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Tuesday, November 29, 2011

What if the Euro blows up ?

Apparently, many large corporations are formulating contingency plans should the Euro go south, according to REUTERS' Ben Hirschler and Scott Malone, in a report excerpted below.

***

Drawing on interviews with company officials, bankers and lawyers in Europe, the United States and Asia and companies' regulatory filings, Reuters has pieced together a picture of patchy preparedness for the possible demise of the 12-year-old euro currency, an event that would be unparalleled in recent history.
"These days, it's a part of almost every risk manageThe chief executive of a European company with annual revenues of more than $10 billion a year told Reuters during a recent visit to London that his board had discussed how to handle a euro zone collapse but that it had proved a very short meeting. Other than ensuring their cash deposits were in the safest possible banks and relying on the broad international nature of their business, executives quickly concluded there was little more they could do.

Treasury department teams are shifting money to safe havens and rehearsing rapid-action scenarios. Budgets for 2012 are being looked at again. And outside consultants are being brought in to advise on exposure to peripheral Europe - Greece, Ireland, Spain, Portugal and Italy.
Central bank data shows a decline in deposits from banks in weaker euro zone countries. Separating data on corporate deposits from personal bank accounts data is nigh on impossible, but anecdotal evidence points to corporations moving euro accounts to safe havens. Some big firms such as engineering group Siemens and carmakers BMW, Daimler and Volkswagen, are licensed to deposit funds with the European Central Bank, the safest of all safe havens in the euro zone.
Siemens finance chief Joe Kaeser said in a November 10 media call on the group's quarterly results that a considerable proportion but less than half of its 12 billion euros in liquidity had been parked with the ECB. About a year ago, Siemens -- a maker of fast trains and gas turbines -- acquired a banking license to be able to deal directly with the ECB.
Some of the most active contingency planning is happening in European countries outside the euro zone that have strong trading links with the currency bloc - Denmark and Britain being leading examples. Of the 33 companies with the biggest exposures to the euro zone in sales terms, five are British, according to Thomson Reuters data. Health care, energy and consumer goods are among the most exposed industries.

The chief executive of a European company with annual revenues of more than $10 billion a year told Reuters during a recent visit to London that his board had discussed how to handle a euro zone collapse but that it had proved a very short meeting. Other than ensuring their cash deposits were in the safest possible banks and relying on the broad international nature of their business, executives quickly concluded there was little more they could do.

Tuesday, November 22, 2011

Blogger DJ's Thanksgiving Musical Excesses, or Rather, Guilty Pleasures

Foster the People - Pumped up Kicks
Cheap Trick - I Want You to Want Me
The Romantics - What I Like About You
Bow Wow Wow - Do You Wanna Hold Me ?
Sheila E- Glamourous Life
Kajagoogoo - Too Shy to Shy
Rod Stewart - Do You Think I'm Sexy ?
George Michael - Careless Whisper
Tom Jones - You Can Leave Your Hat On
Buster Poindexter - Hot Hot Hot
Frankie Goes to Hollywood - Relax
Haddaway -What Is Love ?

I'll take do-nothing U.S. Government over Euro-Crat Wackos any day

Why ? Check out these recent examples of Eurozone Bureaucrat nutbag-ery, cited in THE TELEGRAPH.

EU bans claim that water can prevent dehydration, report Victoria Ward and Nick Collins
Brussels bureaucrats were ridiculed yesterday after banning drink manufacturers from claiming that water can prevent dehydration.  
EU officials concluded that, following a three-year investigation, there was no evidence to prove the previously undisputed fact.
Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict, which comes into force in the UK next month.

Last night, critics claimed the EU was at odds with both science and common sense. Conservative MEP Roger Helmer said: “This is stupidity writ large.
“The euro is burning, the EU is falling apart and yet here they are: highly-paid, highly-pensioned officials worrying about the obvious qualities of water and trying to deny us the right to say what is patently true.
“If ever there were an episode which demonstrates the folly of the great European project then this is it.”

NHS health guidelines state clearly that drinking water helps avoid dehydration, and that Britons should drink at least 1.2 litres per day.
The Department for Health disputed the wisdom of the new law. A spokesman said: “Of course water hydrates. While we support the EU in preventing false claims about products, we need to exercise common sense as far as possible."

German professors Dr Andreas Hahn and Dr Moritz Hagenmeyer, who advise food manufacturers on how to advertise their products, asked the European Commission if the claim could be made on labels.

They compiled what they assumed was an uncontroversial statement in order to test new laws which allow products to claim they can reduce the risk of disease, subject to EU approval.
They applied for the right to state that “regular consumption of significant amounts of water can reduce the risk of development of dehydration” as well as preventing a decrease in performance.

However, last February, the European Food Standards Authority (EFSA) refused to approve the statement.

A meeting of 21 scientists in Parma, Italy, concluded that reduced water content in the body was a symptom of dehydration and not something that drinking water could subsequently control.
Now the EFSA verdict has been turned into an EU directive which was issued on Wednesday.
This bit of inspired insanity on the part of EuroCrat zanies, who clearly have too much time on their hands and not a dollop of common sense amongst them, is hardly unique, as Nick Collins points out in  his piece, EU bottled water ruling joins the ranks of bendy banana law.
The European Union has a reputation for making rulings on the minutiae of everyday life that some consider to be petty, provocative and absolutely pointless. Here are five of the most notorious.
Curved cucumbers and bendy bananas
In perhaps the most ridiculed example of Brussels bureaucracy, the EU dictated that only cucumbers which were “practically straight” and had a gradient of no more than 1/10 could be sold as Class 1.
The controversial directive, along with a host of other criteria applying to bendy bananas, knobbly carrots and several other fruit and vegetables, were eventually scrapped amid fears farmers were discarding perfectly edible produce at a time of world food shortages.
Swedes or turnips?

Having already prescribed how long, short, straight or bendy a fruit or vegetable should be, the European Commission decided last summer that a swede can be called a turnip, provided it is in a Cornish pasty.
In guidelines which stated that minced or diced beef, sliced potato, onion and swede were the only ingredients permitted in the traditional snack, officials were forced to allow the word “turnip” in ingredient lists – though not in the pasties themselves – because the Cornish confusingly use the word to refer to Swedes.
Female drivers no safer than men
Earlier this year the European Court of Justice ruled that insurance companies could no longer charge women lower premiums than men in a decision described by Tory MEPs as “utter madness”.
Judges said that to use gender as a risk factor in car and medical insurance premium calculations or pension schemes breached equality laws.
Eggs by the dozen

Last summer draft legislation published by the EU stated that all groceries should be sold under a common system based on weight.
But despite rejecting bids to include a caveat which would have allowed certain products to be sold by number – for example a dozen eggs or six bread rolls – MEPs admitted the law could not prevent manufacturers including a number on the box, as long as the weight was also listed.
Water palaver
Last week the EU ruled that bottled water manufacturers could no longer advertise their product as helping to prevent dehydration because of a lack of scientific evidence.
Although some scientists have argued the ruling is technically correct because, for example, drinking water would not help prevent the dehydration that comes with diahorrea, others accused Brussels of yet another piece of petty legislation that runs counter to common sense.

Just when you thought there was no collegiality in Congress...

David Rogers of THE POLITICO reports on promising reform measures being formulated by members of the House and Senate Agriculture Committees, and their chairs, Rep. Frank Lucas (R-Okla.) and Sen. Debbie Stabenow (D-Mich.), whose working relationship apparently has more than just survived the much-publicized Deficit Supercommittee's implosion.

It was always a shotgun marriage: the House and Senate agriculture committees would generate $23 billion in savings and get a ticket on the supercommittee’s fast-moving, amendment-free deficit train. But more than most of their colleagues, the agriculture leadership did at least try, and the weeks of backroom negotiations could prove valuable still as a first Washington exercise in the need for change in agriculture policy.

What emerged was a broad consensus that the current system of direct cash payments to producers — costing $5 billion a year — can no longer be defended. Government support for farmers should be a function of real planted acres, not outdated data measuring a producer’s “base” acreage from years ago. And payment limits of $105,000 are proposed for new safety net programs.

But instead of one overarching replacement for direct payments, the draft bill proposes at least three options, one tailored specifically for a single crop, cotton. Indeed, the old farm coalition may never be quite the same, as cotton’s decision to go it alone isolated rice and peanuts, making the South less of a player. Instead, the biggest tension matched the Corn Belt — flush with ethanol-driven prices — vs. the Great Plains wheat country represented by powerful Senate Democrats.

No plans have been announced to release the bill itself, but within the all-important commodity title, the latest scoring from the Congressional Budget Office is said to credit the committees with $16.7 billion in outlay savings — a 27 percent reduction.

Monday, November 21, 2011

Romney's Evitability, Springtime for Gingrich, and "The Hillary Moment"


Is it Hillary Time ?
Damn straight, Mitt's evitable,  proclaims William Kristol in a WEEKLY STANDARD piece, excerpted below.
Fox News has polled likely GOP primary voters six times in the last five months. Here’s Mitt Romney’s trend line of support: July 17-19, 26 percent; August 7-9, 26 percent; August 29-31, 22 percent; September 25-27, 23 percent; October 23-25, 20 percent; November 13-15, 22 percent. Not a tidal wave of irresistibly rising acclamation.
Nor has Romney always been in the lead. In three of the four most recent polls, he’s trailed another candidate. The good news for Romney—the very good news for Romney—is that it’s been a different person each time. Rick Perry, who was at 29 percent at the end of August, has collapsed to 7 percent in the latest survey. Herman Cain, who polled at 24 percent a month ago, is now at 15 percent. If Newt Gingrich, who now edges Romney out at 23 percent, follows in the path of Perry and Cain (and Michele Bachmann, to some degree, before them), then Romney may well win as the last man standing.
And the massive fact of the race so far is that, as various candidates have shed supporters, those voters have looked for someone to go to other than Romney. One could almost say they’re going out of their way not to go to Romney. That could well change, of course. Romney will have the resources and the standing to make his case forcefully to these voters. And Romney defeats President Obama in the latest Fox poll, 44-42, while Gingrich trails, 46-41. That will be an important point in Romney’s favor among GOP primary voters eager to defeat the president. Can Gingrich come close to evening the poll results in the Obama matchup? That’s something to watch for. And more generally, can he rise to the occasion as a co-frontrunner, or will he fumble the ball? Will his famous baggage just prove too heavy? Who knows? We don’t think the inevitable answer is yes.
And even if Gingrich fades, let’s not assume it’s over. Bachmann and Santorum could still have a run in Iowa. If they continue to trail badly, it’s not out of the question that someone else could still present himself in mid-December to the citizens of Iowa (Hi there, Mike Huckabee! Hello, Sarah Palin!). Or, if Iowa (January 3), New Hampshire (January 10), and South Carolina (January 21) produce fragmented results, and the state of the race is disheartening to Republicans, a late January entry by another candidate isn’t out of the question, either. Couldn’t Jeb Bush or Marco Rubio win the January 31 Florida primary as a write-in candidate in such circumstances ?
Meantime,  Fred Barnes argues that Newt's "baggage” is not enough, per se, to deny him the GOP's presidential nomination, or even the presidency. Barnes' thesis is as follows:
In 1980, when Ronald Reagan emerged as the likely Republican presidential nominee, President Carter’s advisers were thrilled. They’d done extensive opposition research. By pointing to what Reagan had said in speeches, radio commentaries, newspaper columns, and conversations, they assumed it would be easy to characterize him as a right-wing extremist. And enough voters would reject him and reelect Carter.
They were wrong. It wasn’t that voters ignored Reagan’s offbeat comments. They just didn’t think eccentric statements he’d made over the years were important. Bigger things were at stake, like Soviet aggression and a stagnant economy. And Reagan had better answers than Carter.
  
A similar phenomenon occurred in 2003 when Arnold Schwarzenegger ran for California governor in a recall election. The media dredged up stories of his chronic groping of women. Voters, intent on ousting Governor Gray Davis, didn’t care. Schwarzenegger won and was reelected in 2006.
  
Republicans figured that once voters learned of President Clinton’s White House trysts with intern Monica Lewinsky and dalliances with other women, they’d turn on him and give Republicans a big victory in the 1998 midterm elections. Instead, Clinton’s popularity held steady, and Republicans lost five House seats.
The point is this: Gingrich probably has at least as good a chance of getting a pass on his various transgressions in 2012 as Reagan, Schwarzenegger, and Clinton did. If 2012 were an ordinary election year, Gingrich would be doomed by his gaffes, three marriages, and fleeting alliances with Hillary Clinton on health care and Nancy Pelosi on global warming. But 2012 is different. Republicans are fixated on defeating President Obama. They’re obsessed. They think about little else. And if that means choosing a candidate with a lurid past and a penchant for self-destruction to beat Obama, Republicans are likely to swallow hard and nominate Gingrich.
In their hearts, Republicans have always wanted a candidate who is bold and tough, and Gingrich is. They’re not sure about Mitt Romney, who is cautious, conventional, and sounds more conciliatory than Gingrich. There’s a reason Romney’s support has been stuck for months at roughly a quarter of the Republican electorate. His blandness explains it. Gingrich is anything but bland.
Gingrich turns out to be a shrewd analyst of himself and his prospects. He has told friends he’s like Richard Nixon, not particularly likable and hated by the press and the left. He’s hardly a perfect candidate, but against a weak field, he can win the nomination and beat Obama in a tight race. And by the way, he’s the best of the bunch in connecting with the populist yearnings and resentments of average Americans.
Months ago, Gingrich foresaw his emergence as the chief rival to Romney. No one else did. The expectation was that Romney would face a challenger from the right. Gingrich, associates say, may be slightly to the left of Romney. It’s hard to tell. We won’t know for sure unless the two go head-to-head after the Republican field shrinks in January.
And now, for "The Hillary Moment ". In THE NEW YORK TIMES, Pat Caddell and Douglas Schoen submit that since "President Obama can't win by running a constructive campaign, and he won't be able to govern if he does win a second term", he should give up on a second term, making way for Hillary Clinton to run !
When Harry Truman and Lyndon Johnson accepted the reality that they could not effectively govern the nation if they sought re-election to the White House, both men took the moral high ground and decided against running for a new term as president. President Obama is facing a similar reality—and he must reach the same conclusion.
He should abandon his candidacy for re-election in favor of a clear alternative, one capable not only of saving the Democratic Party, but more important, of governing effectively and in a way that preserves the most important of the president's accomplishments. He should step aside for the one candidate who would become, by acclamation, the nominee of the Democratic Party: Secretary of State Hillary Clinton.
Never before has there been such an obvious potential successor—one who has been a loyal and effective member of the president's administration, who has the stature to take on the office, and who is the only leader capable of uniting the country around a bipartisan economic and foreign policy.
Certainly, Mr. Obama could still win re-election in 2012. Even with his all-time low job approval ratings (and even worse ratings on handling the economy) the president could eke out a victory in November. But the kind of campaign required for the president's political survival would make it almost impossible for him to govern—not only during the campaign, but throughout a second term.
Put simply, it seems that the White House has concluded that if the president cannot run on his record, he will need to wage the most negative campaign in history to stand any chance. With his job approval ratings below 45% overall and below 40% on the economy, the president cannot affirmatively make the case that voters are better off now than they were four years ago. He—like everyone else—knows that they are worse off.
One year ago in these pages, we warned that if President Obama continued down his overly partisan road, the nation would be "guaranteed two years of political gridlock at a time when we can ill afford it." The result has been exactly as we predicted: stalemate in Washington, fights over the debt ceiling, an inability to tackle the debt and deficit, and paralysis exacerbating market turmoil and economic decline.
Even though Mrs. Clinton has expressed no interest in running, and we have no information to suggest that she is running any sort of stealth campaign, it is clear that she commands majority support throughout the country. A CNN/ORC poll released in late September had Mrs. Clinton's approval rating at an all-time high of 69%—even better than when she was the nation's first lady. Meanwhile, a Time Magazine poll shows that Mrs. Clinton is favored over former Massachusetts Gov. Mitt Romney by 17 points (55%-38%), and Texas Gov. Rick Perry by 26 points (58%-32%).
But this is about more than electoral politics. Not only is Mrs. Clinton better positioned to win in 2012 than Mr. Obama, but she is better positioned to govern if she does. Given her strong public support, she has the ability to step above partisan politics, reach out to Republicans, change the dialogue, and break the gridlock in Washington.
By going down the re-election road and into partisan mode, the president has effectively guaranteed that the remainder of his term will be marred by the resentment and division that have eroded our national identity, common purpose, and most of all, our economic strength. If he continues on this course it is certain that the 2012 campaign will exacerbate the divisions in our country and weaken our national identity to such a degree that the scorched-earth campaign that President George W. Bush ran in the 2002 midterms and the 2004 presidential election will pale in comparison.
We write as patriots and Democrats—concerned about the fate of our party and, most of all, our country. We do not write as people who have been in contact with Mrs. Clinton or her political operation. Nor would we expect to be directly involved in any Clinton campaign.
If President Obama is not willing to seize the moral high ground and step aside, then the two Democratic leaders in Congress, Sen. Harry Reid and Rep. Nancy Pelosi, must urge the president not to seek re-election—for the good of the party and most of all for the good of the country. And they must present the only clear alternative—Hillary Clinton.

Saturday, November 19, 2011

The Euro Crisis affects China, too...

observes Rodger Baker in his STRATFOR piece, "Eurozone Debt Crisis Reveals China's Economic Weakness", excerpted below.

* * *

The Chinese continue to watch the way in which the Europeans are trying to deal with their financial and political crisis right now. For China this is particularly important. Number one, Europe has become China’s largest export market and that has a major impact, of course, on the way in which the Chinese operate their economy. Number two is that a continued or an even deeper crisis in Europe could pull the entire global economy into recession.
 
Although Chinese exports to Europe picked up a little bit in 2010, the rate of growth that the Chinese had been seeing in the previous four or five years slowed down quite a bit. The problem for China is that as the pace of export growth slows, the pace of import growth doesn’t. The Chinese still need a very large amount of commodities. They’re importing these commodities, not only to feed their export market, but to feed all of this new domestic investment. And that means that while the Chinese may not be making as much selling, they are having to buy still a very high market prices to be able to develop internally.

The European crisis, and really the slowdown in the United States as well, has brought home to the Chinese something that they already knew but they had hoped to be postponing — and that is the need to fundamentally restructure their economy. The Chinese base their economy very similar on what we’ve seen in other Asian economies; it was an economy that needed continuous growth. Continuous growth in exports, more money, more money every year and that would allow the Chinese simply to borrow, to supply employment, to not have to worry about things like profits, but rather find some ways to funnel money down into the population.

If we look at the Chinese then we see that there’s maybe 300 million people who are part of the really economically active part of China. However, that leaves out more than a billion people from being part of this Chinese economic growth, this Chinese economic activity. Historically, it’s not from the coastal areas, it’s not from the wealthy areas that trouble comes in China. It’s from the rural areas, it’s from the people who are poor, it’s from the people who aren’t connected to this economic system.

One of the solutions the Chinese have tried to follow is urbanization: the idea that if they build it, people will come and if people move to the cities they will suddenly have jobs and in having jobs in the cities and living in a city, they’re going to become consumers. And certainly this is not for the entire billion of the population that’s not active, but maybe another hundred million, 200 million, 300 million. And that would help to better distribute wealth throughout China; it would also ease China off from their heavy dependence upon exports.

This boom in urbanization coincided with this government need to spend a lot more on domestic investment. It also fell right inside of what was already building as a speculative bubble in real estate investment. And that investment was coming not only from the coastal populations in China — the ones who are trying to find ways to save for the future and therefore invest in real estate — but also from businesses, from SOEs, who are buying real estate watching prices go up and then betting against that real estate, or investing or taking out loans against that real estate, to be able to continue to operate their businesses.

So we have a China that’s facing a real estate bubble in an attempt to build a new urbanized society, but the individuals who would be moving into that urbanized society can’t afford to move in because of the price rise in housing. The government is trying to find ways to slow down that rise in price, but if they move too quickly it can undermine the collateral for the loans from state-owned enterprises, it can pull away the nest egg from their middle class and that can cause a very rapid backlash against the central government.

Thursday, November 17, 2011

What is the real European Crisis ?

Is it the fact that an irrational and stubborn Greek public won't accept onerous conditions of austerity ? Or is there more to this story ? Of course there is, and George Friedman of STRATFOR elegantly explicates what's really going on in his latest post, "Greece and the Struggle of the European Elite"
Excerpts follow.

***

Greece and the Struggle of the European Elite

Now we are seeing this elite struggle to preserve its vision. When Papandreou called for a referendum on austerity, the European elite put tremendous pressure on him to abandon his initiative. Given the importance of the austerity agreements to the future of Greece, the idea of a referendum made perfect sense. A referendum would allow the Greek government to claim its actions enjoyed the support of the majority of the Greek people. Obviously, it is not clear that the Greeks would have approved the agreement.

Led by German Chancellor Angela Merkel, the European elite did everything possible to prevent such an outcome. This included blocking the next tranche of bailout money and suspending all further bailout money until Greek politicians could commit to all previously negotiated austerity measures. European outrage at the idea of a Greek referendum makes perfect sense.

Coming under pressure from Greece and the European elite, Papandreou resigned and was replaced by a former vice president of the European Central Bank. Already abandoned by Papandreou, the idea of a referendum disappeared.

Two dimensions explain this outcome. The first was national. The common perception in the financial press is that Greece irresponsibly borrowed money to support extravagant social programs and then could not pay off the loans. But there also is validity to the Greek point of view. From this perspective, under financial pressure, the European Union was revealed as a mechanism for Germany to surge exports into developing EU countries via the union’s free trade system. Germany also used Brussels’ regulations and managed the euro such that Greece found itself in an impossible situation. Germany then called on Athens to impose austerity on the Greek people to save irresponsible financiers who, knowing perfectly well what Greece’s economic position was, were eager to lend money to the Greeks. Each version of events has some truth to it, but the debate ultimately was between the European and Greek elites. It was an internal dispute, and whether for Greece’s benefit or for the European financial system’s benefit, both sides were committed to finding a solution.

The second dimension had to do with the Greek public and the Greek and European elites. The Greek elite clearly benefited financially from the European Union. The Greek public, by contrast, had a mixed experience. Certainly, the 20 years of prosperity since the 1990s benefited many — but not all. Economic integration left the Greek economy wide open for other Europeans to enter, putting segments of the Greek economy at a terrific disadvantage. European competitors overwhelmed workers in many industries along with small-business owners in particular. So there always was an argument in Greece for opposing the European Union. The stark choice posed by the current situation strengthened this argument, namely, who would bear the burden of the European system’s dysfunction in Greece? In other words, assuming the European Union was to be saved, who would absorb the cost? The bailouts promised by Germany on behalf of Europe would allow the Greeks to stabilize their financial system and repay at least some of their loans to Europe. This would leave the Greek elite generally intact. The price to Greece would be austerity, but the Greek elite would not pay that price. Members of the broader public — who would lose jobs, pensions, salaries and careers — would.
Essentially, the first question was whether Greece as a nation would deliberately default on its debts — as many corporations do — and force a restructuring on its terms regardless of what the European financial system needed, or whether it would seek to accommodate the European system. The second was whether it would structure an accommodation in Europe such that the burden would not fall on the public but on the Greek elite.

The Greek government chose to seek accommodation with European needs and to allow the major impact of austerity to fall on the public as a consequence of the elite’s interests in Europe — now deep and abiding — and the ideology of Europeanism. Since by its very nature the burden of austerity would fall on the public, it was vital a referendum not be held. Even so, the Greeks undoubtedly would seek to evade the harshest dimensions of austerity. That is the social contract in Greece: The Greeks would promise the Europeans what they wanted, but they would protect the public via duplicity. While that approach might work in Greece, it cannot work in a country like Italy, whose exposure is too large to hide via duplicity. Similarly, duplicity cannot be the ultimate solution to the European crisis.

The Real European Crisis

And here we come to the real European crisis. Given the nature of the crisis, which we have seen play out in Greece, the European elite can save the European concept and their own interests only by transferring the cost to the broader public, and not simply among debtors. Creditors like Germany, too, must absorb the cost and distribute it to the public. German banks simply cannot manage to absorb the losses. Like the French, they will have to be recapitalized, meaning the cost will fall to the public.

Europe was not supposed to work this way. Like Immanuel Kant’s notion of a “Perpetual Peace,” the European Union promised eternal prosperity. That plus preventing war were Europe’s great promises; there was no moral project beyond these. Failure to deliver on either promise undermines the European project’s legitimacy. If the price of retaining Europe is a massive decline in Europeans’ standard of living, then the argument for retaining the European Union is weakened.
As important, if Europe is perceived as failing because the European elite failed, and the European elite is perceived as defending the European idea as a means of preserving its own interests and position, then the public’s commitment to the European idea — never as robust as the elite’s commitment — is put in doubt. The belief in Europe that the crisis can be managed within current EU structures has been widespread. The Germans, however, have floated a proposal that would give creditors in Europe — i.e., the Germans — the power to oversee debtors’ economic decisions. This would undermine sovereignty dramatically. Losing sovereignty for greater prosperity would work in Europe. Losing it to pay back the debts of Europe’s banks is a much harder sell.

Friday, November 11, 2011

Is Mitt Gumby--I mean Romney--Inevitable ?

I say, no way.

Mitt's mascot ?
At some point, Romney will commit a colossal blunder--like Governor Perry not being able to remember exactly which 3 Federal agencies he would shutter--and Republicans will have to find someone else.

That person is not Cain, Perry, Huntsman, Gingrich, Santorum, Bachman, or Paul, none of those political Lilliputians whose limitations and weaknesses have already become only too apparent.

It must be someone who has actually governed--as opposed to keeping a seat warm in the State House corner office for two years--and, unlike Mitt Gumby, stands for something. The party must turn to Mitch Daniels or Jeb Bush, or better still both.      

Blogger DJ's Eclectic Friday Night Mix

Jermaine Jackson - Do What You Do
Michael Jackson - Rock With You, Don't Stop 'Til You Get Enough
Bill Withers - Just the Two of Us,  Use Me
KC & The Sunshine Band - That's The Way (I Like It)
Isley Brothers - Work to Do
Morris Day and The Time - Jungle Love
The Gap Band - You Dropped a Bomb on Me
The Brothers Johnson - Stomp !
The Commodores - Brick House
Wild Cherry - Play That Funky Music
Earth Wind and Fire - Let's Groove, Evil,  Fantasy, September
Kool and the Gang - Too hot
Average White Band - Work to Do , Pick Up The Pieces

Thursday, November 3, 2011

Beyond the Euro-Crisis II : Reboot or Collapse, Niall Ferguson Tells U.S.

...in THE DAILY BEAST.  Some excerpts follow.

***

But if we are headed toward collapse, what would an American “Oh sh*t!” moment look like? An upsurge in civil unrest and crime, as happened in the 1970s? A loss of faith on the part of investors and a sudden Greek-style leap in government borrowing costs? How about a spike of violence in the Middle East, from Iraq to Afghanistan, as insurgents capitalize on our troop withdrawals? Or a paralyzing cyberattack from the rising Asian superpower we complacently underrate?

Is there anything we can do to prevent such disasters? Social scientist Charles Murray calls for a “civic great awakening”—a return to the original values of the American republic. He’s got a point. Far more than in Europe, most Americans remain instinctively loyal to the killer applications of Western ascendancy, from competition all the way through to the work ethic. They know the country has the right software. They just can’t understand why it’s running so damn slowly.

What we need to do is to delete the viruses that have crept into our system: the anticompetitive quasi monopolies that blight everything from banking to public education; the politically correct pseudosciences and soft subjects that deflect good students away from hard science; the lobbyists who subvert the rule of law for the sake of the special interests they represent—to say nothing of our crazily dysfunctional system of health care, our overleveraged personal finances, and our newfound unemployment ethic.

Then we need to download the updates that are running more successfully in other countries, from Finland to New Zealand, from Denmark to Hong Kong, from Singapore to Sweden.

And finally we need to reboot our whole system.

I refuse to accept that Western civilization is like some hopeless old version of Microsoft DOS, doomed to freeze, then crash. I still cling to the hope that the United States is the Mac to Europe’s PC, and that if one part of the West can successfully update and reboot itself, it’s America.

But the lesson of history is clear. Voters and politicians alike dare not postpone the big reboot. Decline is not so gradual that our biggest problems can simply be left to the next administration, or the one after that.

If what we are risking is not decline but downright collapse, then the time frame maybe even tighter than one election cycle.

Beyond the Euro-Crisis I : Asia's Water-Stressed, Turkey's Woofing

Brahma Chellaney comments on Water Stress in Asia, and various risks therefrom

Water, the most vital of all resources, has emerged as a key issue that would determine if Asia is headed toward cooperation or competition. After all, the driest continent in the world is not Africa but Asia, where availability of freshwater is not even half the global annual average of 6,380 cubic metres per inhabitant.

Today, the fastest-growing Asian economies are all at or near water-stressed conditions, including China, India, South Korea, Vietnam, and Indonesia. But just three or four decades ago, these economies were relatively free of water stress. Now if we look three or four decades ahead, it is clear that the water situation will only exacerbate, carrying major implications for rapid economic growth and inter-riparian relations.

Yet Asia continues to draw on tomorrow's water to meet today's needs. Worse still, Asia has one of the lowest levels of water efficiency and productivity in the world. Against this background, it is no exaggeration to say that the water crisis threatens Asia's economic and political rise and its environmental sustainability. For investors, it carries risks that potentially are as damaging as non-performing loans, real estate bubbles, and political corruption. Water has also emerged as a source of increasing competition and discord within and between nations, spurring new tensions over shared basin resources and local resistance to governmental or corporate decisions to set up water-intensive industries.

These developments raise the question whether the risks of water conflict are higher in Asia than elsewhere in the world. With Asia becoming the scene of increasingly fierce intrastate and interstate water competition, the answer clearly is yes. Water is a new arena in the Asian Great Game.

In fact, water wars — in a political, diplomatic, or economic sense — are already being waged between riparian neighbours in several Asian regions, fuelling a cycle of bitter recrimination and fostering mistrust that impedes broader regional cooperation and integration. Without any shots being fired, rising costs continue to be exacted. The resources of transnational rivers, aquifers, and lakes have become the target of rival appropriation plans.

Turkey's showing a more aggressive and dangerous side these days, on the one hand, occupying part of Kurdistan, on the other, threatening naval action if Cyprus chooses to exploit its own oil reserves.  In 'Neighbors warily eye a more muscular Turkey', Shlomo Avineri observes :

The recent surge in Turkey's military actions against the Kurds in northern Iraq is an indication that, somewhat surprisingly — but not entirely unpredictably — Turkish foreign policy has undergone a 180-degree turn in less than two years. The Turkish offensive is also an indication that these changes go beyond the current tensions between Turkey and Israel, which are just one facet of much deeper trends.

Turkey has an enormously important role to play in the region. It could be a bridge between the West and the East, between Islam and modernity, and between Israel and the Arabs. But it runs the danger of succumbing to the arrogance of power, which has corrupted and sidelined many strong states in the past.
That new Turkish aggressiveness prompts Michael Rubin to ask, 'Is It Time for an Anti-Turkey Coalition?' :

Kurds and Kurdistan have never felt so much promise. Federalism in Iraq is secure. Iraqi Kurdistan attracts billions of dollars in investment, Masud Barzani no longer needs a borrowed Turkish passport to travel abroad, and the Kurdistan Regional Government has offices which act as virtual embassies in Washington, London, and other major capitals. It is ironic, therefore, that against this progress, Kurds wield so little influence over the issues about which Kurds inside and outside Iraqi Kurdistan most care.

After Kurdistan Workers Party [PKK] members attacked Turkish military outposts in the early morning hours of October 19, Nechirvan Barzani, a former prime minister who retains the power of that post, rushed to Ankara to try to defuse any retaliation. He failed. So too did regional president Masud Barzani, who placed an emergency phone call to Prime Minister Recep Tayyip Erdogan. Turkish President Abdullah Gül vowed revenge and dispensed with the notion for proportionality that Turkey demands from others. "No one should forget that those who are inflicting this pain upon us will suffer in multitudes," Gül declared. Thereafter, Turkish jets bombed targets in Iraqi Kurdistan and Turkish tanks reportedly crossed the border. While Turkish officials say they have killed several hundred PKK members, such declarations cannot be taken at face value. Turkish authorities label any Kurd killed in such bombardment as a terrorist, regardless of reality. Civilians often pay the price. Turkey has yet to apologize or pay compensation, for example, to the families of the seven Kurdish civilians killed in an August strike. Nor has the Kurdish government forced Turkey to provide proof the any recent attacks inside Turkey had a cross-border component.

The failure of Kurdish leaders to fulfill their diplomatic agenda extends beyond the latest Turkish incursion. After all, even before the Hakari attacks, the Turkish Army stationed more than 1,000 troops stationed on mountains and around villages several kilometers across the Iraqi and Iraqi Kurdish border. Indeed, as much as Turkey's Foreign Minister Ahmet Davutoglu frames his country's foreign policy as seeking good relations with all its neighbors, the fact remains that Turkey is the only aspirant to the European Union that unabashedly occupies other countries. Turkish occupation in Iraq and Iraqi Kurdistan, as well as in Cyprus suggests the true meaning of neo-Ottomanism.

Turkey's occupations, however, provide the Kurdistan Regional Government with an opportunity. On September 2, 2011, Egemen Bagis, Turkey's Minister for European Union Affairs, threatened Cyprus with military action. Should that European Union member not stop oil exploration in international waters off its coast, Bagis said, that Turkey might respond militarily. "That's what a navy is for," he quipped.



Papandreou's Referendum Call Only A Bluff ?

Referendum, shmeferundum...
With the fate of his nation--and with it, short-term, that of the greater European economy-- at stake, did Greek PM George Papandreou issue his stunning call for a referendum on the EU bailout in order to shift the political onus of supporting--or nixing-- the bailout onto the Hellenes themselves ? Or did he gamble that by holding the threat of the plebiscite over the heads of the Euro leaders, he could extract better terms ? 

Clearly, if his motive was the latter, he was sadly mistaken, for at Cannes, Merkel and Sarkozy stood firm, as Dina Kyriakidou and Abhijit Neogy reported in REUTERS on developments in the Greek/Euro crisis (excerpted below)


Greece's teetering government backed away from a proposed referendum on staying in the euro on Thursday, while European leaders talked for the first time of a possible Greek exit to preserve the single currency.

Papandreou told lawmakers from his Socialist party he had agreed to talks with the center-right opposition on a transitional government to implement a new EU/IMF bailout program. If that led to a consensus in support of the plan, there would be no need for a referendum.

At a bruising meeting in Cannes on Wednesday night, French President Nicolas Sarkozy and German Chancellor Angela Merkel warned Papandreou that Athens would not receive a cent more in aid until it met its commitments to the euro zone.

Greece was due to get a vital 8 billion euro installment this month and says it will run out of money in mid-December if it does not get the loan.

Greek Finance Minister Evangelos Venizelos broke ranks with Papandreou, saying Greece's euro membership was a historic achievement and "cannot depend on a referendum." He demanded that the government openly ditch the referendum idea.

Dissident lawmakers in the ruling PASOK party also spoke out against a plebiscite and called for a national unity government or early elections, casting doubt on whether Papandreou would survive the week in office. Some suggested former ECB vice-president Lucas Papademos should head such an administration.

Signaling a will to compromise, opposition leader Antonis Samaras called for a transitional government to lead Greece to early elections and said parliament should first ratify last week's 130 billion euro ($178 billion) bailout deal.

European Union leaders have long called for national unity in Greece in support of painful austerity measures needed to cut the country's crippling debt, expected to reach 160 percent of gross domestic product this year.

Sarkozy told a news conference the tough message delivered by France and Germany to Greece's political class was showing signs of bearing fruit. "Things are progressing," he said, welcoming Samaras' support for the bailout plan.

Euro area leaders talked openly of a possible Greek exit from the 17-nation currency area, seeking to maximize pressure on Athens and preserve the euro in case of a "no" vote.
So why did Papandreou engage in such brinksmanship ?

I'm convinced the PM's actual goal was to cajole others beyond his ruling socialist PASOK party into shouldering some of the political burden--and political cost--of backing the bailout, those "others" being other Greek political parties, through creation of a successor, unity government.  Given the fact that on the eve of his referendum announcement, his government's majority in Parliament had dwindled to three votes, and its fall imminent, the PM really had nothing to lose.        

If such was the case, the PM's bluff appears to have worked, at least for the time being.