of Defense have compiled psychological assessments of hostile leaders like Colonel Qaddafi, Kim Jong-il of North Korea and President Hugo Chávez of Venezuela, as well as allies, potential successors and other prominent officials.

… The resulting forecasts suggest that “at-a-distance profiling,” as it is known, is still more an art than a science. So in a crisis like the one in Libya, it is crucial to know the assessments’ potential value and real limitations.

“Expert profilers are better at predicting behavior than a blindfolded chimpanzee, all right, but the difference is not as large as you’d hope it would be,” said Philip Tetlock, a psychologist at the Wharton School of the University of Pennsylvania and the author of “Expert Political Judgment: How Good Is It? How Can We Know?”.

* Tax the Super Rich now or face a revolution Paul B. Farrell – MarketWatch

Revolutions build over long periods — to critical mass, a flash point. Then they ignite suddenly, unpredictably. Like Egypt, started on a young Google executive’s Facebook page. Then it goes viral, raging uncontrollably. Can’t be stopped. Here in America the set-up is our nation’s pervasive “Super-Rich Delusion.”

We know the Super Rich don’t care. Not about you. Nor the American public. They can’t see. Can’t hear. Stay trapped in their Forbes-400 bubble. An echo chamber that isolates them. They see the public as faceless workers, customers, taxpayers. See GOP power on the ascent. Reaganomics is back. Unions on the run. Clueless masses are easily manipulated
….Our top 1% honestly believe they’re immune, protected from the unintended consequences of beating down average Americans for three decades with the free-market, trickle-down Reaganomics doctrines that made them Super Rich. They honestly believe those same doctrines will protect them in the next depression. Why? Because they have megabucks stashed away. Provisions for the long haul. Live in gated compounds with mercenaries guarding them..

* The Toronto Complaints Choir The Toronto Star

Have something to complain about? Try singing it instead. The Toronto Complaints Choir took over St. Lawrence Market for their first public performance. (Video by Randy Risling)

5. How the Economy “Works”

Nov-26-2010 | Comments (0)

Bird’s Eye: It’s always hard to find explanations of what causes the economic shifts that rock our world. Riots in Greece, in France, in London, in Dublin… but what’s the overview? Tikkunista had the happy discovery of Gonzalo Lira this week (his bio is mind-blowing!) who writes about economics like a latter day Hunter S Thompson. We supplement him with a NYTimes piece that makes it clear where the disappearing money is going, and a look at the US military expenditure and where it’s going.

* For Europe’s Future, Spain Is All That Matters Gonzalo Lira

Last Spring it was Greece that was in crisis mode—then last week, it was Ireland—and coming up next is Portugal— but all those pale in comparison to Spain.

If I had to bet on which country will bring about the end of the Euro—and perhaps even the end of the European Union—I’d have to say it’s Spain.

… Just like they did with Greece, the European officials colossally fucked up the bail-out package for Ireland. It turns out that—far from having put together a detailed package that could be swiftly implemented, and thereby restore confidence—the EU/ECB/IMF troika have only a flimsy framework for the Irish bailout. The vaunted European Financial Stability Facility? It’s not even fully funded yet! …Coupled to that, the bail-out announcement sparked a political fire-storm in Ireland—Cowen’s coalition partners, the Green Party, exited the government, and elections are now scheduled for January. There are even calls from Cowen’s own party for his immediate resignation.

This is bad enough—so what does the IMF go and do? Why, with exquisite political tone-deafness, it sends the clear message that Ireland is going to have to crawl if it wants the bail out: John Lipsky, a muckety-muck in the IMF, says to Reuters that“our work there [in Ireland] is technical, not political. Decisions have to be made by [the Irish] government.” In other words, the IMF isn’t going to negotiate with Ireland—it’s going to dictate. Or in other words, the IMF is saying, Beg for the money, you Irish bitches!.

* U.S. Corporate Profits Hit Record in Third Quarter New York Times

The nation’s workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits at an annual rate of $1.659 trillion in the third quarter,according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or noninflation-adjusted terms.

* US Military Expenditures (vs rest of the world) globalsecurity.org (table)

* US Military Bases World Wide (image)

4. Anti-Capitalist Protest Worldwide (not yet available in the US)

Oct-15-2010 | Comments (0)

Bird’s Eye: Don’t you also find yourself amazed how the financial crash didn’t produce a rise in working-class (and middle-class) anger towards the wiping out of their lives’ savings, particularly given the rise in the gap between the rich and poor? Well, the protests are starting, big time, in Europe. In the US anger has been successfully channelled towards liberals by the Koch-funded Tea partiers, or left to metastasize into depression

* Huge pensions protests in France – Europe Al Jazeera

Mass protests across France against plans to raise the retirement age were even larger than demonstrations held earlier this month, according to figures from both the government and a labour union. The CFDT union said 3.5 million people had joined the demonstrations on Tuesday, while the interior ministry said 1.23 million demonstrators had turned out.

* Global Unemployment To Trigger Further Social Unrest Guardian.Co.Uk

The International Labour Organisation (ILO) has warned of growing social unrest because it fears global employment will not now recover until 2015. This is two years later than its earlier estimate that the labour market would rebound to pre-crisis levels by 2013. About 22 million new jobs are needed – 14 million in rich countries and 8 million in developing nations.

The United Nations work agency today warned of a long “labour market recession” and noted that social unrest related to the crisis had already been reported in at least 25 countries, including some recovering emerging economies.

* Iceland’s Politicians Flee From Demos

Protesters took to the streets of Reykjavik today, forcing MPs to run away from the people they represent as renewed anger about the impact of the financial crisis erupted in Iceland.

The violent protest came amid growing fury at austerity measures being imposed across Europe. Disruption in more than a dozen countries this week included a national strike in Spain and a cement truck driven into the Irish parliament’s gates.

* Nearly One In 10 In US Depressed, Employment A Factor

Nearly one in 10 Americans is depressed, and one in 30 meets the criteria for major depression, with the rate higher among the unemployed or those who can’t work, a study said Thursday. Nine percent of more than 235,000 adults polled from 2006-2008 in 45 US states, the capital Washington, Puerto Rico and the US Virgin Islands, met the criteria for depression, and 3.4 percent for “major” depression, according to the study by US Centers for Disease Control and Prevention (CDC).

3. Driving Through Planetary Stop Signs

Aug-13-2010 | Comments (0)

Bird’s-Eye: Bad things can happen when you drive through a stop sign, and sometimes they’re a lot worse than just getting nailed with a traffic ticket. We seem to be doing that a lot these days. Here we look at three examples of global stop signs: the first is our warming of the planet, the second our over-reliance on antibiotics, the third our suburb-based urban design. As Marshall McLuhan famously observed, “Nothing is inevitable, so long as we are willing to contemplate what is happening.” That underlines the importance of starting to pay attention to those stop signs.

* Who Cooked the Planet? Paul Krugman The New York Times

Never say that the gods lack a sense of humor. I bet they’re still chuckling on Olympus over the decision to make the first half of 2010 — the year in which all hope of action to limit climate change died — the hottest such stretch on record.

So why didn’t climate-change legislation get through the Senate? Let’s talk first about what didn’t cause the failure, because there have been many attempts to blame the wrong people. First of all, we didn’t fail to act because of legitimate doubts about the science…. Nor is this evidence tainted by scientific misbehavior. …Did reasonable concerns about the economic impact of climate legislation block action? No.

So it wasn’t the science, the scientists, or the economics that killed action on climate change. What was it? The answer is, the usual suspects: greed and cowardice.

* Are You Ready For A World Without Antibiotics? The Guardian

Just 65 years ago, David Livermore’s paternal grandmother died following an operation to remove her appendix. It didn’t go well, but it was not the surgery that killed her. She succumbed to a series of infections that the pre-penicillin world had no drugs to treat. Welcome to the future.

The era of antibiotics is coming to a close. In just a couple of generations, what once appeared to be miracle medicines have been beaten into ineffectiveness by the bacteria they were designed to knock out. Once, scientists hailed the end of infectious diseases. Now, the post-antibiotic apocalypse is within sight.

* We Have Allowed Developers To Rob Us Of Our Village Green George Monbiot The Guardian

Build loose suburbs carved up by busy roads and without green spaces and you help to create a population of fat, lonely people plagued by criminals. Build dense, leafy settlements with mixed uses, protected from traffic, and you help to create safe, fit and friendly communities.

4. Money, and How to Get it

Aug-06-2010 | Comments (0)

Bird’s-Eye: None of us believe the financial crisis is “solved”, even if we knew what a solution would mean. Here we explore the way that governments, corporations, and political parties are gaining obscene amounts of money, and forcing workers to pay for it. Does that sound like a class analysis to you? Yeah, to me too. But when the shoe fits, march in it….

* Four Deformations of the Apocalypse NYTimes.com

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice…. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

* Crises of Capitalism RSA Animate David Harvey

In this RSA Animate, renowned academic David Harvey (who’s he?) asks if it is time to look beyond capitalism towards a new social order that would allow us to live within a system that really could be responsible, just, and humane.

* The Heresy Of The Greeks Offers Hope John Pilger Znet

In Greece, as in America and Britain, the ordinary people have been told they must repay the debts of the rich and powerful who incurred the debts. Jobs, pensions and public services are to be slashed and burned, with privateers in charge. For the European Union and the IMF, the opportunity presents to “change the culture” and dismantle the social welfare of Greece, just as the IMF and the World Bank have “structurally adjusted” (impoverished and controlled) countries across the developing world.

Greece is hated for the same reason Yugoslavia had to be physically destroyed behind a pretence of protecting the people of Kosovo. Most Greeks are employed by the state, and the young and the unions comprise a popular alliance that has not been pacified; the colonels’ tanks on the campus of Athens University remain a political spectre. Such resistance is anathema to Europe’s central bankers and regarded as an obstruction to German capital’s need to capture markets in the aftermath of Germany’s troubled reunification.

2. The G20 and the G8: Politics

Jul-02-2010 | Comments (0)

Bird’s-Eye: With an overflowing mail folder on the G20, we’ve broken the topic into three sections: what happened inside the conference, what happened on the streets, and photo/videos. We start with the Globe and Mail, in which Gerald Caplin (who’s he?) explaining what filters you need to read the government PR. Then from the Guardian, John Hilary explains why he hopes that this G20 may be the last. And from the New York Times, Paul Krugman looks at the disastrous economic course the G20 has chosen to follow.

* Ten Invaluable Tips For Assessing The G8 – The Globe And Mail (Thanks, Kyla!)

What do you call those who have the capacity to reduce hunger, poverty and disease with a stroke of the pen, and fail to act? What do you call those who are knowingly responsible for causing death and suffering to millions of fellow citizens? What do you call those who deny to the poor the benefits that we in the rich world take for granted? You call them the G8.

* May Toronto’s G20 Be The Last John Hilary The Guardian (Thanks, Gabe!)

Questions are being asked as to why the police chose to drive the vehicles into the middle of a group of protesters and then abandon them, and why there was no attempt to put out the flames until the nation’s media had been given time to record the scenes for broadcast around the world.

The fact that so much attention has been directed towards the policing is largely due to the lack of anything newsworthy coming out of the summit itself. Even David Cameron, attending for the first time as British prime minister, published his own desperate plea in the Canadian press this week for summits to be turned into something more than the hot air and photo opportunities they have been in the past. (How this relates to his stated intention to take time out to watch the second half of the England v Germany game with Angela Merkel was not made clear.)

* The Third Depression Paul Krugman New York Times

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — [but] we are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense. And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending….

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine….

4. The Euro Death Spiral

Jun-11-2010 | Comments (0)

Bird’s-Eye: The clearest explanation is from Clarke and Dawe, the Australian comedians, who hilariously explain how the money crisis “works”. An octet of simple charts shows the financial icebergs moving closer, and a fascinating Observer editorial explores what happens when Germany pulls the plug.

* Clarke and Dawe: Lending merry-go-round (youtube 2’34“)

* The European Crisis In Eight Simple Charts zero hedge

Here is a simplified representation of why anything and everything that the EU, ECB and the IMF can do now is simply delay the inevitable disintegration of the eurozone and the upcoming eventual debt payment moratorium.

* If Germany Can’t Stop The Collapse Of European Hopes, Who Can? Will Hutton The Observer

The future of Europe is in the balance. The potential disintegration of the euro will be a first-order economic and political disaster. Economically, it will plunge Europe into competitive devaluations, debt defaults, bank bailouts, frozen credit flows, trade protection and prolonged stagnation. Politically, whatever resolve there is to hold our disparate continent together, where the old enmities and suspicions are never far from the surface, will evaporate.

The Eurosceptics will have got what they wanted – a Europe of independent nation states looking after their own interests. But there is a dark side to Europe. What will be ushered in won’t be a joyful common market bound together by wealth generating trade. What will emerge will be a Europe closer to the 1930s. Fearful, stagnant and prey to vicious racist and nationalist ideologies.

3. China’s Economic Chess Game

Mar-19-2010 | Comments (0)

The Bird’s Eye: As China gets wealthier, it is expanding into the world (Africa, Australia, Canada). And this brings it into conflict with the US, already a huge debtor to China. And that gives the US huge power over China. (See Quote of the Week). Interesting times, indeed.

* Australia Welcomes China’s Investment, If Not Its Influence Washington Post

Here in this land of searing heat, scrub and eucalyptus, a land so vast that road signs warn the next gas station is 600 miles away, Mount Whaleback was once 1,500 feet high. Today it’s a hole, the biggest open-pit iron ore mine in the world — an entire mountain crushed, sold and shipped to China. …A surging China has become Australia’s No. 1 trading partner. It has pumped $40 billion worth of investments into the Australian economy in the past 18 months alone. China’s 70,000 students help bankroll Australia’s education system, and a half-million Chinese tourists a year keep Aussies employed as lifeguards, blackjack dealers and real estate brokers. Chinese trade and investment have insulated Australia from the global financial crisis more than any other developed nation. Australia is even speaking Chinese: Prime Minister Kevin Rudd is the first Western leader to speak fluent Mandarin.

* Canada Looking To China To Exploit Oil Sands The Guardian

Canada, faced with growing political pressure over the extraction of oil from its highly polluting tar sands, has begun courting China and other Asian countries to exploit the resource…. Major oil companies such as Shell are also coming under shareholder pressure to pull out of the Canadian projects. Earlier this year, Shell announced it was scaling back its expansion plans for the tar sands after a revolt by shareholders.…In the most significant deal to date, the Canadian government recently approved a C$1.9bn investment giving the Chinese state-owned oil company Petro China a majority share in two projects. Prime minister Stephen Harper said: “Expect more Chinese investment in the resource and energy sectors … there will definitely be more.” China’s growing investment in the tar sands is seen in Canada as a useful counter to waning demand for tar sands oil from the US, its biggest customer.

* Obama’s China Rollback Stategy China Matters

When trends in Africa, the Middle East, and South Asia are examined, I think the US-PRC dynamic is pretty clear. The Obama administration is reasserting U.S. influence in resource-rich regions that China penetrated during the distracted and internationally unpopular Bush administration. Now the U.S. is cannily framing and choosing fights that unite the U.S., the EU, and significant resource producers, and isolate China and force it to defend unpopular positions alone. Cases in point: Copenhagen climate summit, non-proliferation, and Iran sanctions. Next up: RMB valuation. (Editor’s note: RMB is renminbi, the Chinese currency)

* Taking On China and its Currency Paul Krugman, New York Times

Tensions are rising over Chinese economic policy, and rightly so: China’s policy of keeping its currency, the renminbi, undervalued has become a significant drag on global economic recovery. Something must be done…..What you have to ask is, What would happen if China tried to sell a large share of its U.S. assets….It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive and reduce our trade deficit. On the other hand, it would be a bad thing for China, which would suffer large losses on its dollar holdings. In short, right now America has China over a barrel, not the other way around.

4. Iceland Just Says, “No!”

Mar-12-2010 | Comments (1)

Context: After its crash last year, the bankrupt Icelandic banks owed $5 billion dollars to creditors (primarily the UK and Netherlands). A proposal to have Icelanders pay off this debt got savaged at the polls (93%-2% against). We look at Iceland, and the effect of this debt repudiation on similar situations in Greece and California. What happens when a state goes bankrupt, anyway?

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