Beyond Fashion with Paclantic
Beijing Fashion Week reminds us that today’s Chinese designers are very much in demand, both at home as well as all over the world, notably the West, where they are being increasingly recognised by both American and European fashion houses as being totally ‘on-trend’ and pointing the way forward for the rest of the fashion industry.
The exhibitors at this month’s Beijing Fashion Week are going to be showing everything from the high-end of the market, right down to everyday streetwear, including the most highly accelerating sector, which is children’s clothing. Read More
Darwinism and EU Economic Theory
The European Union is languishing in a perpetual economic autumn whilst bankers, with the connivance of politicians, apply rudimentary quack remedies such as Quantitative Easing in the vain hope that somehow they’ll skip a couple of seasons and as if by miracle, an economic summer will materialise out of the murk.
Last year I wrote that modern global economics owes as much to Chaos Theory as it does to Keynes and has mutated beyond the competence of mere politicians. Economic evolution has overtaken the ability of those who traditionally administer the remedies when economic sickness hits.
The mechanisms which are needed to be put in place to even begin to have any effect on economies are so diverse and complex as to make present economic theory, especially that tainted by political dogma, almost redundant. The best that a politician and his advisers can do is to prod a small corner of the economic matrix in the hope that eventually a positive effect is somehow brought-about.
It is fair to say that politicians are no longer shapers of an economy but have now been diminished to mere observers.
The post-war years have seen such an incredible acceleration in all the factors which affect us – from technology to global financing, that it is only now becoming apparent that old solutions will NOT cure new problems. Sometime in the not-too-distant past, the “butterfly effect” became the wing-flap of the American Eagle – until the eagle itself became subject to bouts of economic coma .
Now it is probably the hot-breath of the Chinese dragon which will burn economies.
It has been universally established (even by China and Russia) that Capitalism is the way forward. However, it is no longer the gung-ho, asset-and-natural-resource-stripping capitalism of the past. A democratic and more ethically accountable flavour of capitalism is now needed.
For instance, “business” ought to be an activity which strives to maximise market share and commercial efficiency, i.e it should be inwardly-focused with profits as the essential by-product which is then used to disseminate wealth.
What we currently have is a business model where the rationale is primarily concerned with the maximisation of shareholder profits which concentrates wealth into comparatively few hands. Hence the 21st century craze for moving money in order to generate money without the added old-fashioned complication of production. A virtual world generates virtual money with a virtual value.
“Ah!” you’re thinking. Socialist!! Nothing could be further from the truth.
Let’s keep it simple and look at the two extremes.
The Left (Socialism, Labour, U.S. Democrats, EU) dreams of public or community ownership and what you might call “forced distribution” which unfortunately needs to be underpinned by bureaucratic control and masses of public expenditure.
The Right (Conservatives, Republicans) dreams of privatisation. That has absolutely nothing to do with the individual. It is to do with corporate power.
So, at one extreme, we have unsustainable and forever expanding bureaucracy and on the other we have unacceptable (to the individual) accelerating corporate power.
Western political systems have now become nothing more than a tension between those two extremes. For instance, witness the “Punch and Judy” politics of America and the United Kingdom, as currently exemplified by the quality of the United Kingdom’s EU referendum debate and the antagonistically offensive quality of the USA’s 2016 Presidential campaign.
Currently, there isn’t a better example of extreme corporate power than that exhibited by the banking system. A debt-fuelled crisis, which was accidentally engineered by the banking system ………aided and abetted by politicians who continue to have absolutely NO idea how to deal with it, except by assuming that the problem has gone away. They have adopted the “rabbit-staring -into-headlights” technique and have even been reduced to appealing to the bankers better nature, by inviting central banks into the economic driving seat!!
Paradoxically, the only people who will be able to clean-up the financial mess are financiers. Unfortunately, the type of financier that is needed is not the traditional self-serving, avaricious, unprincipled type which we have all come to love.
It is an as yet undiscovered species. The socially responsible financier who, with the assistance of the politician can generate new ideas which will, in turn, evolve into a NEW Capitalism which places the individual and not the corporation at its nucleus.
The financial crisis happened in spite of politics and will eventually cure itself in spite of politics. Chaos has its own mysterious mechanisms.
It is obvious though that the Darwinian aspects of world economics have outstripped the development of both our politicians and our economic theories.
…..and as China is demonstrating….it is the Survival of the Fittest…..and as the #EU is clearly demonstrating, the answers do not lie in organisational chaos, bureaucracy and huddling for political and economic warmth with people you wouldn’t normally invite into your home.
Carney in the Cameron Corner?
The (hired by Chancellor Gideon) totally impartial Governor Mark Carney of the oh-so independent Bank of England said today that if the United Kingdom left the Bruderschaft of the oh-so economically-stable #EU, the risk of leaving “could possibly include a technical recession”……….which by implication suggests that if we stay firmly wedged in Bundeskanzlerin Merkel’s ample #EU cleavage, the risk of recession will be gone! Good news !!
David Cameron then said the warning amounted to “a very clear message” of the dangers of Brexit.
Some have declared that the Governor was spouting unwarranted and unmitigated bollocks with several calling for him to be sacked.
In reply, the Governor’s spokesperson said the Bank had “a duty to make its judgments known.”
As the Bank of England has been so incisive and accurate in all of its previous economic judgments and predictions – the 2008 economic collapse, the subsequent recession and the collapse of RBS, to name but a few – I cannot think of any reason why we should not take Governor Carney’s latest prophecy (it’s NOT a prediction!) VERY seriously. 🙂
Cameron’s crap Spreadsheet
Has ANYONE noticed that David Cameron has NOT yet produced his Tax Return?
In their excitement, the media appear to have accepted a very dodgy-looking and simplistic spreadsheet – the sort we could all knock-out on our PCs. The sort of spreadsheet which would be totally unacceptable to HMRC or even to an unqualified book-keeper.
We should see Cameron’s and his wife’s Tax Returns plus any non-PAYE accounts.
Cameron & Gideon….don’t forget the wives!
In order to see number which give a true reflection of Cameron’s and Osborne’s incomes, their spouses tax returns should also be made public. It’s amazing how easy it is to forget having bestowed large amounts of cash on a loved one.
I am not suggesting for one moment that there may have been deliberate movement of assets or cash designed to defraud HMRC but these things can happen for totally innocent reasons…..so while we’re at it, perhaps it would be best to get it all over with in one go!
In addition, I would suspect that at least one of them is part-Schedule E and part Schedule D. That means that apart from PAYE deductions, there may be accounts!
Point of View
Remember that whatever your opinion, whether it’s the #EU hokey-kokey debate or Mr Cameron and his deep and (so genuine!) offshore love for his father, it all depends on where you’re standing …your POV……………… For instance:
Dog: ” I love the way I’ve trained that nice Dr Pavlov to smile, make notes and give me a treat every time I drool”
Excellent #EU insight
The question is very straightforward: Do we want to belong to a totally unaudited association of failing and near bankrupt economies, overrun by unwanted (yes!) migrants and presided over by an inward-focused, self-amplifying bureaucracy – or should we be looking outwards to the rest of the world whilst maintaining relations only with the European states we can do business with – without worrying about regulations governing what we eat or the amperage of our hairdryers and toasters!
Here is a link to Euro MP Daniel Hannan’s excellent revelations which we should all read: http://dailym.ai/1S2A0P6
Cameron’s offshore shenanigans
Apparently, David Cameron was probably the only rich kid for whom a Trust Fund was never set up. A startling omission by his father because it would have been the most efficient way to put cash or any other type of asset away with junior as the beneficiary. A Trust has ‘trustees’ who usually exercise their discretion in how much is paid to the beneficiary and when it is paid. Trusts are not only useful for passing down assets to the next generation but also keep assets out of a settlor’s estate, thus reducing any Inheritance Tax liability. It is therefore VERY surprising that Cameron Snr did not think of that!
However, it is nevertheless always a good idea to listen very carefully to the words written for any Cameron statement. For instance, the latest denial issued by Downing Street contains the following sentence:
“There are no offshore trusts or funds that the Prime Minister or his immediate family would benefit from in future“
One can only assume that the trustees have exercised their discretion very recently as well as very suddenly…….unless of course Cameron Snr indeed did not follow his own advice!
Cameron deploying his “We’ll do everything we can to help” mantra. This time it is aimed at the British steel industry. Certain commentators have suggested that Dave is probably thinking about re-nationalising steel! He’d rather be rogered by a pig wearing a red rosette….It won’t be long before we’re importing steel from China. Remember, this government does NOT have a long-term plan – only fine words. Time to say ‘tata’ to our steel industry.
Sharm el-Sheikh Sabotage
It’s a great shame that even when Cameron makes an absolutely CORRECT decision in halting flights to and from Sharm el-Sheikh, people still complain. As evidence accumulates, it looks increasingly likely that the Russian Airbus 321 was brought down by a catastrophic event which occurred inside the plane. DC is taking no chances – and quite right too!
No Syrian conflict for Dave.
An influential Commons committee has urged David Cameron not to press ahead with a vote on UK air strikes against Islamic State militants in Syria.
The Foreign Affairs Committee – which has a Conservative majority – said the Prime Minister should instead “focus on efforts to end Syria’s civil war”.
The committee also raised concerns about the legal basis for any UK action.
Downing Street has strongly denied reports Mr Cameron has abandoned plans for a vote altogether…….but Oh YES, he has!
There’s no way that he can risk another Commons defeat, Lords humiliation or be seen doing to Syria what Blair did to Iraq.
He has taken the line of least resistance.
BURIED NEWS: The (our) government has given a cheap £45 MILLION loan to international Steel Mills Group EVRAZ (owned by Roman Abramovich). The cash will be used to upgrade a steel mill in Saskatchewan Canada which Abramovich owns jointly with Mitsubishi. #Redcar
Renegotiation of the UK’s EU Membership.
If you ask the average British person why they are dissatisfied with the nature of the UK’s membership of the European Union, the items which are always near the top of the agenda are: 1. The scale of our national contribution. 2. Migration fears. 3. The wastage on the bloated Brussels bureaucracy.
That is why it is strange to see that David Cameron’s tediously anaemic ‘negotiation’ shopping list does not mention TWO of the above. Here’s the list:
- Securing an opt-out from the principle of ever-closer union
- Protecting the rights of countries outside the eurozone
- Regaining more powers for national parliaments
- Overhauling the existing welfare rules in relation to migration
If Cameron does not deal which what is really bothering the UK voter, the 2016 EU referendum already has a foregone conclusion.
Many years ago, I was in East Germany (don’t ask!) and recall a Keep Britain Tidy demonstration being reported in a Russian newspaper. The strapline was “The average Englishman throws his rubbish onto the street.” I knew what they meant but the impression given was horrific. This week, the following article made it to the Independent. Here’s what is being reported about the United Kingdom and its ‘hardworking people’………………..‘Victorian’ diseases rise as Tories fail to tackle food poverty http://bit.ly/1S9nI6A
Euro zone corporate lending growth slows to near zero in September
Growth in lending to eurozone corporations slowed almost to a halt in September while a broader measure of money circulating in the euro zone was unchanged, the European Central Bank said on Tuesday.
Lending growth to non-financial corporations slowed to an annualised 0.1 percent in September from 0.4 percent a month before, while lending growth to households picked up to 1.1 percent in September from 1.0 percent in August.
Sparse lending to companies has dogged the struggling euro zone economy although the picture improved slightly over the summer months before September’s dip.
The ECB last week raised the prospect of providing more monetary stimulus to the euro zone economy, possibly as soon as December, to boost inflation and growth.
The M3 measure of money circulating in the euro zone, which is often an early indicator of future economic activity, grew by 4.9 percent in September, unchanged from August and missing forecasts for 5.0 percent. (Reuters)
EU urges Greece to ‘stop wasting time’ on reform
(Reuters) – The head of euro zone finance ministers has urged Greece to “stop wasting time” and buckle down to serious talks and implementation of a reform programme to secure urgently needed fresh funds from its international creditors.
“Little has been done since the last Eurogroup (meeting two weeks ago) in terms of talks, in terms of implementation,” Eurogroup chairman Jeroen Dijsselbloem said on arrival for a meeting of ministers of the 19-nation currency bloc.
“We have to stop wasting time and really start talks seriously,” he said, adding that euro zone partners stood ready to support Greece if it continued on the economic reform path.
Euro zone officials were not persuaded by a letter sent by outspoken Greek Finance Minister Yanis Varoufakis on Friday outlining seven planned measures. They said it was only a starting point and no basis for releasing frozen bailout money.
Varoufakis irritated EU partners in a weekend newspaper interview by dangling the prospect of a referendum.
Dijsselbloem said earlier the steps outlined were “far from complete”, adding that it would be very difficult to complete the reform programme during the four-month extension of Greece’s European Union/International Monetary Fund bailout that runs until end June.
Shut out of capital markets and with international loans frozen against a background of falling tax revenues, Greece could run out of cash later this month.
Hardline German Finance Minister Wolfgang Schaeuble told reporters Athens must start implementing its obligations and refrain from unilateral changes to its commitments.
Varoufakis, who wants a negotiated restructuring of Greece’s debt to official lenders, was quoted by Italy‘s Corriere della Sera on Sunday as saying the leftist-led government could call a referendum or early elections if European partners rejected its debt and growth plans.
The finance ministry later clarified that the Marxist former academic had been replying to a hypothetical question and that any referendum would “obviously regard the content of reforms and fiscal policy” and not whether to stay in the euro.
French Finance Minister Michel Sapin said on leaving Paris for the meeting that while he was not worried about a risk of Greece defaulting, “things are serious”.
A source at the European Central Bank said the cash position of Greek banks, on a drip-feed of emergency funding, appeared to be stabilising after heavy deposit outflows from December to late February. The ECB would not allow Greece to increase its issuance of short-term treasury bills because it could not allow monetary financing of the government, the source said.
A senior politician in German Chancellor Angela Merkel’s conservative bloc said Greece would be better off outside the 19-nation euro zone, suggesting that Schaeuble privately agreed.
“By leaving the euro zone, as Finance Minister Schaeuble has suggested, the country could make itself competitive again from a currency perspective with a new drachma,” former transport minister Peter Ramsauer, a member of the Bavarian Christian Social Union (CSU), wrote in Bild.
Merkel and Schaeuble have both said publicly they want to keep Greece in the currency area. But in a sign that German sentiment may be shifting, Ramsauer said a temporary “Grexit” would be a “great opportunity” for the country to boost its economy and administration “making it fit to return to the euro area from a position of strength”.
GREEKS WANT TO STAY
Seeking European support for his government’s efforts to alleviate deep hardship caused by austerity, leftist Greek Prime Minister Alexis Tsipras will meet European Commission President Jean-Claude Juncker on Friday.
A Greek official said they would discuss how Greece can use EU funds to tackle what he called the humanitarian crisis.
Juncker has been trying to mediate between the new Athens government and its EU creditors, notably Germany, but his efforts have irritated Berlin, the euro zone’s main paymaster, which is keen to avoid sending mixed messages to Greece.
German Deputy Finance Minister Steffen Kampeter said in a radio interview he did not expect substantial decisions on Greece at Monday’s Eurogroup meeting because ministers were waiting for more financial details on the reform plans.
He criticised Varoufakis’ talk of a referendum or returning to elections, saying it would only delay what needed to be done.
An opinion poll on Monday showed a large majority of Greeks want Athens to reach a compromise deal with lenders to avoid having to leave the euro.
Some 69.6 percent of Greeks say the new leftist-led government should look for an “honourable compromise” to resolve the crisis, according to a Marc survey for the newspaper Efimerida Ton Syntakton. Only 27.4 percent of those questioned wanted Greece to refuse any compromise, even if that meant having to leave the euro zone.
Tsipras won power in January promising to renegotiate the bailout package and end austerity, but was forced to accept a four-month conditional extension to avert bankruptcy.
(JAN STRUPCZEWSKI AND INGRID MELANDER with Additional reporting by Robin Emmott, Tom Koerkemeier, Renee Maltezou and Robert-Jan Bartunek in Brussels, Toby Sterling in Amsterdam, Stephen Brown and Noah Barkin in Berlin, Steven Scherer in Rome and Angeliki Koutantou in Athens; Writing by Paul Taylor Editing by Jeremy Gaunt.)
The Jackboot of Austerity?
It looks as if the Eurogroup is giving Greece little chance of breaking free from its crippling austerity. Surely they understand that Greece has little chance of Economic Growth with the jackboot of austerity still on its neck. Hopefully, the #EU is not hoping for a U-turn to 100% compliance by attempting to “engineer” the return of Samaras and his Euro-poodles.
#Islamic State – Cause or Effect?
After the mess left behind in Iraq, Libya and Syria, Western leaders appear to have realised that the days of a “good shooting war” being good for political image have gone forever. For most political leaders, heroic speechwriter-polished phrases and Churchillian posturing are a remnant of a past when the words ” honour” and “bravery” still had currency.
Today, war is recognised as a filthy misery-spawning industry which, like an appalling Grand Prix Circuit, moves from country to country, leaving no more than a legacy of destruction and death. There is no honour in war – there is only pointlessness, rubble and refugees.
The most bizarre aspect of the whole Middle East circus is that the leader of a small cluster of damp islands in the North Sea is always the one who makes the most noise, always hiding behind his younger but much bigger American cousin’s skirts…..and unsurprisingly, the United Kingdom’s Prime Minster is at it again. This time, from the safety of the White House.
Historically, the West feels that its job is to dispense the universally therapeutic remedy of “democracy” – even to those who don’t really want it.
Democracy is not an emollient to be force-fed in the same way that 18th and 19th century missionaries (from exactly the same damp islands) delivered Christianity to the world’s natives.
The Arabs are not even remotely interested in our special brand of democracy. Democracy used to be THE excuse because they knew that as soon as they shouted “Freedom!” or “Democracy!“, the usual suspects would come riding in, dispensing guns with notions of rescue, egalitarianism and ballot boxes.
THAT didn’t work so now it’s Muslim Fundamentalism and not democracy which needs to be spread! However, the Root Cause remains the same. Only the excuse is different.
Can you imagine revolutions in the Middle East if the family businesses masquerading as governments, distributed their oil billions as they should? Would the average Muslim be interested in getting shot in the name of “regime change” , “democracy” or even “Islam” – if he had a job, enough food, decent housing, a car, TV set, free hospital care for his family and a bit left over? Of course not.
Exactly the same economic argument applies here in the West . Would as many young Muslims fly to Syria or Iraq to join the Islamic State if they had a career, a home and a future? Would they blow-up magazine offices and fly planes into buildings?
With horrific levels of Muslim youth unemployment and social exclusion, their “Islamic revolution” is primarily based in economics….. not religious idealism.
Once Western leaders accept that, instead of constantly citing “Radicalisation”, we may be a step nearer to finding a solution.
Government to shoot-up Pfizer?
Select Committee members can do a bit of grandstanding, Prime Ministers deliver a bit of macho jive talk – but the fact is that politicians can do jack-s*** about the Pfizer/Astra Zeneca deal . They CANNOT influence board or even management decisions.
Read carefully what DC said this week: “
Our entire approach is based on TRYING to secure the best possible deal in terms of jobs, investment and science. And that is why I believe it was absolutely right to ask the cabinet secretary to ENGAGE with Pfizer, just as we’re engaging with AstraZeneca, and I do find it extraordinary that we’ve been criticised for this.”
The Enterprise Act only allows government to intervene in the case of mergers affecting NATIONAL SECURITY or MEDIA OWNERSHIP.
After the Kraft takeover of Cadbury’s and subsequent events, the Takeover Code was amended in 2011 so that nowadays, the bidding company has to publish INFORMATION as to the anticipated effects of the takeover and employees are able to give their VIEWS. All irrrelevant window-dressing which does NOT affect future management decisions.
Let’s PLEASE stop all the pretence.
The IMF’s austerity conditions for #Ukraine, in return for cash handouts will prepare the country for membership of the EU’s “Indentured Servitude Club”.….alongside near-neighbours such as Greece……. The short to mid-term future looks very bleak for members of the ISC……..Nowadays, the population-at-large paying for the crimes of its politicians and bankers appears to be the generally accepted norm!
#MH370 : What if…..
The red mark on the map is the location of the American Military Base on Diego Garcia, which is is a coral atoll and part of the British Indian Ocean Territory.
The disappearance of the flight has been the subject of many conspiracy theories……ranging from alien abduction to an on-board bomb.
A couple of days ago, INMARSAT, a British company completed some very subtle calculations and announced the most likely resting place of flight MH370….somewhere near the bottom of the above map, to the west of Australia.
We have all taken Inmarsat’s calculations at face value but the discovery that a recent addition to this company’s Board was General C. Robert Kehler, United States Air Force (Retired), puts a slight “spin” on the facts.
Until November, General Kehler was Commander, US Strategic Command (USSTRATCOM).
So, we have a heavily-protected US base which has nuclear rockets pointed a several targets on the Asian mainland.
We have a (possibly) deranged pilot who is rumoured to have Diego Garcia programmed into his home-built aircraft simulator.
What if the pilot had decided to crash Malaysian Airlines Flight MH 370 into the Diego Garcia Base? Remember that he didn’t disappear from radar by accident. He disappeared at the point where he knew that the plane would be “invisible” to radar.
There was absolutely NO reason to fly South and crash into the ocean.
Last question: WHAT would the USA Military do if they became conscious of what looked like a rogue plane with communications switched off heading towards them at a height of a few thousand feet?
They would blow it out of the sky.
The only issue remaining would be to lay a false trail in order to put the “crash site” as far away as possible from where it was “killed”.
One cannot blame the passengers’ families for being sceptical.
Euro Christmas Wishes
My best wishes for an environmentally friendly, socially responsible, low stress, non-addictive, gender non-specific celebration of the Winter Solstice holiday, practiced with the most enjoyable traditions of religious persuasion or secular practices of your choice with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all and a fiscally successful, personally fulfilling recognition of the onset of the generally accepted Gregorian calendar year 2014. This of course does not imply any disrespect to other calendars which, in certain cases, are accepted to predate the generally accepted measurement method and are not considered to be any less valid.
If you live within the Eurozone, we shall of course meet in one month’s time to discuss the above wishes and possibly renegotiate them as they are always subject to clarification or withdrawal. Moreover they can be withdrawn should one member not be in full agreement or should they personally not perform as expected within the usual application of good tidings, the above-mentioned fiscal success and ongoing cooperation from the Holy banking system.
The Wisher also accepts without reservation that especially within the political sphere, there may be, because of election, death or resignation, changes of Wishee. In such cases, the above is fully transferable in perpetuity, to subsequent Wishees but only subject to ongoing membership and cooperation.
2014 Predictions – PART ONE
Predicting the future has always been a mug’s game. For instance, I continue to believe that the markets are all in the wrong place and overpriced and I predicted the FTSE at about 4500 – but then again, I could not have predicted the collective madness of Quantitative Easing and the real fear that politicians have of the banks. I used to understand investment…but not any more. Cheap virtual cash continues to fund the markets and to keep them artificially high.
The politicians feel that they have to please the banks first and only then the voter. Governments are no longer in control of events. Nowadays, finance drives politics and politicians have become the bankers’ lackeys.
For as long as banks and governments continue to mutually gorge themselves on virtual cash and governments do not have the courage to increase interest rates and taxes in order to join us in the real world, there is a very real possibility that the current economic situation will become the status quo.
These predictions are in no particular order.
1. The disconnect between economic data and the quality of life is fueling populism. It is also fueling right-wing extremism and anti-government sentiment. I fully expect the equivalent of the Arab Spring sometime during 2014 , in the UK and some other European states.
2. South Sudan will provide the next African bloodbath.
3. The Scots will vote “No” to independence.
4. The recently-adopted self-congratulatory air will desert both UK and European politicians as it is realised that the “virtual” economic recovery is unsustainable.
5. There will be a substantial increase in China’s birth rate (the new “one child plus” policy), contrubuting TWO MILLION children to the 2014 economy, boosting consumer motivation.
6. China will continue to build and accelerate its natural resource monopoly in Africa. (One million Chinese already live there).
7. As the West cuts its military budgets, China will continue to do exactly the opposite.
8. David Cameron will continue to tell us what MUST and SHOULD be done, one a whole range of issues.
9. Anaemic growth in the advanced economies will see government debt continue to climb.
10. The US $ will continue its decline. Instead of Quantitative Easing Infinity accelerating economic growth, its effect will be to shrink the $’s buying power.
11. The sudden (and unexpected) pick-up in UK growth, followed by the indication of a reversal in the final quarter of 2013 suggests that businesses were adding to their inventories rather than selling their goods. Expect the reversal to continue in 2014.
12. Germany currently represents approximately 30% of the Eurozone economy and will continue to enjoy the fruits of a weak euro and ramp-up exports.Germany has the world’s highest current account balance as a percentage of GDP. During 2014, Germany’s economic success will continue to accelerate and will represent over ONE THIRD of the Eurozone’s output.
13. Japan will continue to prosper. Its economic output is not 75% of China’s. although it is 4% of China’s size with 9% of China’s population. “Abenomics” has provided the “jump-leads” which Japan needed.
14. The USA will enter another recession in 2014. Currently it is still on “below-2%” growth.
15. A Populist movement will become increasingly vocal here in the UK (and in certain Eurozone countries), with sudden impetus being generated AFTER the European Parliamentary Elections when the main traditional parties will be decimated by the Left and Right.
16. In spite of the Eurozone’s economic “recovery”, unemployment will remain at current record heights (Over 12%).
17. Deflation will accelerate within the Eurozone and economic forecasts will once again be downgraded.
18. The European Court of Auditors (ECA) will publish the 2013 EU accounts and once again, confirm that the continuing “errors” in all of the EU’s spending areas have finally crossed 5%(!) of expenditure.
19. The UK government will do well to prepare for the possibility of social unrest which is driven by the rapid growth of the “have nots”. The financial hangover caused by Christmas 2013 will be far more extreme than in previous years.
20. The Federal Reserve will announce and implement the end of its massive bond-buying programme. This will have a substantial effect on the markets.
21. The full-extent of the banking industry’s Pension and Life Assurance mis-selling will become apparent.
22. There will by an explosion in Teacher Militancy as the government continues to fiddle with our childrens’ education.
23. The price of Crude Oil will fall to about $75 per barrel. The decrease will be primarily caused by oversupply as a result of new production methods.
24. The European Union will fail to deal with its members’ collective debts. Again.
25. The Global Recovery will falter.
26. On January1st, Greece will take over the Presidency of the EU – at a cost to itself of €50 MILLION. This exemplifies the madness of the European Union when a de facto bankrupt state with zero clout is allowed to be burdened such a “spend”. Prediction: Greece will make a “pig’s ear” of its Presidency. Hopefully Subway and MacDonald’s are bidding for the catering contract.
27. Twitter, Amazon etc will be recognised as part of yet another totally unsustainable bubble.
28. In the UK, there will be yet more calls for House of Lords reform. Hopefully, as more and more of their Lordships’ financial “indiscretions” come to light, the debate will snowball, eventually leading to an elected Upper House. Turkeys may well HAVE to vote for Christmas.
29. Once South Africa has recovered from Mandela’s death, there is a real danger of a return to what I can only describe as “Reverse Apartheid”. Violence.
30. Syria will continue to generate substantial profits for the world’s Arms producers as it has become increasingly apparent that there is NOT the political will to even attempt to end this butchery.
(I am NOT a Global Warming mullah but the image above shows all the world’s water and air to scale.)
THIS is from China’s state news agency Xinhua: “As US politicians of both political parties (fail to find a) viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanised world. Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated. A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing. Instead of honouring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas.” ………….Xinhua added: “Regional tensions amid territorial disputes, fighting unwarranted wars under the cover of outright lies…..”
Foreign Secretary William Hague this morning: “I condemn the abduction of the Libyan Prime Minister….”……. It’s NO WONDER the bad guys have released Prime Minister Ali Zeidan so soon! You don’t mess with the Haguemeister! When he condemns you – you stay condemned!! Al-Qaeda terrorists are quaking in their sandals!
When most people see Malala Youzafzai, the Pakistani girl who was shot by the Taliban, they see a heroine. I see a sad, unfortunate girl, impelled and steered by a father’s grasping opportunism. Sorry.
Currrently, American politicians do NOT appear to be fulfilling their electoral mandate and instead, are concentrating on a Washington power struggle. Perhaps they too should have their salaries suspended. It might help them to concentrate.
#SYRIA: Does the increasingly isolated Obama, with his barking-mad, cigar-chomping generals, not realise that an attack on Syria will cause markets to tumble, wipe BILLIONS off share prices, accelerate the failure of the “propped-up-by-the Fed” American economy, damage the BRICS countries’ economies, raise oil prices, accelerate the collapse of the Eurozone and probably cause the deaths of thousands more innocent people? There are times when principle has to give way to pragmatism. #Callmehysterical!
SYRIA: The Pope, spotting an obvious bandwagon, has urged world leaders to “lay aside the futile pursuit of a military solution”. He has also invited 1.2 billion Roman Catholics and people of other faiths to join him in a day of prayer and fasting on Saturday “to end the civil war”. He obviously does not realise that to the millions of displaced victims of Syria’s violence, prayer and (especially) fasting, come quite naturally!
What you see in the mirror is never what other people see. Let’s hope that there’s a massive reality check before the s*** hits the fan.
#SYRIA: I hate to pee on America’s parade and spoil the day for all those self-important politicians and generals sitting around over-sized mahogany tables… but here’s a warning: Bashar al-Assad will shoot back. Big time.
John Kerry – his full statement on SYRIA
President Obama has spent many days now consulting with Congress and talking with leaders around the world about the situation in #Syria. And last night the president asked all of us on his national security team to consult with the leaders of Congress as well, including the leadership of the congressional national security committees. And he asked us to consult about what we know regarding the horrific chemical weapons attack in the Damascus suburbs last week.
I will tell you that as someone who spent nearly three decades in the United States Congress, I know that that consultation is the right way for a president to approach a decision of when and how and if to use military force. And it’s important to ask the tough questions and get the tough answers before taking action, not just afterwards.
And I believe, as President Obama does, that it is also important to discuss this directly with the American people. That’s our responsibility: to talk with the citizens who have entrusted all of us in the administration and the Congress with responsibility for their security.
Our intelligence community has carefully reviewed and rereviewed information regarding this attack. And I will tell you it has done so more than mindful of the Iraq experience. We will not repeat that moment. Accordingly, we have taken unprecedented steps to declassify and make facts available to people, who can judge for themselves.
But still, in order to protect sources and methods, some of what we know will only be released to members of Congress, the representatives of the American people.
That means that some things we do know, we can’t talk about publicly.
So, what do we really know that we can talk about? Well, we know that the Assad regime has the largest chemical weapons program in the entire Middle East. We know that the regime has used those weapons multiple times this year, and has used them on a smaller scale but still it has used them against its own people, including not very far from where last Wednesday’s attack happened.
We know that the regime was specifically determined to rid the Damascus suburbs of the opposition, and it was frustrated that it hadn’t succeeded in doing so. We know that for three days before the attack the Syrian regime’s chemical weapons personnel were on the ground, in the area, making preparations. And we know that the Syrian regime elements were told to prepare for the attack by putting on gas masks and taking precautions associated with chemical weapons. We know that these were specific instructions.
We know where the rockets were launched from, and at what time. We know where they landed, and when. We know rockets came only from regime-controlled areas, and went only to opposition-controlled or contested neighborhoods.
And we know, as does the world, that just 90 minutes later all hell broke loose in the social media. With our own eyes we have seen the thousands of reports from 11 separate sites in the Damascus suburbs. All of them show and report victims with breathing difficulties, people twitching, with spasms, coughing, rapid heartbeats, foaming at the mouth, unconsciousness and death.
And we know it was it was ordinary Syrian citizens who reported all of these horrors.
And just as important, we know what the doctors and the nurses who treated them didn’t report: not a scratch, not a shrapnel wound, not a cut, not a gunshot wound. We saw rows of dead lined up in burial shrouds, the white linen unstained by a single drop of blood.
Instead of being tucked safely in their beds at home, we saw rows of children lying side by side, sprawled on a hospital floor, all of them dead from Assad’s gas, and surrounded by parents and grandparents who had suffered the same fate.
The United States government now knows that at least 1,429 Syrians were killed in this attack, including at least 426 children. Even the first responders — the doctors, nurses and medics who tried to save them — they became victims themselves. We saw them gasping for air, terrified that their own lives were in danger.
This is the indiscriminate, inconceivable horror of chemical weapons. This is what Assad did to his own people.
We also know many disturbing details about the aftermath. We know that a senior regime official who knew about the attack confirmed that chemical weapons were used by the regime, reviewed the impact and actually was afraid that they would be discovered.
We know this.
And we know what they did next. I personally called the foreign minister of Syria, and I said to him, if, as you say, your nation has nothing to hide, then let the United Nations in immediately and give the inspectors the unfettered access so they have the opportunity to tell your story.
Instead, for four days they shelled the neighborhood in order to destroy evidence, bombarding block after block at a rate four times higher than they had over the previous 10 days. And when the U.N. inspectors finally gained access, that access, as we now know, was restricted and controlled.
In all of these things that I have listed, in all of these things that we know, all of that, the American intelligence community has high confidence, high confidence this is common sense, this is evidence, these are facts.
So the primary question is really no longer, what do we know. The question is what are we — we collectively — what are we in the world going to do about it.
As previous storms in history have gathered, when unspeakable crimes were within our power to stop them, we have been warned against the temptations of looking the other way. History if full of leaders who have warned against inaction, indifference and especially against silence when it mattered most.
Our choices then in history had great consequences, and our choice today has great consequences.
It matters that nearly a hundred years ago, in direct response to the utter horror and inhumanity of World War I that the civilized world agreed that chemical weapons should never be used again. That was the world’s resolve then. And that began nearly a century of effort to create a clear red line for the international community.
It matters today that we are working as an international community to rid the world of the worst weapons. That’s why we signed agreements like the START treaty, the New START treaty, the Chemical Weapons Convention, which more than 180 countries, including Iran, Iraq and Lebanon, have signed onto.
It matters to our security and the security of our allies. It matters to Israel. It matters to our close friends Jordan, Turkey and Lebanon, all of whom live just a stiff breeze away from Damascus. It matters to all of them where the Syrian chemical weapons are, and if unchecked, they can cause even greater death and destruction to those friends.
And it matters deeply to the credibility and the future interests of the United States of America and our allies. It matters because a lot of other countries whose policies challenge these international norms are watching. They are watching. They want to see whether the United States and our friends mean what we say. It is directly related to our credibility and whether countries still believe the United States when it says something. They are watching to see if Syria can get away with it because then maybe they too can put the world at greater risk.
And make no mistake. In an increasingly complicated world of sectarian and religious extremist violence, what we choose to do — or not do — matters in real ways to our own security. Some cite the risk of doing things. We need to ask what is the risk of doing nothing.
It matters because if we choose to live in a world where a thug and a murderer like Bashar al-Assad can gas thousands of his own people with impunity, even after the United States and our allies said no, and then the world does nothing about it, there will be no end to the test of our resolve and the dangers that will flow from those others who believe that they can do as they will.
This matters also beyond the limits of Syria’s borders. It is about whether Iran, which itself has been a victim of chemical weapons attacks, will now feel emboldened in the absence of action to obtain nuclear weapons. It is about Hezbollah, and North Korea, and every other terrorist group or dictator that might ever again contemplate the use of weapons of mass destruction. Will they remember that the Assad regime was stopped from those weapons’ current or future use, or will they remember that the world stood aside and created impunity?
So our concern is not just about some far-off land oceans away. That’s not what this is about. Our concern with the cause of the defenseless people of Syria is about choices that will directly affect our role in the world and our interests in the world.
It is also profoundly about who we are. We are the United States of America. We are the country that has tried, not always successfully, but always tried to honor a set of universal values around which we have organized our lives and our aspirations. This crime against conscience, this crime against humanity, this crime against the most fundamental principles of international community, against the norm of the international community, this matters to us, and it matters to who we are. And it matters to leadership and to our credibility in the world.
My friends, it matters here if nothing is done. It matters if the world speaks out in condemnation and then nothing happens.
America should feel confident and gratified that we are not alone in our condemnation and we are not alone in our will to do something about it and to act. The world is speaking out, and many friends stand ready to respond. the Arab League pledged, quote, “to hold the Syrian regime fully responsible for this crime.” The Organization for Islamic Cooperation condemned the regime and said we needed, quote, “to hold the Syrian government legally and morally accountable for this heinous crime.”
Turkey said there is no doubt that the regime is responsible. Our oldest ally, the French, said the regime, quote, “committed this vile action, and it is an outrage to use weapons that the community has banned for the last 90 years in all international conventions.”
The Australian prime minister said he didn’t want history to record that we were, quote, a party to turning such a blind eye.
So now that we know what we know, the question we must all be asking is what we will do. Let me emphasize President Obama, we in the United States, we believe in the United Nations. And we have great respect for the brave inspectors who endured regime gunfire and obstructions to their investigation. But as Ban Ki-moon, the secretary-general, has said again and again, the U.N. investigation will not affirm who used these chemical weapons. That is not the mandate of the U.N. investigation. They will only affirm whether such weapons were used. By the definition of their own mandate, the U.N. can’t tell us anything that we haven’t shared with you this afternoon or that we don’t already know. And because of the guaranteed Russian obstructionism of any action through the U.N. Security Council, the U.N. cannot galvanize the world to act, as it should.
So let me be clear: We will continue talking to the Congress, talking to our allies and, most importantly, talking to the American people. President Obama will ensure that the United States of America makes our own decisions on our own timelines based on our values and our interests.
Now, we know that after a decade of conflict, the American people are tired of war. Believe me, I am too. But fatigue does not absolve us of our responsibility. Just longing for peace does not necessarily bring it about.
And history would judge us all extraordinarily harshly if we turned a blind eye to a dictator’s wanton use of weapons of mass destruction against all warnings, against all common understanding of decency. These things, we do know.
We also know that we have a president who does what he says that he will do. And he has said very clearly that whatever decision he makes in Syria, it will bear no resemblance to Afghanistan, Iraq or even Libya. It will not involve any boots on the ground. It will not be open-ended. And it will not assume responsibility for a civil war that is already well underway.
The president has been clear: Any action that he might decide to take will be limited and tailored response to ensure that a despot’s brutal and flagrant use of chemical weapons is held accountable. And ultimately, we are committed, we remain committed, we believe it’s the primary objective is to have a diplomatic process that can resolve this through negotiation because we know there is no ultimate military solution. It has to be political. It has to happen at the negotiating table. And we are deeply committed to getting there.
So that is what we know. That’s what the leaders of Congress now know. And that’s what the American people need to know. And that is at the core of the decisions that must now be made for the security of our country and for the promise of a planet where the world’s most heinous weapons must never again be used against the world’s most vulnerable people.
Thank you very much.
SYRIA: On April 14th 1986, Ronald Reagan ordered a series of bombings directed against Libya under “Operation El Dorado Canyon”. This was in reprisal for the “Libyan” bombing of a Berlin nightclub. It is now generally accepted that the “evidence” against Libya had been fabricated. Reagan subsequently gave the CIA “Regime Change” orders for Libya. THAT goal took 20 years to achieve. Both Clinton and George W Bush openly talked about regime change in Iraq. One may be forgiven for wondering whether the CIA have ever been given similar orders in respect of Egypt and Syria.
#SYRIA: The embers of discontent have been glowing ever since the previous owner of the family business that is Syria, President Hafez al-Assad, quelled a Muslim Brotherhood uprising in 1982. Thousands were killed with little reaction from the West……Then in 2011, in the southern city of Daraa , his son and heir, Bashar al-Hassad had 15 children arrested for painting anti-government graffiti on the walls of their school. Small, seemingly insignificant events such as this can often change the course of history. The present killing, propaganda and destruction are just another example. The rest of the world has turned a blind-eye to Syria for too long and much irreversible damage has been done not only to its people but to the country’s infrastructure and culture. There is little doubt that the West wants to see a regime change… but the means to achieve that – whether right or wrong, are not to be found in the navigation system of a Cruise missile, the trigger-finger of a jet pilot or a politician’s vanity. There’s still time to talk.
#Syrian U.N. envoy Ambassador Bashar Ja’afari says that U.S Secretary of State, John Kerry Kerry has “adopted old stories fabricated by terrorists based on fake photos from the Internet.” …..and based on Uncle Sam’s past record of relying on fabricated “evidence”, who is brave enough to argue with him? The Ambassador has also written to U.N. Chief Ban Ki-moon and President of the Security Council Maria Cristina Perceval, asking them to “to shoulder their responsibilities for preventing any aggression on Syria and pushing forward reaching a political solution to the crisis in Syria” …..Now that both Obama and Cameron have bared their teeth and convinced everyone that they still belong to the “Peace through Bombing” style of international politics, they should now do the right thing: Sit down with the Russians and Syrians and talk.
For the last 70 or 80 years, in spite of their oil billions and flash skyscrapers, most Arab States have clearly demonstrated that sociologically and politically they are firmly anchored in the Dark Ages. On many occasions, they have also demonstrated that all despotic dictators have a limited shelf-life which invariably ends in violence. For a long time, we have been trying so hard to tell them all about Democracy and its advantages. and in recent years, we have even tried to install it for them. This week, the vote in United Kingdom Parliament which prevented us from bombing Syria, has done more to demonstrate real democracy than any action of the last 50 years – and we should be proud. We do not go to war on the whim of a single individual. We debate…then whatever the outcome, we respect the Democratic Process. Half of us may be “pro” a military strike and half of us may be “anti” but in the final analysis, we respect each others views, accept them and move on. From now on, we can go to a politically primitive state such as Syria with our heads held high…NOT because we decided against adding to their pile of dead.. but because we have finally shown the world (in a very public way) that we Brits practice what we preach. It isn’t the romanticised French version of “Liberté” or the still largely theoretical American notion of “Freedom”: It is in the astonishingly mature demonstration that it is possible to disagree – but with acceptance and mutual understanding. That’s the real lesson for the bad guys.
#SYRIA: Looking forward to William ‘Rambo’ Hague and maybe DC read out the Churchillian stuff currently being written for them…….as yet another North African state prepares to be molested……… Methinks that we may need to reappraise our self-image. We have been binning ships, armaments and soldiers but, just because we won the World Cup in 1066 and WW2, we think that, along with Uncle Sam, we’re still the world’s policeman and everyone’s conscience!
#Syria All those years that we were shooting Irish people and the IRA were bombing in Northern Ireland as well as the mainland….I don’t recall Assad’s old man (Assad Snr.) either condemning the United Kingdom for “killing its own people” or threatening to invade or bomb us. Mind you, the USA was raising funds for the IRA (remember NORAID?), so nothing really changes. http://noraid.homestead.com/
OOPS!!! China’s brokerages will come under government scrutiny after Everbright Securities mistakenly made 23.4 billion yuan($3.82 billion) of “buy” orders, collectively the biggest erroneous trade in Chinese stock market history. The China Securities Regulatory Commission (CSRC) decided to widen its investigation of stock trading systems to all brokerages following its probe into a small Shanghai-based company that made the high-frequency trading software used by Everbright
GOLD BULLION is being surreptitiously moved out of London. It is being pulled out of London’s Exchange Traded Funds. It then goes to Switzerland where it is melted down and converted into small bars and coins. In the last eight months, about 800 TONS (!) have headed East. First to Switzerland and then Asia. As I said the other day – NOW is a good time to think about buying! Mind you, many gold MINERS are also looking very interesting at the moment.
Egypt: another Iraq or Libya?
After the mess left behind in Iraq and Libya, Western leaders appear to have realised that the days of a “good shooting war” being good for political image have gone forever. Heroic speechwriter-polished phrases and Churchillian posturing are a remnant of a past when the words ” honour” and “bravery” still had currency.
Today, war is recognised as a filthy misery-spawning industry which, like an appalling Grand Prix Circuit, moves from country to country, leaving no more than a legacy of rubble and death. There is no honour in war – there is only pointlessness.
The most bizarre aspect of the whole circus is that the leader of a small cluster of damp islands in the North Sea is always the one who makes the most noise, always hiding behind his younger but much bigger American cousin’s skirts. Collectively, the West feels that its job is to dispense the universally therapeutic remedy of “democracy” – even to those who don’t really want it.
Democracy is not an emollient to be force-fed in the same way that 18th and 19th century missionaries (from exactly the same damp islands) delivered Christianity to the world’s natives.
The Arabs are not even remotely interested in our special brand of democracy. Democracy is their excuse because they know that as soon as they shout “Freedom!” or “Democracy!“, the usual suspects will come riding in, dispensing guns with notions of rescue, egalitarianism and ballot boxes.
Can you imagine revolutions in the Middle East if the family businesses masquerading as governments distributed their oil billions as they should? Would the average Arab be interested in getting shot in the name of “regime change” or “democracy” – if he had a job, enough food, decent housing, a car, TV set, free hospital care for his family and a bit left over? Of course not.
There is no such thing as absolute freedom or unbridled freedom of speech – and that is NOT the product which interests the Egyptian population.
With 77% youth unemployment, their revolution is based in economics not idealism and whatever the West’s response, it will be based on exactly the same criteria.
AFGHANISTAN: Another political case of the Law of Unintended Consequences. Over 10 years ago, the Americans exported hundreds of thousands of tons of wheat to Afghanistan in order to feed the poor and hungry. That resulted in the local price of wheat to collapse to about 20% of what it had been. Afghan farmers were forced to plough-in their worthless wheat crops and move to a more profitable crop: Opium Poppies. Was it all worth it? That once again begs the question – do politicians EVER carry out any sort of Risk Analysis when they take decisions?
Immigrants – we NEED them!
According to the Office for Budget Responsibility (OBR), the UK needs SEVEN MILLION migrants over the next 50 years to help keep down national debt levels.
The OBR warns that the UK’s ageing population was squeezing public finances and said there was “clear evidence” that migrants, who tend to be working age, have a “positive effect on the public sector’s debt dynamics”.
The OBR has also warned that increasing pensioner numbers and a strained healthcare system means an extra £19 BILLION of spending cuts or tax increases are needed to combat an “unsustainable” pressure on the nation’s public finances.
It IS possible that while we continue to live too long and not produce enough, those much maligned immigrants could be the solution to our economic problems.
That should please UKIP!
HERE’S the Executive Summary of the OBR’s Fiscal Sustainability Report.
The risks of a Greek Collapse
While Greece seems to be engrossed in its “success story,” the country’s partners appear more concerned with its “stability story,” in other words whether or not the country will stay on an even keel. There are several reasons why this is what they are most interested in.
Portugal is on the brink of a major political crisis; Italy seems unable to find solutions to its problems, and an out-of-control collapse in Greece would complicated this already tenuous situation. There are also broader geopolitical reasons. The Americans and the Europeans are becoming quite frightened by the chaos in the Middle East, especially at a time when Israel is particularly isolated. Their stance toward Turkey has also changed as they grow more and more concerned by the instability there and Prime Minister Recep Tayyip Erdogan’s arrogant behavior. A Greek “accident” is seen as very dangerous in such a climate. Of course there are those who expect Greece to fail, but argue that even if does, it will find a way to get back on its feet. The majority of international observers and officials, however, do not take the possibility of a Greek collapse so lightly.
So what is the problem? The Greek political system and public administration are nowhere near achieving reform targets, even when these are lowered. The international community is aware that it can exert pressure on Athens until the end of the year when Greece hobbles to a primary surplus. But, as that time approaches and it feels that it only has a few more months to exert influence, the more pressure it will apply. And this is where the danger lies: Greece’s creditors may cause the crash by applying too much pressure.
In the middle of it all are the markets, either in the form of large funds willing to invest in the new low-cost Greece or in the form of lenders who would like to see the Greek bond market operate again.
Prime Minister Antonis Samaras believes that maintaining calm is the top priority. He hopes that an excellent summer in terms of tourism, public works projects due to begin imminently, the TAP pipeline and some good investment news will create a positive climate come the fall.
At the same time he is equally aware that the people are about to be hit with a cascade of taxes and that if these are not collected the fiscal gap will be hard to manage. No one can predict whether there will be a sense of positive shock or an even greater feeling of misery in the fall.
All of this, meanwhile, is taking place ahead of an anticipated clash between Berlin, the International Monetary Fund and Brussels right after the German elections over whether Greece should receive a further debt writedown and a different policy mix.
©Alexis Papachelas : Ekathimerini.com
The Lough Erne Declaration: You SHOULD enjoy it.
I have pointed out on several occasions that many of our politicians but specifically our Prime Minister, David Cameron have fallen into the habit of using a new kind of language. It purports to be all about ACTION, delivered in extremely weird exhortary terms which give the (false) impression of achievement and initiative. It is anything but.
Here is the transcript of the so-called Lough Erne Declaration on tax evasion. There are no dates, no specific responsibilities and certainly no action points. In short….it says NOTHING.
I have highlighted the “SHOULD” word, which the Coalition Government and its leaders continue to confuse with action or “WE WILL”.
(The first paragraph is just full of “truisms”…..what some might call BS :
The Lough Erne Declaration 18th June 2013
“Private enterprise drives growth, reduces poverty, and creates jobs and prosperity for people around the world. Governments have a special responsibility to make proper rules and promote good governance. Fair taxes, increased transparency and open trade are vital drivers of this. We will make a real difference by doing the following:
- Tax authorities across the world should automatically share information to fight the scourge of tax evasion.
- Countries should change rules that let companies shift their profits across borders to avoid taxes, and multinationals should report to tax authorities what tax they pay where.
- Companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily.
- Developing countries should have the information and capacity to collect the taxes owed them – and other countries have a duty to help them.
- Extractive companies should report payments to all governments – and governments should publish income from such companies.
- Minerals should be sourced legitimately, not plundered from conflict zones.
- Land transactions should be transparent, respecting the property rights of local communities.
- Governments should roll back protectionism and agree new trade deals that boost jobs and growth worldwide.
- Governments should cut wasteful bureaucracy at borders and make it easier and quicker to move goods between developing countries.
- Governments should publish information on laws, budgets, spending, national statistics, elections and government contracts in a way that is easy to read and re-use, so that citizens can hold them to account.”
A WISH LIST disguised as an ACTION LIST.
Your life is in a PRISM and Obama knows it!
We know that (at least) the USA’s NSA (National Security Agency) has direct access to the PRISM companies’ servers. Above is what used to be a secret slide which describes its intent very clearly.
But what is PRISM – apart from its obvious connotations to spying, terrorism or Ian Fleming’s SPECTRE!?
It is the codename for a US government surveillance programme and has been in existence since 2007 . Its purpose is to monitor foreign communications which pass through US computer servers.
There has already been a lot of debate about the existence of this proactive programme designed to spy – and not only on possible terrorist or criminal targets. The scope of PRISM is far greater because to identify the bad guys, it is inevitable that the government also has to snoop on the good guys. Why? Because the bad guys don’t only communicate with other bad guys so it is inevitable that perfectly innocent messages and site visits are monitored- but that it not the most serious issue.
The most frightening issue is that a government has given itself powers and IT IS NOT WITHIN A GOVERNMENT’S MANDATE TO GIVE ITSELF POWERS.
Any democratic government’s powers must come from the people. Unfortunately, on this occasion, we are too late and the seeds of tyranny have already been planted.
This genie is well-and-truly out of the bottle!
The “terrorism” excuse has previously only been used in order to excuse illegal invasion, destruction or state-sanctioned assassination. But, because we have now become totally conditioned into believing the “as long as the word ‘terrorism’ is in the sentence, it’s for your own good” excuse, we all have the status of potential terrorists.
Make no mistake, this is no “one-off”. Here is a list of what is under surveillance (and don’t forget – it is indiscriminate).
Audio and video chats, photographs, e-mails, documents, and connection logs… Skype can be monitored for audio when one end of the call is a conventional telephone, and for any combination of “audio, video, chat, and file transfers” when Skype users connect by computer alone. Google’s offerings include Gmail, voice and video chat, Google Drive files, photo libraries, and live surveillance of search terms.
So the next time you are considering an intimate SKYPE “one-on-one” with your boyfriend, girlfriend (or both!)…..think! There could be a government operative at Langle, Beijing, the Kremlin or GCHQ watching (purely for “terrorist” and “for your own good” reasons, of course!).
Finally, PRISM’s first collaborator was Microsoft – way back in 2007. Here’s another slide showing the timeline of when the others came aboard.
The Eurocrisis isn’t just Financial.
The Eurozone crisis has managed to morph from a plain old currency crisis to a debt crisis, an economic crisis and now, a full-blown political crisis – although no-one seems to have noticed…….. and it’s not just the Eurozone:
In the United Kingdom, people are making increasingly indiscreet noises about the Prime Minister’s leadership capabilities and the Chancellor’s questionable competence, as the cold hand of political instability makes a (so far) half-hearted grab for No 10. Currently it looks as if there is already a swing to the right. Nigel Farage and UKIP no longer look like a bunch of extremist Right-wing loonies and as they gain respectability and seats, they will pose a genuine threat to the status quo.
Here’s a quick Grand Tour:
Greece’s political problems are well-documented and this is where the recent polarisation of national politics began with the success and increasing support of the right-wing Golden Dawn Party. Greece is on its knees.
In France there’s the scandal of a Minister and his secret Swiss Bank account with the consequent investigation of all Ministers – shades of the UK’s MP expenses outrage. President Hollande is keeping a very low profile because , let’s face it….he came to the table without any ideas. His mere presence has allowed Marine le Pen and her Right-wingers to re-emerge blinking into the sunlight, ready to build on her father’s legacy.
Germany’s Bundeskanzlerin Merkel is no longer odds-on to win her autumn election and so, in order to placate her detractors, countries such as Cyprus are being put through the debt-wringer and effectively having to bail themselves out! All in the cause of extra Brownie points for the Merkelator.
Many are anticipating more resignations from within the Cypriot government. Michalis Sarris, the Cypriot finance minister who negotiated Cyprus’s bailout agreement with international creditors has already gone.
Portugal’s Constitutional Court has kicked into touch some of the austerity measures imposed on the country by the Eurozone moneylenders. Now the politicians are wondering about how to plug the fiscal gap and Prime Minister Coelho may resign.
Belgium took 535 days to form a government after its last election and now has a 6-party Cabinet.
Italy is struggling to form a government and will most likely hold another election after President Napolitano comes to the end of his tenure as Head of State on May 15th. Goodness only knows what the reaction of not only the Eurozone but of the Markets would be should Silvio Berlusconi (again) rise from the dead! Italy’s political scene has become so surreal that ONE QUARTER of the vote in the recent election went to a protest movement headed-up by Beppe Grillo – a comedian!
Spain’s politicians, including its Prime Minister are mired in corruption scandals – and now there are anti-Royalist demonstrations as a direct result of the king’s daughter being implicated in a government financial rip-off. Mind you, affluent Spaniards have already pulled about $100 billion out of their Spanish bank accounts. They started running early. It’s only a matter of time before the Basques and Catalans start to make their separatist noises.
The difficulty is that one would normally expect the emergence of the Right to be counterbalanced by a strong showing from the political Left. But what Europe has are weak governments , compounded by even weaker oppositions. No European political party in government has over 50% of the vote……. and the less said about the European Union’s politicians, the better! They seem to have elevated ineptitude into an art form.
Currently, Britain’s Left is being driven by Ed Miliband and the New-Old-New-Who-Knows-Who-Cares Labour Party. They earn their salaries through the medium of being critical. They have shown themselves to be totally bereft of a coherent, cohesive strategy and will be directly responsible for the future success of UKIP.
Leadership (or a lack of it) within Germany’s Social Democratic Party will be the main factor which could give Merkel another few years of power. If that happens, the rest of the Eurozone should begin to consider itself as no more than a motley collection of Vassal States……there to do Germany’s bidding. Unless of course, Germany accepts George Soros’ advice and leaves the Euro.
France does not enjoy having a Socialist President and it is right to be sceptical. President Hollande is now totally ignored by Merkel and is doing what he does best – he keeps out of the way as Germany tightens its stranglehold.
Hollande could have been the Eurozone’s great hope but unfortunately is way out of his depth. France now has a negative bond rating by all three rating services and has lost much of its international respect. It’s precarious banking system is just waiting (like many others) to go “pop!”
The Main Event this year will be Merkel’s re-election so the Eurozone states must not expect any major policy changes until then – and when she wins? More of the same – but without the compassion!
What of Europe’s medium to long-term future? Without some sort of political quantum leap, it will inevitably descend into a collection of Third World states but with running water, TV and a banking system totally independent of its economy and probably with its own flag.
Boeing has just signed a $15.6 billion order with Ryanair. I wonder if they had to pay extra for the pen?
ECONOMIC CHAOS ?
The piece below is over 2000 words long and I have just completed it for a client .
It is about the random nature of an economic system.
Have you ever wondered why ALL economic predictions are wrong? Have you noticed that in spite of a proven record of error, economists and politicians continue to bang their heads against the forecast-wall and refuse to do anything else but continue to predict outcomes which by now, they must realise will be incorrect?
They certainly use all the latest computer models which have been empirically derived and used for many years.
So, are there any incorrect assumptions about “fundamentals”?
Is the economic process Stochastic (a sequence of random variables)? Or is it Deterministic (when the output of a system is totally dependent on its initial state and subsequent inputs – and therefore, predictable)?
(Mind you, to add to the confusion, deterministic systems may occasionally produce random and therefore unpredictable results. )
Is economics a question of Stochasticity v Determinism?
Why do I ask the question? Because there appears to be a total absence the ‘stable equilibrium’ predicted by classical economists.
On the contrary, Market Economics behaves like a collection of dynamically unstable systems. The instability is attributed to external ‘shocks’ rather that any fault in the basic concept. There is what can only be described as ‘non lineality’.
One solution to this ‘non-lineality’ is CHAOS THEORY!
So far, no real evidence has been produced of ‘low – dimensional’ Chaos in economic processes but there are definitely discrepancies between the ‘expected’ according to classic economic models and the ‘observed’. Just look at any economic prediction within your memory. It was probably incorrect.
We still have a ‘mechanistic’ view of the world and economics as a ‘hangover’ from 18th century SCIENCE.
Scientific thinking is very simple: ‘Measure, predict and adjust until you no longer have any more surprises. Then keep measuring to confirm that what you measured in the first place can be replicated’.
Economics was conceived on that same principle . It was established as a ‘science’. That’s where the Determinism crept in.
It was at this time that man first considered the possibility of his own intellect being so unconstrained that he would eventually understand the ‘Universe and everything’ through the medium of scientific reasoning.
This principle was applied to all sorts of activities and thinking – including economics.
The so-called ‘Enlightenment Policy’ would help man in his pursuit of happiness. Especially in the sciences. Science was cool and now in the early 21st Century it is enjoying a bit of a revival.
Of all the subjects on offer, Physics became the admired Paragon for Enlightenment and so it continues.
The way Physics works is simple: Carefully describe an environment and you should be able to predict the outcomes of any experiment conducted within that environment.
Likewise in Economics: Know the initial environment and you should be able to predict outcomes based on subsequent inputs.
The belief stemming from that philosophy is that EVERYTHING is governed by ‘NATURAL LAWS’ which are a set of ‘cause-effect’ regularities. That means that everything can be predicted.
These same principles have been applied to Economics.
A simple scientific rule is that ‘The state of any system is a consequence of what it was in the preceding moment…..and so on.’
In the beginning, random occurrences had no place in such linear thinking. Everything was governed by Mathematics and Laws.
However, there is one major flaw in the way that we ‘do’ science: That is our ignorance of the CAUSES which generate phenomena and events.
For instance, we know the effects of gravity – which we can measure but we don’t really know the CAUSE.
However, in spite of our ignorance of the exact causes of events added to the imperfection of our analyses, we still cannot have 100% certainty about the vast majority of phenomena.
Economists also appear to have forgotten both the imperfection of analysis and their ignorance or (at best) of the exact CAUSES of events.
What is the solution? What is to be done about our comparative blindness?
Our ‘crutch’ is the science of probability. Chance.
Current economic thinking is a throwback. In economics, the world is still viewed as totally deterministic.
‘STOCHASTIC’ is non-existent – as is uncertainty because uncertainty is treated as ignorance or a failure to understand the deterministic rules of a very complex system.
Yet, with ALL our processing power, no-one has yet been able to establish those rules which should predict outcomes.
So, as Chaucer wondered in The Nonnes Priest Tale – Travelling from A to B: Freewill or Predestination?
Looking at the unpredictability of economic outcome, we move from linear to non-linear dynamics, from certainty to probability, from Economic Theory to Chaos Theory.
Theories of economics have been shaped by the assumption of ‘Rational Man’ who behaves in accordance with a known set of rules.
The evolution of economics into a science was ‘booted’ into becoming a science when it was ‘mathematicised’. Formulae arrived and suddenly, it became a bona fide branch of Applied Mathematics.
Many of the original people who translated economics into a mathematical form were physicists, engineers and mathematicians…… and it still shows. At that time, their view of the world was ‘linear’.
Does that work in economics? The short answer is ‘no’. That is why economists are struggling, interpreting and making excuses.
Marshall in his ‘PRICIPLES’ compared the study of economics to the study of tides. The number of variables affecting tides means it is impossible to create a consistent dynamic picture.
Even nowadays, there isn’t enough processing power to generate an accurate picture of such a dynamic system, especially as the number of variables affecting such a system is, for all intents and purposes – infinite.
Imagine random stones being thrown into the sea or small outcrops of rock or variations in the seabed. They all have an effect on the ‘shape’ and speed of the tide.
And so it is with an economic system: lots of rocks, stones and other variables.
It is not possible to formulate or predict a picture of such an infinitely dynamic system.
Currently, economic theory appears to predict that any shock to such a dynamic system will (obviously) have an effect on the system but that it will ultimately converge-to or seek either a new equilibrium or ‘tend’ towards its original equilibrium because, after all – that’s what ‘systems’ are supposed to do!
Economic Theory assumes a tendency towards stability and equilibrium with certain ‘oscillatory happenings’ on the way.
So we have a situation where economic thought was (and still is, in most cases) linear, deterministic and quasi-dynamic. That is to say, the ‘set-in-concrete’ notions of certainty, invariant economic laws and sameness……………..rather than approximation, probability and infinite variety.
For instance, the Bank of England predicts an inflation rate one year ahead, based more on hope than fact or perceived fact. But when such predictions are (always!) wrong, there is no revisiting of the thought process, merely another prediction with little or no basis in anything-in-particular.
Often, both ‘inputs’ and predicted outcomes are decided by committee and vote!
All predictions appear to be based on an assumption of an ultimate convergence of economic process to stability, via those periodic cycles which, although not understood are treated with a certain sense of fatalism.
Chancellors are so locked into predictions based on erroneous facts that they will even massage their outcomes in order to land somewhere near the expected landing point – purely in order to retain credibility not only for themselves but also for ‘the system’.
What cannot possibly be countenanced are the random fluctuations of what is most likely a permanently unstable economic system. We don’t do that sort of thing because it may suggest a lack of control!
Let’s have a look at non-linear Economic Dynamics.
Actual (REAL) economic results indicate little resonance with the symmetry and regularity suggested by a linear mechanistic dynamic system. (Something that moves predictably along a pre-determined path).
On the contrary, fluctuations and movements are totally unpredictable. That means that regular Deterministic Laws cannot apply.
If we look at an economic situation in say, the Eurozone at a particular point in time, we may try to predict an outcome in say, 10 years’ time.
However, a small variant or an incorrect assumption in our analysis of the initial economic situation will have an effect on the ultimate outcome. The earlier that variation occurs, the more devastating will the effect be.
For instance Greece’s hidden debt at the time of its accession to the Eurozone, undetected at the time, is having a huge effect on the Eurozone’s economic outcome.
Meanwhile, the economists, bankers and politicians crave and need the comfort of ‘stability’. They know that the further the Eurozone travels from the initial conditions at Greece’s entry into the Euro, the more anomalies“The Greek Effect” will generate. It’s a self-amplifying issue.
Consequently, the bulk of the work of Eurozone politicians is now concentrated on creating a series of ‘faux’ stabilities.
It is the fallout from Stochasticity which is causing fear with Determinism being their comfort and shelter.
It was only 60 years-or-so ago that stochastic considerations were appended to classical economic theory.
But the so-called New Classical Macroeconomics was no more than a compromise. “Let’s introduce a Factor X because we can no longer ignore it.”
Yet, the economists still needed their ‘models’ – because deep down they were still the mathematicians and physicists of old.
A formula was devised (SLUTSKY) which took the linear dynamic business cycle model and added random (not necessarily economic) terms which attempted to explain the real ‘actualités’!
At last, an attempt had been made to explain ‘exogenous shocks’ to an economic system by the introduction of nothing more than random error terms.
But what was REALLY missing in classical economic reasoning was the concept of NON-LINEARITY.
So, the battle was between a Linear Model with a Stochastic Term (a fiddle factor) versus a pure Non-Linear Model.
Obviously by now – 200 years from the beginning, we have to assume that the evidence for linearity in economics has been overestimated!
So, if we agree that we do need a new non-linear model of econonomics, what are we searching for? What are the other ingredients and how do we ‘work them in’?
Do we want a synthesis of economics, psychology, politics and sociology? Or do we simply stick to the notion of determinism?
Human evolution is viewed as a random process (although the way it is often expressed makes it seem as if scientists view it an ‘inevitable linear’).
The evolution of an economic system is also pretty random, except that, applying psychology, politics and sociology, it can never be a system that can develop naturally. (For example, Survival of the Economically Fittest).
Mind you, economists have already had several attempts at introducing the concept of non-linear economics.
Followers of Keynes developed theories which generated Real Business Cycle Theory but any exogenous shocks to the new non-linear system were considered as merely ad hoc disturbances.
Economists could NOT break away from LINEAR THINKING. Linear thinking was being applied in an attempt to imprison a loose and free system, which tended to CHAOS.
The result? More economic models that you can shake a stick at!
It is only fair to say that our understanding of economic phenomena has been greatly enhanced by all these models and formulae…… but still no cigar. No General Theory of Economics. No equivalent of E =mc2….+εe
So Chianella, Pun, Goodwin, Kaldor, Baldrin, Woodford, Barmal, Benhabib etc have all done their bit but we’re still NOT QUITE there.
Unfortunately, for all intents and purposes, many of the models did no more than introduce the concept of economic ‘white-noise’.
Chaotic systems generate their own randomness without need for external input. Therefore in a chaotic system, predictions can ONLY be very short term and even if there were deterministic rules within such a chaotic system, an inability or failure to 100% ‘book’ the initial conditions of the system will always yield forecasting errors.
This all suggests that economic forecasting (except that on a very short time-scale) is a nonsense. PLUS – the bigger the system, the bigger the CHAOS.
That would suggest that a proposal such as a EUROPEAN ECONOMY is a flawed concept because there is very likely to be an exponential amplification of Chaos.
The dynamic of a mega-economy is very different to a housewife balancing the books at home – although economists are still applying the same principles to both.
Unfortunately so far, classical economists continue to resist economic chaotic concepts.
The reason for this apparent intransigence is simple: it is very difficult to extract evidence of chaotic dynamics from economic data – especially on a meaningful scale. Especially if another dose of chaos is injected into the ‘mix’ by erroneous or spurious data.
In order to predict in a chaotic system a VAST (infinite) amount of data is required – far more than is normally available and so far, the search for Chaos in economics has not been successful.
Meanwhile it is Chaos which is making long-term economic forecasting totally impossible and increasingly sophisticated and precise measurement of ‘initial conditions’ incredibly difficult and potentially prohibitively costly.
If we imagine an economy to be like a cloud – subject to all those forces that clouds are subject to, we can see the impossibility of a mathematical model which can predict the size, shape and exact direction of the cloud or even its shape and volume as it travels.
Its ultimate shape will always remain a mystery.
Politicians, bankers and economists ought to be able to say ‘I don’t know’ without us constantly expecting magic answers which do not exist.
For example: ‘Mr Chancellor or Mr Banker – what will be the effect on the economy of billions in Quantitative Easing?’ Correct answer? ‘We don’t know.’
“The initial conditions of a system are always uncertain, while Chaos guarantees that these uncertainties make prediction impossible.” (Heisenberg)
THAT is the essence of Chaos within an Economics System.
These are the GDP figures per quarter since Q4 2010, the time from which we can assume that the government’s policies “kicked-in”.
Q4 2010: -o.4%
Q1 2011: +0.4%
Q2 2011: +0.1%
Q3 2011: +0.6%
Q4 2011: -0.3%
Q1 2012: -0.2%
Q2 2012: -o.4%
Q3 2012: +o.9%
Q4 2012: -0.3%
If we now look at a “Moving Year”, that is to say, starting a year at Q4 2010, taking the four figures in blue and then adding them…..and then taking the next four numbers, starting with Q1 2011 etc, we have these GDP figures for the Moving Year:
+0.7% +0.8% +0.2% -o.3% zero zero
WE HAVE BEEN IN RECESSION or “FLATLINING” SINCE THE YEAR BEGINNING Q3 2011
The OECD statistics are HERE.
As you can see from the table, no matter how our government dresses-up the figures, we are the worst performing nation in this list (apart from Spain and Portugal).
The basic solution is simple. The Chancellor of the Exchequer needs to prioritise Growth ahead of Credit Rating.
Incidentally, much has been claimed by the government in respect of how many jobs they’ve created , WITHOUT any significant increase in GDP or “tax take”.
This could be the reason:
When the Coalition took power in May 2010, the number of unemployed people was 2.51 million. See HERE.
The latest figure shows that there are still 2.51 million unemployed in the United Kingdom. See HERE.
……….and no-one appears to have noticed!
All this banging-on about “THE MILLION JOBS we have created” since coming to power?
(Once again, the government appears to have been “economical with the actualité”.)
World Economy: The lunatics ARE running the Asylum!
Today, I was asked what I thought about this year’s European economic outlook. It isn’t great!
One factor which I have consistently underestimated is the ability of politicians to “wheelbarrow” a tragic set of circumstances from one meeting to another without even aiming for a holistic solution. Plus, I have always been conscious of the symbiotic relationship between politicians and bankers but, like an illicit love affair, it has grown over the years. Not into a mature loving relationship but instead, it has acquired all the charming qualities of an incestuous shotgun marriage.
I have been feeling very pessimistic about the world’s banking system for years – even before the 2007/2008 crisis. HERE!
Today, the ENTIRE financial system remains in crisis with both bankers and politicians apparently reduced to the role of observer. Their well-timed occasional “good news” is both ritualistic, orchestrated and largely illusory.
The problem is most acute in Europe where all major banks are barely managing to contain gut-busting levels of very bad government bonds.
Asian banks are at risk as Japan has begun to print and we all owe them money. Plus, we been in the habit of paying for their goods with money which they’ve lent us.
As a result of the sharp decrease in world demand, Asian economic growth has slowed very sharply.
Meanwhile, the United States was becoming addicted to the easy “fix” of Quantitative Easing, but nevertheless, in spite of the supply of virtual money, many of its institutions remain on life support.
Now we have the frightening prospect of the Fed stopping its money printing and the U.S economy having to go “cold turkey”. That won’t be a pretty sight!
Because nothing has really been done post the 2008 banking system collapse, I fear that we may be soon heading for an action replay.
The so-called “stress tests” which various governments have been performing on the banks have been less than useless as an indicator of banking “health” because the entire banking industry has been dispensing the wrong information to those who dare to try and measure what they’re doing and what they’ve got.
Bankers have only ever told us what they feel we ought to hear.
We are all aware of how badly the Rating Agencies managed to mess things up prior to 2008 and guess what…………the likelihood is that they’re still doing it! It is clear that, for instance, the Eurozone is about to suffer Cardiac Arrest but the Agencies are still telling us that everything is (more-or-less) fine!
The Rating Agencies have a history:
In a landmark 1994 study of the rating agencies, the U.S Government Accountability Office (GAO) concluded that Standard & Poor’s didn’t issue a “vulnerable” rating for one of the biggest failed companies, Fidelity Banker’s Life, until SIX DAYS before the failure … and for another, Monarch Life, until 351 days AFTER the failure! Similar instances of outright neglect were true of Moody’s as well as A.M. Best .
The Enron Failure of 2001: The New York Times reported that ratings agencies saw signs of Enron’s deteriorating finances but did little to warn investors until at least five months later – long after more problems had emerged and Enron’s slide into bankruptcy had already accelerated. It wasn’t until four days before Enron filed for Chapter 11, that the major agencies first lowered their debt ratings below investment grade!
What about the U.S mortgage meltdown of 2007 and 2008? EVERYONE now agrees that triple-A ratings on mortgage-backed securities grossly overestimated the investments’ credit quality and that this played a pivotal role in the debt crisis and that the primary factor behind their inflated ratings were multiple conflicts of interest between them and the issuers.
In the United Kingdom, the collapses or near-collapses of Northern Rock, HBOS, RBS etc were also a surprise to everyone except a few impotent accountants and auditors.
Do you remember anyone commenting on the “ratings” of the companies which had been bankrupt for months or even years? Me neither.
Nearly all ratings issued by the major agencies are paid for by the issuers — in other words, by the companies that are supposedly being rated!
In addition, the ratings agencies have often earned substantial additional consulting fees to help structure the very Securities which they rate!
To add insult to injury, it’s been proved that the major ratings agencies have often revealed their ratings formulas to issuers, helping their clients to pre-manipulate their data and “adjust” reporting in order to achieve the highest rating.
During the first phase of the financial crisis (2008), and largely because of the inherent conflicts of interest, the major ratings agencies continued to feed investors disinformation. (b******t).
For example, on the day of Bear Stearns’ failure, Moody’s maintained a rating on the company of A2 — the same rating it had published from June 1995 through to June 2003.
S&P was equally generous, giving the firm an A rating until the day of failure.
And Fitch assigned Bear Stearns an A+ rating for 18 straight years all the way up until the day it imploded!
The same basic facts apply to Lehman Brothers and all the other companies that either went belly up or were acquired for pennies.
The major ratings agencies have failed time and again to provide adequate warnings on collapses in all kinds of stocks, bonds, and even entire companies.
The scariest thing today is that European banks are now on the verge of being decimated just like Lehman, Bear Stearns and other firms were back in 2008.
The world economy is slowing from one end of the globe to the other. With massive debts piling up, unemployment rates soaring and the world’s banks still HIGHLY leveraged (overborrowed), it’s only a matter of time before the entire system blows up.
Nowhere is the crisis more acute than in Europe — and nowhere are the risks so great.
The key reason is that European banks are so HUGE relative to their home economies.
The aggregated European economy is roughly equivalent to that of the USA. However, European banks have almost THREE TIMES the assets of our American cousins. Now THAT’s disproportionate power!
That makes it all but impossible for European countries to successfully bail out their banks without jeopardizing their own credit standing and crushing their citizens under the weight of massive tax increases.
Greece, Spain, Portugal, Italy and soon France, have been lined up like fairground ducks under the jackboot of austerity by tax-starved governments.
That’s why we’re seeing sovereign credit ratings fall, bank share prices decline, and policymakers scrambling from one end of the continent to the other in a desperate attempt to find some kind of workable solution!
The problem? THERE ISN’T ONE!
The perfect recipe for an epic, global financial collapse that will sweep up major banks around the world!
50 Predictions for 2013
Last year’s predictions are HERE.
Some were right, some were nearly right whilst others were nowhere near! That’s because most forecasting is a mixture of extrapolation, conjecture, wishful-thinking and luck…………..apart, that is, political and economic divination , which also includes an unhealthy slice of blind optimism.
My interests are mainly political and economic although the list below contains a few random “fun” ones!
I have not included too much of the blindingly obvious, such as the 2013 Eurovision Song Contest in Malmö, where the United Kingdom will be in the bottom THREE and the most likely winner will be Scandinavian.
Wishful thinking has been avoided. For example I do wish that Mo Farah would stop sticking his hands on his head and doing an impression of a demented Pretzel in a vest!
Conjecture, based on past performance suggests that there will NOT be any banking reorganisation because of vested interests and political cowardice. Governments have it within their power to keep that particular pot boiling for years!
All Eurozone Crisis predictions of the last four years vastly underestimated politicians’ capacity for procrastination, ineptitude and political self-interest.
However, I do perceive that European countries with reasonably strong economies will begin to see the advantage of NOT prolonging the Euro agony and once again, striking out on their own, setting their own interest rates and returning to the Lira or Peseta!
These are my predictions:
1. Gold will skyrocket in value.
2. Brazil will finally become THE place to invest(shares and currency)….but see 41 & 42 below.
3. Germany will accelerate the sale of its Bunds, in spite of the fact that it hopes to sell about only about €250 billion Euros’ worth which is lower than in 2012.
4. As predicted last year, Silvio Berlusconi will reappear in Italian Politics – much to Frau Merkel’s chagrin.
5. Pressure will increase on Chancellor George Osborne to be replaced (It’s the ONLY way that the Coalition can move to Plan B without too much loss of face).
6. The banks will continue to rebuild their balance sheets as the value of their assets diminishes, resulting in an increase of non-bank lending. Credit Unions, peer-to-per lending, asset leasing, community finance organisations and invoice finance will all accelerate as the banking system continues its introspection.
7. United Kingdom property prices will fall by 25%.
8. Frau Merkel will be re-elected and continue as Germany’s Chancellor.
9. Italy will talk about leaving the Euro and readopting the Lira…………..and Berlusconi will be accused of blackmailing Europe.
10. People-power will win-out in Greece and it too will (finally) seriously consider leaving the Euro as its austerity programme is given a violent “thumbs down” by its people.
11. The theoretical €30 billion in French tax hikes will have a negligible effect on its tax “take”. High net worth individuals and businesses will continue the exodus which began in late 2012.
12. Greek banks will begin to totter as loan defaults by Greek borrowers (both personal and commercial) continue to accelerate.
13. The “restructuring” of Spanish banks will fail.
14. David Cameron and other members of the UK Coalition Government will continue to add 100,000 to the ” number of new jobs we have created in the Private Sector” every time they make a speech. By mid-2013, the “figure” will have swollen to over 1.5 million. Unfortunately without the associated increase in tax-take which one may be forgiven for having expected.
15. Japan printing money will result in a currency battle, primarily involving the American dollar.
16. Greek Tax authorities (in spite of all those reorganisation noises!) will still fail to collect the taxes.
17. David Cameron will realise that UKIP is a clear and present danger and will begin the fight-back by the only way possible. He will adopt their policies and reinforce that by continuing to spray copious volumes of testosterone in Brussels.
18. Mario Monti will stand for election in Italy in a last-ditch attempt to maintain the stranglehold on European politics by Goldman Sachs old boys.
19. The Euro will make its annual journey “to the brink”.
20. Protests will accelerate across Europe – into the United Kingdom….as voters wake-up to the politicians’ ineptitude, procrastination and complacency. Voting-out incompetent governments and merely replacing them with incompetent outfits of another flavour will no longer be viewed as the solution.
21. In France, Francois Hollande will continue to demonstrate why the French don’t really appreciate Presidents who are Socialist.
22. The ECB’s Mario Draghi will once again tell the world that he will do “all it takes” to keep the Euro intact…..including the ruination of millions of Euro lives.
23. Someone, somewhere will wake up to the fact that the banking system is not working and has morphed into a fat, ever-hungry cash cow which no longer executes the functions which it was designed for (to support individuals, commerce and government).
24. Youth Unemployment in Greece and Spain will approach 60%.
25. By the end of 2013,the Catalans and the Basques will decide on their self-determination.
26. There will be a massive surge in the Spanish anti-Royalist movement and the Spanish Royal family will feel “unloved” as demands are made for the abdication of King Juan-Carlos.
27.The Franco-German Euro Axis will be consigned to the poubelle of history as Frau Merkel finds herself another “favourite”.
28.There will be an exodus of high-earners from France in protest to the Socialist-style “Politics of Envy” taxes on those earning over €1 million.
29. British P.M David Cameron will continue to bang-on about “the mess that Labour left behind” – THREE years after coming to office. That will remind the electorate that in spite of the PR, the Coalition still has no idea about how to deal with the budget deficit, except to adopt the bad part of the Merkel Model.
30. Japan’s money-printing programme will drive up its inflation, to match (and exceed) that of the USA, possibly achieving “hyper” levels. Then, they’ll print some more!
31. USA: There will be no “Fiscal Cliff”. The cracks in policy will be papered over by compromise and political expediency………. as America lurches towards the next crisis.
32. In the UK, the Church of England will continue to fret about sex-related matters such as gays, gay marriage and lady bishops. Hopefully, some of them will find a bit of time for their God and congregation!
33. The winners of the X-factor and Britain’s got Talent will have no discernible…………talent. (That’s my annual, sure-fire, 24-carat banker!)
34. In Europe (as usual), neither Barroso nor Van Rompuy will say anything REMOTELY interesting or pertinent.
35. Europe will continue to TALK of fiscal and political integration………but that’s what it will remain…..TALK. Why? Because one of the by-products would have to be some form of Debt-Mutualisation which so far, remains a deal-breaker.
36. German resistance to European supervision of the banks will result in the smaller banks remaining unsupervised.
37. In Italy, Mario Monti has clearly demonstrated the usefulness of a government of Technocrats: they have pushed through economic reforms and budget cuts which a properly-elected government would have NO CHANCE of implementing. However, the honeymoon appears to be over and Italy will return to a Berlusconi-led coalition.
38. Bundeskanzlerin Merkel will strengthen her position as de facto European leader as other (weaker, male) European leaders (half of who are on their way out – including the UK administration) continue to defer to her.
39. After the German elections, Mrs Merkel’s Christian Democrats will form a new coalition with the Social Democrats.
40. Stagnation, Recession and Depression will continue in Europe. Greece will remain in depression (yes!), as will Spain and Portugal.
41. If you’re an investor, you could do worse than keep an eye on Mongolia’s mining boom which will pick up speed in 2013.
42. If you’re a gambling person, here’s an interesting “double”. Lord Patten to resign as BBC Chair . Then, invest your winnings on anything in Macau whose economy is booked to grow by about 15% in 2013.
43. The “in denial” UK Coalition Government will continue to spout meaningless statistics as the retail trade continues its slow-motion collapse and accelerating volumes of businesses go into administration and bankruptcy.
44. The Protestant Church will begin to turn more to Bible-centred Christianity – away from the airy-fairy, trendy, unleaded and flaccid Christianity of the Rowan Williams era. More “splintering”.
45. Last year I predicted a dismembering of the UK’s Coalition government but now realise that it was just wishful thinking. I underestimated how much Tory crap Nick Clegg could swallow. Last year, his capacity seemed infinite. However, for 2013, I predict that Europe will provide the catalyst for an all-out Coalition Civil War.
46. Unless the Chancellor can sell 5G, 6G and all the other “G” Futures and assuming he collects for 4G, there will be a massive government Welfare Review designed to further butcher Public Spending. ( He has no choice because of his rather stunted economic repertoire). That will finally shake the Libdems from their collective coma and fight the Tories. Otherwise…….Libdem Oblivion.
47. “Dead-tree” journalism will continue to atrophy and die with an announcement that at least one major newspaper is to go exclusively digital. (My money is on the Guardian).
48. Massive Solar storms may envelop the Earth which, according to NASA, could render the above predictions both irrelevant and obsolete. Keep an eye on www.swpc.noaa.gov
49. Andrew Mitchell MP will make a return appearance in the Cabinet after the nonsense of allowing the police to investigate themselves in what is increasingly looking like the fit-up of the year.
50. William Hague and Hillary Clinton will keep-on “condemning” the Syrian Authorities as they continue to murder with impunity. Western powers have learned that when they intervene in the Middle East – only one group ever benefits: The Construction Industry.
Europe: Read the small print.
European leaders have agreed a timetable during which they will produce (only) the legal framework for a Eurozone Banking Regulator.
Critical words? Timetable and Legal Framework.
NO BANKING REGULATOR.
Implementation will be “during 2013”. (Nothing AT ALL to do with the pure coincidence of the September 2013 German Elections.)
That sort of crap deserves a Nobel Prize!
Good job they managed to crank up the markets earlier this week…….
Money printing – a simple question.
Today, the Head of Germany’s Bundesbank, Jens Weidmann, has asked a very simple but critical question about Quantitative Easing and its cousin, the Unlimited Bond Purchase:
“If a central bank can create unlimited money from nothing, how can it ensure that money remains sufficiently scarce to retain its value?”
Money is a commodity and was invented when someone did not have goods or skills to trade in return for a commodity he wanted. He was able to offer “money” which could be redeemed at a later date for something that the original “seller” wanted or needed.
However, if there is a too much of a commodity, its price goes down.
So, if there is too much money, its price WILL go down.
THAT is why Central Bankers are playing a very dangerous game.
The simple answer to Herr Weidmann’s question is that a Central Bank CANNOT ensure that by increasing the money supply, it can even begin to ensure that the money will retain its value.
What they’re doing is the equivalent of fixing a stalled car engine by painting the car…..again….and again….and again…..
Eurozone Meetings Merrygoround
This week, Angela Merkel meets Herman Van Rompuy, Mario Monti meets Francois Hollande who also meets David Cameron.
The new Meeting Season seems to indicate that Eurozone leaders have decided that meeting in plenary will be punctuated by the new craze of meeting in pairs.
I thought that it may be useful to compute how many meetings 0f TWO, could be managed by 20 politicians.
They are: the 17 Eurozone leaders + Van Rompuy + Barroso + Cameron = 20.
So, how many meetings would 20 politicians generate if they met in pairs?
Using the formula n!/(r!(n-r)!)……… (n = number of leaders and r = 2, as they meet in pairs)
The total number of “pair meetings” achievable by 20 politicians is 20!/(2!(20 – 2)!) = 190
We have to double that, because they each will want to meet twice so that each one has TWO meetings with every one. (One Home and one Away).
Therefore 20 politicians can generate 380 meetings – if they confine themselves to meeting TWO at a time.
That of course is on TOP of the monthly Eurozone Crisis Meetings, EU meetings and special meetings – for instance, when Spain decides to take the €500 billion we all know it needs or the next time Greece is (once again) about to go down the Grexit toilet.
We can see therefore that any attempt to solve the European Crisis would only serve to interfere with what is already a very heavy meeting schedule.
The Eurozone’s Déjà vu Economics
For years, regulators have been trying to control bad banking. Governments have been failing to control bad sovereign fiscal governance. That’s the nature of the Eurozone. This flawed approach has only left one solution – at some stage, both the banks and sovereigns will have to be properly underwritten by the European Central Bank (ECB).
One day soon, the ECB will become the lender-of-last-resort.
However, possibly for reasons of either dull-wittedness or maybe just some good old-fashioned showmanship, the ECB never makes a move until there is a proper danger of a crisis. (Think Superman grabbing that train on a railway bridge just seconds before it falls into the ravine.)
Unfortunately, this economic scenario appears to be played out on a perpetual “loop”.
Déjà vu Economics.
Currently, markets are once again applying severe pressure to Eurozone public debt and Euro politicians are repeating the “We are determined” and “Whatever it takes” mantras. The markets continue to fluctuate “in vacuo” with little regard to the “real” conditions, further confusing the politicos who, for some unknown reason, believe that the solution to everything lies in greater Eurozone union and organisational changes. (Bless them! It’s all they know!)
The next stage is simple (and it began last week): a few mealy-mouthed statements from Euro leaders which attempted to shove the crisis-cursor forward a few weeks until after the end of the Summer Holidays – whilst Spain and Italy (both standing on the trapdoor) have issued “holding statements”.
The well-worn and rapidly failing policy response from the Euro Gods is those potentially explosive “Austerity Measures” – the only other technique in their repertoire. Yet another case of the cure being more painful than the disease. Ask Greece.
In 2010, the Greek Government (just before it lost access to the markets) po-pooed the idea of needing help. “We are not Latin America!” they scoffed. Now it’s Spain’s and Italy’s turn: “We are not Greece!”
Oh yes you are – only bigger, hungrier and therefore more dangerous – and remember this, when you too lose access to the markets, you will need a bailout.
Euro politicians do play with a very limited repertoire, so Spain and Italy will have yet more austerity. That will accelerate the deterioration of their economies – although their politicians will talk (a lot) about “growth”.
This (just like in Greece) will result in lower tax revenues and austerity targets being missed (although the “Troika” continues to believe that, contrary to all the evidence, an economic miracle will manifest itself . Suddenly, as if by magic, they hope that the Perpetual Spring of Eternal Economic Growth will materialise out of the ashes of Austerity!!).
Then, the banks will need yet more and we’ll end up discussing when Spain and Italy will leave the Eurozone. Then France…..
That will return the cycle to Square One with the politicians once again being “Determined” and promising to do “Whatever ir takes”.
Another dose of Déjà vu Economics.
Meanwhile, should the crisis look really dangerous, the ECB’s Marion Draghi will find a telephone box, change and fly-in to save the day. “To calm the Markets”
The banks have spent four years watching and secretly hoping that this ridiculous loop continues forever, Why? Because once the ECB steps in and protects sovereign debt, those debts will have a price. Banks will have to revalue any debt they are holding (downwards), resulting in quite a few of them going to the wall.
There will be yet more “haircuts” for private investors too!
Just like a rapidly expanding non-working retired population needs more and more support from an increasingly taxed but shrinking working population, so the Eurozone is becoming an arrangement whereby more and more non-producing and increasingly reliant countries have to be supported by a rapidly shrinking collection of fully-functioning states.
The tipping point is not too far away – the point at which there are more (economically) broken states than those in reasonable health which can continue to support them.
Meanwhile, let’s have some more Déjà vu. Again.
Merkel Gives No Ground on Demands for Oversight in Debt Crisis
(Bloomberg) — Chancellor Angela Merkel gave no ground on Germany’s demands for more European control over member states in return for joint burden-sharing as she conceded that the bloc has yet to master the debt crisis.
The German leader said yesterday she hadn’t softened her stance at last month’s summit in Brussels and that a so-called banking union involving a bloc-wide financial overseer will have to include joint oversight on a “new level.” She chided member states who had sought to slow moves toward greater central control “since the first summit” in the 30-month-old crisis.
“All of these attempts will have no chance with me or with Germany,” Merkel said in an interview with broadcaster ZDF in Berlin.
Two weeks after a European Union summit aimed at bridging differences over crisis resolution, euro leaders are still squabbling over details of how to lift the bloc out of the turmoil. Merkel hardened Germany’s position that any attempt to share burdens in Europe — such as jointly issued euro bonds or common banking bodies — must first be met with greater cooperation and a handover of some sovereignty to Brussels.
The euro fell to its lowest level against the U.S. dollar in more than two years last week, sliding to as low as $1.2163 on July 13. Europe’s most credit-worthy government bonds climbed, with German two-year note yields down to a record minus 0.052 percent, as investors sought havens from the euro crisis.
Diverging rates and capital outflows within the 17-member monetary union signal that the single currency is “slowly unraveling,” Stephen Gallo, senior foreign-exchange strategist at Credit Agricole SA in London, told Bloomberg Television’s “The Pulse” in a July 13 interview.
“The whole project is unraveling, that’s what’s essentially happening now,” Gallo said.
While Merkel said that Europe is on the “right course” toward putting an end to the crisis, euro-area leaders “haven’t solved the problems conclusively.”
German lawmakers will interrupt their summer vacations and return to Berlin on July 19 to vote to approve 100 billion euros ($122 billion) in rescue loans to Spain. After Spanish Prime Minister Mariano Rajoy last week announced 65 billion euros in welfare cuts and tax increases, Merkel reiterated yesterday that financial assistance would not be doled out without conditions.
“Whoever receives assistance and where liabilities are taken over, there has to be control,” Merkel told ZDF.
French President Francois Hollande, Italian Prime Minister Mario Monti and Spain’s Rajoy have pressed for faster action, including joint liabilities, while Merkel has called jointly issued debt the “wrong way” to fix the crisis. Merkel last month castigated a blueprint for the summit by EU President Herman Van Rompuy as too focused on “collectivization.”
Euro officials this month have also sparred over the timetable for establishing a euro-wide bank supervisor, a benchmark required before they implement one of the decisions from the June 28-29 summit — direct bailout funding for banks. Investors have viewed such a step as a way to sever the link between banking debt and sovereign debt.
Euro-area finance ministers will confer on Friday, July 20, to complete an agreement on Spain’s bank bailout. On July 10, the minister’s announced 30 billion euros of aid would be made available by the end of this month.
Klaus Regling, who heads the euro’s bailout funds, told Welt am Sonntag yesterday that governments could avoid liability for bank rescues under proposals for a regional supervisor. That contradicts German Finance Minister Wolfgang Schaeuble, who said July 9 that he expects governments to guarantee loans even if they go directly to banks, Welt said.
Merkel said leaders hadn’t yet reached an agreement on the terms for bank rescues.
German Bundesbank President Jens Weidmann said euro leaders had caused damage by failing to define more clearly their conclusions at the summit. He told Dutch newspaper Het Financieele Dagblad on July 14 that euro nations “should discuss giving up sovereignty with the same openness as the question of how to resolve the debt problem collectively.”
As governments in Spain and Italy struggle under the burden of higher borrowing costs, Weidmann, Germany’s chief central banker and a European Central Bank GoverningCouncil member, told Boersen-Zeitung that Italy’s higher yields don’t justify a request for bailout assistance. Euro bailout funding should be deployed only as a last resort, he said.
“If Italy stays the course on reforms, it’s on a good path,” Weidmann told the newspaper in an interview. Asked whether the euro area’s third-largest economy needs to tap the fund, he said, “No, I don’t see Italy in that situation.”
Italian Prime Minister Mario Monti has sought a “debt shield” against spillover from a Spanish banking crisis.
Euro-area leaders have given Spain an extra year, until 2014, to drive its budget deficit below the euro limit of 3 percent of gross domestic product, a concession that may foreshadow leniency for other indebted states in the bloc.
In Greece, an MRB poll published in Athens-based Real News newspaper showed that almost three-quarters of Greeks want Prime Minister Antonis Samaras’s coalition government to insist on a renegotiation of the country’s international bailout.
Seventy-four percent in the survey said the government should insist on discussing the terms even if negotiations steer toward the prospect of Greece leaving the euro; 15.5 percent said the government should stick to current conditions.
Volker Kauder, the parliamentary leader of Merkel’s Christian Democratic Union, told Welt am Sonntag that he doesn’t want to give Greece more time to meet economic targets.
Merkel, asked the same question during the ZDF interview, said she would await a report by Greece’s international creditors, known as the troika.
With assistance from Tony Czuczka in Berlin, Paul Tugwell in Athens, Guy Johnson in London and Fred Pals in Amsterdam. Editor: Dick Schumacher.
To contact the reporter on this story: Patrick Donahue in Berlin at firstname.lastname@example.org
To contact the editor responsible for this story: James Hertling at email@example.com
Νύχτα των Κρυστάλλων ?
“Greeks are lazy, Greeks are corrupt, Greeks are dishonest, Greeks refuse to obey the rules……”
Are they? Do they?
Hearing that certain countries are already thinking about “doing something” about future Greek immigration sent a shiver down my spine.
The Eurozone states and their limp politicians are beginning to treat Greeks like pariahs – in the same way that the Nazis treated the Jews in the 1930s.
What will be the the natural conclusion? Make no mistake – it could be tragic.
Is there going to be the modern equivalent of the 1938 Kristallnacht ?
Will Greek-owned shops and businesses all over Europe be vandalised because of negative anti-Greek Eurozone propaganda?
Kristallnacht was the starting point for intense economic and political persecution of Jews – with the end game being played-out during WW2. No further reminders needed.
Then, as now, it all started with an excuse. In 1938, it was the assassination of German diplomat by a Polish Jew.
The 2012 excuse is nothing more than an anticipated refusal of Greece to comply with over-strict German-inspired ” necessary” austerity rules.
Propaganda is a very powerful device. Let us hope therefore that the gradually amplifying and insidious vilification of the Greek people does not result in yet another European catastrophe.
EU official: Greece needs extra $20 billion
BRUSSELS (AP) — Greece needs about an extra euro15 billion ($20 billion) to get its debt down to manageable levels — and the rest of 17-country eurozone is being asked to help foot the bill.
Debt-ridden Greece is close to a deal with private investors to reduce its debt burden by about euro100 billion and that — plus an agreement to enact deep spending cuts — could pave the way for a euro130 billion bailout from its European partners and the International Monetary Fund. But on Thursday a European Union official said this plan was not enough to help fix Greece’s problems, which are getting worse as the effects of the recession take hold.
In order to bring Greece’s debt burden to a sustainable level — 120 per cent of its economic output in eight years’ time — the country’s international debt inspectors calculate that Greece needs an additional euro15 billion — a shortfall it believes should be made up by the rest of the 17-country eurozone, the European official. The official spoke on condition of anonymity because of the sensitivity of the matter
The extra money, in theory, could come either from the other euro countries or by having the European Central bank, its national counterparts and state-owned banks like France’s Caisse de Depots taking a loss on their Greek bond holdings, the official said. Analysts estimate that the European Central Bank holds euro50 billion to euro55 billion in Greek bonds by face value but it can’t simply write them down without breaking the EU treaty, which prohibits the bank from financing governments. Writing off a debt would be, in effect, transferring money directly to a government.
The new push for Greece’s public and government creditors to take a cut on their investments — dubbed the official sector involvement, or OSI — is a new front in the battle to save the country from a potentially devastating default. So far the eurozone and the International Monetary Fund have given billions in bailout loans to the struggling country, but they haven’t been asked to take losses.
It is also an acknowledgment that Greece’s economy is in such a dire state that the country’s debt inspectors — the so-called troika of the Commission, the European Central Bank and the IMF — are having a hard time finding more ways in which Athens can save money.
Greece has been at the heart of Europe’s debt crisis since it revealed in 2009 that its debt was far larger than its official estimates. It piled on the debt during a decade in which the government overspent and its economy was growing. Those fortunes turned when the world went into recession in 2008.
The challenge now is reducing the debt at a time when the economy is shrinking. Spending cuts, tax increases and the general uncertainty of the crisis have already pushed Greece into a deep recession, which in turn has eliminated many of the gains from the austerity measures.
Asking private creditors like banks and investment funds to share the burden of saving Greece was the first reaction to this problem; getting the public sector creditors involved is the next.
The official said a deal with private creditors to take losses on their holdings will have to be announced before the end of the week to make sure it can be implemented before Athens has to pay back euro14.5 billion in bonds on March 20.
Experts from national finance ministries will examine the details of the deal on the so-called private sector involvement — or PSI — on Friday, and will likely also discuss how the euro15 billion gap can be closed, the official said.
People familiar with the tentative deal have said it would see investors take losses of more than 70 percent of their holdings. On top of having to accept a 50 percent cut in the face value of their bonds, investors will also receive lower interest rates of between 3.5 per cent and 4.5 per cent and give Greece 30 years to pay back the debt.
If agreed, the deal would end negotiations with bondholders that started this summer and have become increasingly tenuous in recent weeks.
Getting public creditors like central banks or sovereign wealth funds to take a hit may be even more controversial, since any losses or foregone profits ultimately come out of taxpayers’ pockets. Germany, the strongest economy in the eurozone, is also one of the strongest opponents of OSI.
Germany’s finance minister, Wolfgang Schaeuble, said on n-tv television Thursday that he didn’t see the need for “any extra contributions from the public sector; we’re carrying everything anyway.”
Schaeuble didn’t address the issue of the euro15 billion funding gap.
The majority of the ECB’s Greek bonds were bought at a discount in the summer of 2010, when the central bank was trying to stabilize their prices. Even though it is bound by the rules of the EU treaty, it could find a way to give up the substantial profit it would earn by holding the bonds to maturity. It could do that by selling the bonds to the eurozone bailout fund or to Greece at the knockdown prices it bought them for.
However, the ECB has so far given no indication that it is willing to do so, with some of its governing board members saying that giving up on profits would clash with the bank’s ban.
Alternatively, eurozone states could boost their bailout loans beyond the promised euro130 billion, or provide some, more-limited, relief by further lowering interest rates on these loans.
Analyst Carsten Brzeski at ING in Brussels said the ECB and President Mario Draghi might be open to giving up the profits on the bonds. But the bank will wait to take action so it does not appear to be acting at the request of politicians.
The bank is legally independent and the EU treaty forbids it to take instructions from government officials.
“I think Draghi could live with it, but they will not bow very easily,” said Brzeski. “It has to look like it is their own idea, their own initiative.”
While officials have stressed the need for Greece’s financing to be set before the bailout goes through, the main players have been flexible before and “it’s not as hardball as it looks.”
On the official side, “someone will have to bite the bullet, or everyone,” he said. European officials are trying “to have everyone take part in the burden sharing and thereby get the ECB involved.”
The euro130 billion second bailout package also still depends on labor market reforms that the EU and IMF are asking Greece to implement. Unions and employers resumed talks on Thursday over troika demands to lower wage costs in the private sector and possibly lower the minimum wage.
AP Business Writer David McHugh contributed from Frankfurt.
Copyright © 2012 The Associated Press. All rights reserved.
Action points should be very much more than vague statements of unspecific intent. Proper action points should contain elements such as amount or time.
In addition, there has been a noticeable increase in the use of a very strange new language . It has been used by Eurozone leaders during their various pronouncements over the last (many) months.
The rhetoric adopted by current Eurozone Commissars is frighteningly similar to the Soviet-style nonsense spouted by dead-eyed Party apparatchiks of the 1960s. It is the empty “old-school” Party-designed exhortatory language of the minor government Soviet official.
In common with the good old Berlin Wall days, these pre-written Euro-statements appear to promise much but actually, say nothing. They have a smell about them. It is the smell of long-demolished East German Trade Mission offices – a mixture of damp buff-coloured pocket folders, dusty Party rubber stamps, wax floor polish, wet mops and lever-filled fountain pens.
Until very recently, apparatchik-speak was a dead language.
There is ONE significant word which appears to be “de rigeur” because it implies a level of forcefulness and “doing” which is designed to suggest imminent action.
So far, it has fooled most of the people – especially those who plunder the Stock Markets. They crave warm words.
The words are empty but they provide hope – just like the old Soviet insistence on increased wheat production quotas – last transmitted on Short Wave from Radio Moscow.
These are actual extracts from recent Eurozone communiqués and statements:
“Our action must be determined…”
“We must do more…”
“We must modernise our economies and strengthen our competitiveness … This is essential to create jobs and preserve our social models …”
“These efforts must be made in close cooperation with the social partners.”
“The March European Council must pay due attention…”
“EU legislation… must be rapidly and fully implemented…”
“National supervisors and the EBA must ensure that bank recapitalisation does not lead to deleveraging…”
This strange almost admonitory style, detached from any real analysis of the problems has a quaint nostalgia, which those of us who are used to modern management or political idiom do find both unsettling and hollow.
…and the band plays on.
In January 2011, French President Nicolas Sarkozy proclaimed that by the end of the year, France was ready to implement a financial transactions tax (FTT) to help poor countries. The German Chancellor, Angela Merkel, also expressed her support.
Sarkozy promised: “My conviction has always been that the FTT is the best form of innovative financing…. France is prepared to implement innovative financing mechanisms even if other countries should choose not to join. Because there is a moment in time where you have to go from discourse to setting an example.”
But, surprisingly, no agreement has yet been reached.
It’s urgent that France and Germany take concrete action to drive this joint proposal forward and to ensure that the revenues will be used to help reach the Millennium Development Goals.
France’s and Germany’s generosity is to be admired and we should do all we can to encourage this initiative, especially in the wake of such momentous upheavals within the Eurozone.
One trusts that our Prime Minister takes the time to gently remind the French and the Germans of this more-than-generous gesture.
The petition is here: http://www.thepetitionsite.com/takeaction/825/474/357/
Greece points the way.
Many have said that the defining photograph of 2011 was taken earlier this year, somewhere in or near Tahrir Square. I disagree.
For me it is this image .
It represents the normally stoic Greeks shouting “Enough!” and trailblazing in a way which points to the inevitable and over-postponed conclusion to the fast-failing Euro adventure.
Eventually, while the politicians and bankers play their increasingly convoluted monetary games, the people WILL have their say.
Kim Jong Ill-judged?
Kim Jong Il’s death in North Korea will inevitably shift the focus of Western disdain to his son and president “elect”, Kim Jong Un. Here in the West, his PR will very soon become as colourfully sneering as that enjoyed by his dead father.
Through no fault of ours, we have never really understood either the dead dictator or his people but, the North Korean cult of uber hero-worship appears to be so infused into Korean Society as to look totally genuine.
To us, Kim Jong with his bouffant hair and pigeon posture was a comedy figure but to his people, he was a god. Did EVERYONE really love and revere him? Was he REALLY, like the Catholic Pope Ratz – an infallible near-deity?
We may well have mocked the small man with the big ego whose pronouncements were sacrosanct – but was he really any different to the Man from the Vatican with his pointy hat, red slippers and gold dresses? Was he any more ridiculous or ridiculed? Was he any less dangerous?
At least he didn’t claim to have a hotline to God or to perform miracles or accept the ramblings of the feeble-minded who believed that by simply being touched , they had been cured.
We would argue that you cannot fool ALL of the people ALL of the time but the fact remains that we do all need our heroes and the North Koreans’ hero was their leader.
Some may say that he was a “manufactured” hero – but doesn’t that apply to MOST heroes? Our own heroes are sportspeople and singers – in fact anyone who can have the word “celebrity” appended – no matter how tentatively.
Kim Jong was a political and spiritual celebrity. He gave his people focus.
OK, so he had bought into his own image and had travelled the well-worn celebrity route of believing his own publicity but so what?
Was the publicity of his making?
The sad fact is that he presided over a beaten-down, brainwashed nation where dissent results in Stalinist-type reprisals. The Gulag Culture is alive and well.
Perhaps the comparison with the Vatican was NOT altogether fair. After all , the Vatican does not have Nuclear weapons. North Korea is now a potentially unstable country with REAL weapons of mass destruction and the ability to deliver them. Even its neighbour China will be hoping that the North Korean Generals can return their country to comatose and malnourished stability as soon as possible.
There has always been some suspicion that Kim Jong Il’s personality cult was mere window dressing for a sinister totalitarian military administration – just as Iran’s Ahmandinejad is the fluff and window-dressing for spiritually malevolent turbaned puppet masters of his own.
Today, there was footage of North Koreans wailing in their “grief” for their lost leader. Two things were very striking – there were no real tears and every single frame contained at least two military people in uniform, apparently standing about to ensure acceptably adequate grief.
Here’s a fine example of Korean “sincero-grieving” as practiced by the Korean Central News Agency:
Pyongyang, December 19 (KCNA) — Leader Kim Jong Il, the great father of the Korean people, passed away too suddenly.
The DPRK is overcome with bitter sorrow at the demise of the father of the nation who had energetically worked day and night for prosperity of the socialist homeland and the happiness of people all his life.
Its army and people’s loyalty and sense of obligation to him are now growing higher than ever before.
They are resolutely rising up to change their sorrow into great strength and courage with the noble sense of moral obligation and immovable faith and will to hold Kim Jong Il in high esteem forever and glorify his feats for all ages.
The hearts of all servicepersons and people are replete with the pledge to hold in high esteem the great Kim Jong Il forever and make neither concession nor delay on the road of the Juche revolution, the Songun revolution true to his behests.
The Korean people have suffered the great loss but are decisively rising up as they have Kim Jong Un, great successor to the revolutionary cause of Juche and prominent leader of the party and the army and people of the DPRK who is standing in the van of the Korean revolution.
He is another great person produced by Korea who is identical to Kim Jong Il.
Quote Source: Korean Central News Agency: http://www.kcna.kp/goHome.do?lang=eng
More European Unforeseen Consequences?
For 3 years, (since the 2008 crisis) banks have been acquiring equity stakes in British companies.
That is grinding to a halt.
Banks will be cutting losses in order to get their money out – especially from weak companies, resulting in more businesses going into administration.
Maturing Private Equity Loans will be a major problem for both British and Euro economies.
There are nearly £300 billion Euros in Private Equity Loans.
How much of that will the banks go after?
……..and is it yet another example of the Law of Unforeseen Consequences?
World Markets Rally!!!!
A move to boost lending by six central banks including the Bank of England has triggered a rally on world markets.
The banks, also featuring the European Central Bank and US Federal Reserve, agreed to lower interest rates on US dollar loans, which should encourage lending and help to stave off another credit crunch.
The FTSE 100 Index surged as soon as the measure was announced, rising 3.3% or 176 points to 5513.
In the US, the Dow Jones Industrial Average was up by a similar level in early trading, while the Dax in Germany rose 4% and the Cac-40 in France was 3% higher.
Before the announcement was made London’s leading shares index saw gains of up to 1%, amid hopes European leaders would make headway expanding the region’s bailout fund to help shore up confidence in the eurozone.
Banks led the charge despite some of the sector’s biggest UK players suffering a credit ratings downgrade from Standard & Poor’s.
Lloyds was ahead 7%, or 1.6p at 24.8p, Royal Bank of Scotland was 1.4p higher at 20.9p and Barclays rose 11p to 179.9p.
Miners also surged on the news, with South American copper miner Antofagasta topping the risers’ board, up 96p at 1180p.
Cairn Energy was the biggest faller after it reported more disappointing results from its exploration activities in Greenland. Cairn shares were 8.3p lower at 266.9p, a drop of 3%.
The Edinburgh-based firm said it had failed to find oil in two more wells, following the closure of three other wells earlier this year.
Copyright © 2011 The Press Association. All rights reserved.
EFSF Accounting Gymnastics.
Last night , Eurozone finance ministers (sort of) agreed a deal to increase the firepower of the European Financial Stability Facility (EFSF).
Unfortunately, this time it really IS a case of too little too late or perhaps, someone didn’t get his sums quite right. Some of the €440 which the EFSF has to play with has already been allocated to help Portugal and Ireland. There is also the small matter of the EFSF contribution to the next Greek bailout.
Nevertheless, it was agreed that the EFSF will guarantee 20 to 30% of the value of any bond issued by a Eurozone member, allowing the fund’s “assets” to be “leveraged”. That, in effect means that say, €1 billion of EFSF assets can underwrite about €3 billions’ worth of Eurobonds. A dangerous game – especially as the EFSF’s real apacity is so limited.
In reality the EFSF’s capacity might only be between €500 and €700 billion, which is not really even big enough to bailout Italy and Spain. Meanwhile, Greece will run out of cash in two weeks’ time and is already standing in the wings, hands out, awaiting its next €8 billion bailout.
Also embedded in the backdrop to all this accounting wizardry, is a secret Euro report which states that Italy will need to beef-up its austerity measures , otherwise it will soon become insolvent.
The ECB has its own issues, centering around its difficulty in securing support from banks in respect of balancing its sovereign bond purchases. Because banks are so unsure of what is going to hit them next, they wish to maintain liquidity. That means that they are no too keen on even depositing short-term money with the ECB.
When agreeing such initiatives, it is quite normal to “test the water” by soliciting the views of investors. Chris Frankel CFO and Deputy CEO of EFSF said ‘Following extensive discussions with investors covering all types and geographical regions, “a number of them” have given their positive views and signalled their willingness to participate.’
That simply means that institutions which are already government-underwritten will invest in lower-risk bonds as a result of centralised underwriting. Consequently, they will be willing (in theory) to accept lower bond yields.
All of the above is being promulgated as a “done deal” but others believe that the whole arrangement is far to complex and too difficult to understand. It certainly smacks of desperation.
What is really needed is a fund which can operate quickly and simply.
In spite of very strong opposition from Germany, it would seem that the only eventual way forward will be not-only for the ECB to start printing Euros. but to become European lender of last resort.
One thing is definite – the whole thing is hanging by a thread and just one more “Eurosurprise” would be devastating.
And the IMF? Another statement declared: “The 17 Euro Finance Ministers have agreed to work on boosting the resources of the IMF so it can “cooperate more closely” with the European Financial Stability Facility.” Make of that what you will.
One thing is for sure, everything MUST be done to boost the EFSF’s effectiveness and for the “stop-gap accords” to stop. So far, all the temporary “fixes” and retro-crisis-management have failed to protect Italy and Spain from surging bond yields and both Standard and Poors as well as increasingly cynical investors now have France in the crosshairs.
Today is a big day for the Eurozone.
The uncertainty is not helped by statements such as the one from EFSF Chief Executive Officer Klaus Regling who said “It is “impossible to give one number” for the total firepower of the EFSF because market conditions change over time.”
Or ECB President Mario Draghi saying that the ECB’s 18-month- old bond-buying program is “temporary and limited.”
In spite of all the meetings, organisational complexity and communiqués, there are still two vital ingredients missing – a coherent strategy and leadership with direction.
There may be trouble ahead….
In my predictions for 2011, I suggested riots and civil unrest. Many said that I was being too pessimistic but Italy, Greece , Portugal and the United Kingdom have clearly shown that civil dissidence is on the increase. Tents may be pulled down, arrests can be made and demonstrators dismissed as “trouble makers” but the mind-set cannot be destroyed – just look at the current goings-on in Egypt. Potentially 2012 could become the MOST crucially important year in world history. It could be THE year of change but also the year of homelessness, poverty, hunger, civil unrest, violence, crime and martial law .
THAT’S where both Europe and the United States of America are currently headed, unless the politicians act NOW.
Both the unemployed as well as the overstretched taxpayers will join forces and destroy governments during 2012. It is not something that anyone really wants to either think or talk about but the sad fact is that ALL the components for a nightmare scenario are already in place with citizens EVERYWHERE moving towards a militant mindset. Politicians would do well to take note.
Meanwhile in Europe, politicians within the Eurozone are once again sitting back and observing the Greek, Italian and Spanish regime changes, in the vain hope that a simple change of administration will somehow have an effect on tumbling markets and crumbling economies. The Americans appear to be in denial as well as out of leadership and ideas.
The only possible explanation for the politicians’ intransigence is that there has already been an acceptance of catastrophe and that the only device remaining is damage limitation after the event.
The Band Plays on………and on………
Markets are continuing to gyrate quite wildly and it will not be long before they finally wake up and pluck up the courage to realise that the nth solution to the Sovereign Debt crisis is not going to work any better than the (n-1)th solution or even the (n+1)th attempt next week. Greece is still bogged-down in a political and fiscal mess – in fact EVERY SINGLE DAY it is sinking further into the mire. Italy and its change of main players is also becoming unhinged, while everyone else in Europe is keeping their head well below the parapet, cringing in horror at the thought of having to produce increasing amounts of bailout money which DOES NOT EXIST. Countries such as the United Kingdom take scant comfort from changes in growth and forecasts measured in no more than a few basis points. Meanwhile bankers are bracing themselves for the tidal wave of “sell” orders which are about to swamp their offices. Suddenly the Christmas Holiday seems such a long way away.
The principle of keeping the management of a national economy away from politicians and handing it to technocrats is very sound – as has been proved over the last THREE years by the procrastination and ineptitude of Euro politicians.
However, handing-over a sovereign economy to technocrats could be considered counter-democratic because technocrats tend to be unelected.
The “unelected specialists with focused knowledge versus elected generalist know-all politicians “ argument is set to explode in Italy where the new government is expected to be made up of mostly non-political, unelected technocrats.
Both the Italian Democratic Party and Berlusconi’s PDL are seeking Cabinet representation – even though they have shown that they will be able to add little to the issues.
This should prove an interesting time and possibly a template for other democracies with elected politicians who have absolutely no idea how to deal with a failing multi-faceted and complex modern economy.
The moves by both Greece and Italy towards a Technocratic -style government are both reassuring and frightening. The increased complexity of global economics has really exposed elected politicians as being incapable of making the right decisions, except at the most superficial level. The worrying thing is that Austerity Economics has become a modern Mantra and so has come to be viewed as a modern divine truth. In fact, Stimulus Politics is what is needed. Currently, the cure is killing the patient. The United Kingdom experience is an excellent example of a policy which clearly demonstrates that austerity measures gradually KILL economic growth but that political dogma always wins out. Greece has been an extreme example where austerity has done little more than accelerate economic collapse. Italy has followed and now French austerity economics are set to cause even more economic havoc.
Mario Monti , so far the most likely successor to Sylvio Berlusconi as Italian Prime Minister has all the credentials to fall into line with Euroland. He was European Commissioner for the Internal Market, Financial Services and Financial Integration, Customs, and Taxation as well as a member of the Bidergberg Group.
European Union Economic and Monetary Affairs Commissioner Olli Rehn has said that Belgium, Cyprus, Hungary, Malta and Poland are not doing enough to cut their deficits. How DO these people know?
The good news is that Italy has managed to shift 5 billion euros-worth of one-year bonds at a rate of 6.087%. That means that in 12 months, the Italian government will have to repay those bonds at over 5.3 billion. By then, it will have to borrow more in order to redeem the 5.3 billion etc etc.
This bond issue is, of course is a mere drop in the ocean if set against the 1.4 TRILLION which they will probably need for a bailout.
Within a few weeks, Italy’s president Giorgio Napolitano will attempt to form a new government. With Italy’s past electoral history, the creation of a new administration will make the Greek efforts look like a W.I. meeting.
For a few weeks I have been asking the question “Who will leave the Euro first: Germany or Greece?” That question doesn’t look so silly now, does it? A very long time ago, I suggested a Euro and a Euro-lite. Two separate currencies , membership of which should be heavily dependent on a country’s average annual temperature. That is to say a Euronorth and a Eurosouth. They’ll catch up eventually.
Eurozone: Have you noticed how discreet the Portuguese bailout was in May 2011? Their 10 yr bond is now quietly trading at 11.7%. Barroso?
The United States has been doing more-or-less what the Eurozone has been doing for the last few years. Marking time and watching debt grow. Their “Greece” is Jefferson County , Alabama which has filed for bankruptcy court protection. We are talking big bucks ($3.14 billion) in what is the biggest municipal bankruptcy in U.S. history. County elders have been trying to restructure their debts but after two days of meetings, have decided to declare bankruptcy. Dominoes are beginning to topple as many American states, counties and cities are “on the verge” of going bust.
Thank you for all your messages and inquiries about the Twitter suspension of my @spygun account. I have probably been sinbinned for a week but am currently awaiting the results of an appeal which I have filed. Some of you already know that occasionally I Tweet from my corporate account which is @PresentationLab. Might see you there!! Otherwise, stick with me on spygun.com. It would seem that my predictions of the Eurozone collapse and economic unravelling aren’t as well-accepted as I thought.
Apart from Italy’s imminent crisis (it’s not REALLY a crisis yet!), there is now open talk of a much reduced Eurozone and rumours of France and Germany already being in discussion about a “break-away” or a “two-tier” Europe. France needs Germany more than Germany needs France so, as usual, any major initiative may , superficially be subject to discussion but ultimately, it will be a German decision. Here’s what a Euro spokesman has been quoted as saying: “The change has been discussed on an “intellectual” level but has not moved to operational or technical discussions.” That’s just what has been happening for the last few years with the Eurozone, Global Warming and the Global Recession. It’s what has been eluding the politicians for years: that small leap from discussion to action. Therein lie the solutions to problems.
Tomorrow (10th November 2011) will see a continuation of the rapid slide in Bank shares. Not only will European Markets begin to collapse but the Dow Jones will also join in the panic. China is waiting to buy cheap. It’s business. The rest, as they say, is Geography.
The Eurozone is in a blind panic because Italian 10 yr borrowing is going to cost at least 7.5% per annum. That is the point at which Ireland, Portugal and Greece were forced to request a bailout. Italy needs to borrow but at that sort of interest rate, it is not generating enough income to sustain the amount of borrowing which it needs. The other fly in the ointment is the fact that there isn’t enough money within the Eurozone to bail-out Italy. Countries such as China and Japan will be able to demand more-or-less what they want – should they feel inclined to wave the chequebook in Italy’s direction.
Greek President Karolos Papoulias has called another meeting of party leaders because they have failed to agree on who will lead the country’s interim government.
Prime Minister Papandreou and opposition leader Antonis Samaras cannot reach any sort of compromise which means that the political high drama of the last few days has now degenerated into farce.
Soon after the meeting began, Georgios Karatzaferis, head of Greece’s far-right Laos Party stormed out, accusing all of Greece’s political leaders of “playing tactical games.”
The Greek farce is set to continue but at least it is providing an amusing diversion – in counterpoint to the storm which is gradually engulfing Italy.
Weird that the imminent Italian collapse is being treated as a bit of a surprise. Politicians do not appear to acknowledge that they have been sitting back and watching the whole thing unravel. Starting with Ireland. Greece needed help two years ago. Portugal needs help now as does Spain.
Gaddafi dead? Or Alive?
We don’t need any more sanctimoniously hypocritical nonsense about whether or not Gaddafi was “murdered in cold blood” or whatever….
Admittedly, because Gaddafi was not taken alive, the legal profession has missed-out on yet another Lawyer Bonanza – this one would have lasted YEARS. So perhaps a gunshot to the head was the best way to have dealt with old Muammar.
The fact is that when, on August 24th 2011, a Benghazi businessman offered a reward of £1 million for Gaddafi “dead or alive”, there was little chance of the Old Dictator ever having an Idi Amin-type retirement in Saudi.
I remember thinking at the time of the reward announcement, that it was a tad undignified and not very statesmanlike of Mustafa Abdel Jalil, Chairman of the National Transition Council of Libya, to endorse the reward for Gaddafi’s head. Especially as Jalil used to be Libya’s Minister of Justice.
Mind you, Jalil had been the very first senior Libyan politician to resign from Gaddafi’s gang (February 2011). That resulted in The Gaddafi regime offering a bounty of $400,000, for his capture.
Two days before supporting the “dead or alive” approach to Gaddafi, Jalil had said that people must “not take justice into their own hands”. He had also said that he hoped the dictator would be “captured alive.”
THAT will be Jalil’s big problem – how to prevent Libyan citizens from taking justice into their own hands.
Most will be pretty neutral on the “Democracy – no Democracy issue”. What they really want are the trappings of Western-style affluence.
So, once the big guns have been unbolted from the Toyota pickups and the AK47s handed-in and all 150 Libyan tribes decided to live in harmony – all will be well.
Otherwise, there will be a quite sudden slide into Iraq-type chaos as fundamentalists in oversized vests start going “boom” in crowded places.
(Looks as if Libya is about to receive its very first lesson in Western-style Democracy. The United Nations Human Rights office has called for an “full investigation” into Gaddafi’s death. Their very first Inquiry! Witnesses, statements, cross-examinations……..not a bad consolation prize for the Lawyers!)
José Manuel Durão Barroso is a very able, bright and distinguished politician. He is the lawyer-economist who is President of the European Commission.
His speech of 12 October 2011 to the European Council was going to tell the world what was going to be done about an issue which for the past two years, even during Middle Eastern revolutions, earthquakes and hurricanes , has consistently been one of the TOP THREE news items: The European Economic Crisis.
During that time, politicians, economists and bankers have adopted a strange general, non-specific tone, laced with metaphor and euphemism and we have all become seduced by this new trick of being told nothing, yet imagining that we have been told everything.
Last week, I analysed Bank of England Governor Mervyn King’s latest statement and found that true to form, it was flooded with generalisations and platitudes with a sprinkling of occasional metaphor.
Mr Fact has become a stranger and fear appears to have driven away the the art of realistic economic ambition and goal-setting.
Most of us have come across the goal-setting model S.M.A.R.T.
A goal has to be structured as follows. It has to be SPECIFIC, MEASURABLE, AGREED, REALISTIC and TIME-BASED.
So, if a politician says that “something will be done as soon as possible”, it fails on all counts. However, if a politician says (and the figures do not matter!):
” It has been agreed with all members of the Eurozone as well as the IMF and the ECU that the European Central Bank will hand-over $250 billion to the Greek Government on November 1st 2011 with an additional $50 billion on March 31st 2012″, then we have a definite statement of intent – a goal.
If a Chancellor said “The Austerity programme is NOT an open-ended precaution. On January 1st 2013, the VAT rate will be reduced to a zero rate until the end of the First Quarter 2014 and every viable SME with a turnover of less than £100,000 will be given a grant of £20,000” would also be a goal.
“Boosting Capital”, “Rebuilding Balance Sheets”, “Banks have to lend more” etc. are further examples of empty non-goal-based rhetoric.
The text of Mr Barroso’s speech is reproduced below. I have highlighted certain phrases.
Brussels, 12 October 2011
Presidency in office of the Council,
The European Council of 23 October will be held against a backdrop of urgency over the threat of systemic crisis now unfolding. There are many issues on the European agenda. The Minister of the Polish Presidency mentioned most of them. I will not of course go into detail of the many important challenges, from the conference in Durban to very important external items. I will today focus on the urgent response needed to the financial and economic crisis.
To break the vicious cycle of uncertainty over sovereign debt sustainability and over growth prospects, we need comprehensive solutions now.
In my State of the Union address to this Parliament two weeks ago I promised responses. Today we are delivering. I can announce that the Commission has just adopted a roadmap to stability and growth. And we have set out concrete terms and timelines to implement it. You are the first to whom I communicate the main elements of this roadmap. I am sending to the President of the European Parliament the document that we have first adopted some time ago.
Over the last three years, the European Union has come out with specific responses to different aspects of the crisis. Now is the time to bring them all together. To once and for all meet the depth of the crisis with a full comprehensive and credible response.
The elements in this roadmap are interdependent. They must be implemented simultaneously. They must be implemented immediately. This is the only way that the European Union can convincingly:
- Give a decisive clear response to the problems of Greece;
- Enhance the euro area’s backstops against the crisis;
- Make a coordinated effort to strengthen the banking system including through recapitalisation;
- Frontload stability and growth-enhancing policies and;
- Build a more robust and integrated economic governance.These are the five points of the roadmap I put before this House today and that I will take to the European Council on October 23rd as a coherent and comprehensive plan for Europe that embodies a Community approach.
Here is how.
First, on Greece, we need a decisive solution. Doubts and uncertainties over Greece’s future jeopardise stability in the entire euro area and beyond. The time has come to definitively remove these doubts. This means three immediate and sustained actions:
- paying the sixth tranche of the loans to Greece. The result of the Troika mission has sent a positive signal in this respect;
- deciding a sustainable solution for Greece within the euro area. This should be through an effective second adjustment programme, based on adequate financing through public and private sector involvement, backed up with robust implementation and monitoring mechanisms;
- We also understand that Greece must fully carry out its programme in a timely manner, with continued support from the Commission’s Task Force and maximised disbursement of structural funds focused on growth.
But there is a more general problem in the euro area.
Despite the assurances given by Heads of State or Government on 21 July to support countries under programmes, and despite their assurances that private sector involvement would be strictly limited to Greece, contagion risks have not been contained. To decisively put a stop to this threat that is hampering all our efforts, we must strengthen the euro’s firewalls. We must have credible, stronger instruments.
At the European Council I will strongly urge Heads of State and Government of the euro area to complete and complement the measures they agreed on 21st July.
This is crucial to give a much-needed injection of confidence to market participants.
It means making operational the agreements taken to increase the flexibility and effectiveness of the EFSF and the future ESM, to allow for precautionary programmes based on conditionality, on which the Commission and ECB should be consulted in advance. Stronger monitoring and surveillance could be included as part of the Stability and Growth Pact.
But, the EFSF must be more than just a firewall.
It should have real firepower. We should maximise its capacity.
And, to further cement the expression of unity and responsibility inherent in these crisis resolution mechanisms, we must accelerate the adoption and entry into force of the permanent ESM – preferably to mid-2012.
We must trust that the European Central Bank will continue to provide the background of financial stability necessary for all this to be done.
The strengthened and more flexible EFSF is in the interest of all euro countries, including the Slovak people. Our common currency plays a crucial role in investment decisions, in growth, in jobs, all over Europe. I commend those in Slovakia who have risen above partisan attitudes and voted in favour of what is important for all Slovak citizens, for the euro area and for the European Union as a whole. And I call upon all parties in the Slovak Parliament to rise above the positioning of short term politics, and seize the next opportunity to ensure a swift adoption of the new agreement.
The third element of the roadmap is the need for a coordinated approach to strengthen the banking system. Let us be clear – over the last three years huge efforts have been deployed to this end. Billions of euros in aid and guarantees. An overhaul of banking supervision. Boosting capital requirements and protecting citizens’ deposits.
However, all this has not yet been sufficient to lift the weight of uncertainty hanging over the banking system, or to halt the volatility and pressure on the European banks. While these doubts persist and spread, sufficient confidence cannot be restored to allow liquidity to flow again and to oil the growth that our economies so badly need. For confidence to return we need to fix the sovereign debt problem, which can only be done through a coherent package.
We must therefore urgently strengthen the banks, because in fact those two issues – the sovereign contagion and the banks are now, whether we like it or not linked. This must be coordinated through the Member States, the European Banking Authority, the ECB and the Commission. The strategy should comprise 5 key steps:
- It should include all potentially systemic banks identified by the European Banking Authority across all Member States;
- It should take account of all sovereign debt exposure in full transparency;
- It should involve a temporarily higher capital ratio after accounting for exposure;
- Banks that do not have the required capital should present and then implement plans to have it in place as swiftly as possible. And until they have done so, they should be prevented from paying out dividends and bonuses by the national supervisors.
- Banks should use private sources of capital first. If necessary the national government should provide support as a next step, as a last resort, drawing on a loan granted from the EFSF. Any public support should be compatible with the state aid rules. The Commission intends to extend the existing state aid framework for bank support beyond the end of 2011.
Naturally, details on capital ratios and evaluation methods should be proposed by the EBA with national supervisors, who are best placed to judge on this.
At the same time, the ongoing work on a new financial regulation system should be completed as swiftly as possible. To that end, the Commission will present its remaining proposals to implement the full G20 commitments by the end of this year. We also urge rapid adoption of the Financial Transaction Tax I presented to you two weeks ago.
The fourth element is to frontload policies that consolidate stability and boost growth.
We all know that most Member States do not have much room for fiscal stimulus. Those who have should use it. However, all Member States do have at their disposal means to implement structural reforms, to focus spending on priority areas, and to remove obstacles to growth.
As I said to you in my State of the Union address, growth is within our reach if we can break down the barriers that stop money, services and people flowing through our Union as they should.
This means first – getting more out of what has already been agreed at the – European level.
I am talking about implementing for instance the services directive, delivering on the digital agenda. I’m talking about maximising our trade agreements.
These are measures we can take today, that don’t require significant additional investments or budgetary effort, but that can have immediate and significant benefit for our companies, for our citizens, for our economy.
This means second – accelerating adoption of what is on the table. There are many proposals on the table that we can fast-track for adoption. I am talking about unitary patent protection. I am talking about the energy savings directive. I am talking about concluding ongoing trade agreements.
And it means third – fast-tracking the most urgent growth-boosting proposals. I am talking about the Single Market Act, about forthcoming proposals to facilitate access to venture capital because today there is a lack of venture capital in Europe and this is especially felt by SME’s. I am talking about the Young Opportunities initiative to increase youth employment.
And where agreement on fast-tracking proves difficult, we should be able to use enhanced cooperation so that those who want to move forward are not held back. Frankly dear members of the Parliament it is time to say that the speed of the European Union should not be the speed always of its slowest member. We need sometimes to use reinforced cooperation.
All this should be done in conjunction with targeted investment at European Union level, such as through the Europe 2020 Agenda where we propose also our Project Bond Initiative, the Commission will propose it next week, and will maximise the resources of the European Investment Bank so that it can lend to the real economy.
So reforms, implementation of everything we have agreed and also try to fund some of these efforts through new sources of investment using the appropriate instruments we have and some we can create like the Project Bonds.
The fifth and final element of the Commission’s proposed roadmap to stability and growth is the pursuit of sound economic policies by the Member States, especially of the euro area, reinforced by stronger Community governance.
We now have the six pack– and I thank you for your support in getting the ambitious proposals approved. We have the European Semester and all that it entails in strengthening governance. But we must go further to match the ambitions of our monetary policy with those of our economic policies. As we have said we have to complement the monetary union with a real economic union. The future of the single currency also depends upon it.
In its roadmap, the Commission is proposing a much stronger euro-area dimension in planning, implementing and assessing national policies. This dimension is backed up by strict constraints enforceable at the Euro-area level and is based on an enhancement of the Community approach, which will reinforce the role of the European Parliament in economic governance. We will further reinforce the role of the Commissioner for economic and monetary affairs in full respect of the Treaty.
There are other actions we can take very quickly, without change in the Treaty:
- We must improve working methods and crisis management between the European Commission, the European Council and the Eurogroup. Proposals to this end will be made soon, in line with the agreements of 21 July, by the President of the Council, Commission President and President of the Eurogroup and the aim is to have a more streamlined process between the Euro area summit, the Eurogroup and the Euro area working group.
- Second, we should streamline and reinforce the instruments we have. Not only by rapidly implementing the six-pack, but also by strengthening the European Semester by intensifying surveillance and integrating the Euro Plus Pact into the Semester – hence reinforcing the Community method in the Union.
- And we must also go further than the measures set out in the six-pack, by setting out provisions for strengthening the economic and budgetary surveillance of Euro area Member States requesting or receiving financial assistance from the EFSF, ESM, or other institutions. The Commission will make a proposal to the Council and the European Parliament under Article 136.
- We must monitor the national budgetary policies of Member States in excessive deficit procedure or countries under programmes through a Commission-Council procedure which will enable the European Union to intervene. For example, in serious cases it could request a second reading of draft budgets, to suggest amendments in the course of the year and to monitor budgetary execution. The Commission will make a proposal to the Council and the European Parliament under Article 136 setting out the graduated steps and conditions that should apply in such cases. You see, honourable members, that we are really speaking seriously when we mention we urge for more discipline, more integration. It means more Europe that, I think, should be the goal of all of us.
- All this is in addition to the proposals on a more unified external representation for the Euro area and options for ‘stability bonds’ the Commission will bring forward by the end of this year.
One final point on governance – In the State of the Union address I said the Commission would present a single, coherent framework for better economic governance based on the Community method. We are developing that right now.
The proposal will ensure the compatibility between the euro area and the Union as a whole. It will be done in a way that aims to integrate the Euro Plus Pact because coordination and integration must be carried out on a single, Community level. How can we speak about coordination and integration in a disintegrated manner. It is obvious that we need a Community approach to do that. Yes, we need stronger governance. Yes, we need the Euro area heads of government to meet more frequently. But no, we do not need to create yet more institutions or yet more titles, when we already have the structures in place to do the job.
It is essential that we do not create a division between the 17 members of the euro area and the 27 members of the European Union – most of whom wish to join the euro. Such a division could deeply harm the European Union as a whole, put in question the Single Market, be an invitation for renationalisation of Community policies. That is why we need to have stronger governance for the countries that are in the euro area, but have it in full compatibility with the rules and the acquis for the European Union as a whole. This is why it is essential to keep the Community institutions – this European Parliament, the European Commission – at the core of the process of coordination and integration.
The role of these institutions is also to guarantee this link, to guarantee that no Member State is jeopardised, to guarantee that Europe remains strong and united.
The solutions to Europe’s crisis, I believe, are known by most of us. But to grasp them requires courage and political will. To do so is to fully acknowledge our interdependence and to take a bold leap towards further integration. The problem of Europe is not too much integration. It is in fact a lack of a European approach. Such changes to the nature of our Union may need to be enshrined in changes to the Treaty. Changes that must keep the Community method at their core.
But one thing is for sure – as the crisis narrows in on us, I see no other option but to act now, so the fact that we are considering for the future more ambitious changes should not be an excuse not to adopt the decisions now and this is why we need to act together in a unified and coherent way.
This crisis is not partial. The response cannot be partial. Our responses cannot be piecemeal. That is why this roadmap is a single, comprehensive approach and all its elements must be implemented in parallel.
This is the message I intend to take to the European Council on 23rd October and for which I would like to have your support – the support for a united and stronger Union.
Thank you for your attention.
“E7?” I hear you ask: China, Brazil, Mexico, Indonesia, Turkey, India and Russia.
In terms of economic output, these are the countries which will overtake the increasingly arrogant and shaky G7 cartel. It will happen within a generation and has been predicted by both Goldman Sachs and Price Waterhouse.
Apart from Turkey, all of the E7 are “over there somewhere”, whereas Turkey is on our doorstep – and we would do well to pay attention.
For the moment though, let’s park Turkey back within the G20.
You may be forgiven for not knowing that last year, the The Turkish economy recorded the third-fastest G20 growth rate. The country was untouched by the current economic crisis and not a single Turkish bank failed.
Almost modestly, the Turkish government slid onto the World stage and presented itself as the voice of reason during the Libyan crisis.
They seem to be doing a lot right.
The Turkish community is the United Kingdom numbers about half a million – about 150,000 Turkish nationals with the rest of Turkish-Cypriot origin. They represent the epitome of integration, whilst maintaining their own traditions as well as contact with their country of origin – and the don’t make a noise about it.
Almost unnoticed, we have our first-ever woman of Turkish-Cypriot origin to be elected to the House of Lords: Baroness (Meral) Hussein-Ece . She’s already making an impact and adding a bit of much-needed administrative experience and glamour to what was rapidly becoming a Westminster rest-home for bilious ex-MPs.
She is a Liberal – but you can’t have everything! Seriously though, the important thing is that in what appears to be a Turkish trait, she is a straight talker – another attribute which has been sadly lacking in the recent political universe.
I was going to say “Turkey is Coming!” – but it seems that it’s already here!
Baroness Meral is on Twitter and very worth following (@meralhece ) because her opinion on a variety of topics is now regularly sought by the media and whenever she can, she shoots from the lip!
This, for example, is a link to her interview today on Radio 4: CLICK HERE
Many of us are already smitten!
Greece and the Deutschebond
Hopefully, Europe is NOT relying on yesterday’s conference call between Angela Merkel, Nicolas Sarkozy and Greek Prime Minister, George Papandreou.
Lets not beat around the bush. The Greek government lied in order to gain entry to the Eurozone. It did it with the connivance of Goldman Sachs who were paid $190 million for their trouble. CLICK HERE.
Euro auditors ought to be in Athens performing Due Diligence in order to make sure that the numbers stack-up and more importantly, that Athens really is making progress and reducing its budget deficit.
The days of “My word is my Bond” are over.
Greece is an economic Basket Case which will be a drag on the Eurozone economy for ever. Historians will also know that Greece tends to make a habit of going bust and defaulting.
The destructive influence of Greece is now causing rifts within Europe and there is now a very real danger of the German government disintegrating.
Finally, empty pronouncements by senior European officials which are designed to manipulate Stock Market prices MUST stop.
The ONLY morsel of common sense was delivered yesterday by Guido Westerwelle, Germany’s Foreign Minister. He said: “….we believe you can’t fight debt in Europe by making it easier to take up debt.”
We all know that economic GROWTH is the answer. That’s something that Greece will not be capable of for years – if ever.
I pointed out a few days ago that it seemed as if there was an orchestrated effort by politicians and bankers to put-out weekly or bi-weekly “Statements of Intent” — purely in order to placate the Markets as well as to postpone the inevitable collapse of the Euro. That means NOT actually doing anything but promising to do something, sometime in the future. It’s the new “Weapon of Choice” for politicians whose ideas have run out.
THIS week is shaping up as a very special example of this comparatively new phenomenon.
Today, the Markets have responded well to yet more wind and wee from a politician. So whose turn was it THIS time?
None other than European Commission President himself – Jose Manuel Barroso!
Let’s have a close look at what he said and maybe ascertain whether his statement actually contains any “doing” words.
He said that he will put forward moves to tackle the Eurozone crisis. “Put forward”? “Moves”? What moves?
He will urge the Eurozone countries to issue joint bonds. “Urge”? “Joint Bonds”? How will he “Urge”?
Unsurprisingly, Italian Finace Minister Giulio Tremonti supports Eurobonds. Italy is vastly over-borrowed – to the extent that its attempt to borrow even more from China was given very short shrift by the Chinese – even though the Italians were offering security.
The fact that George Soros (no less) has backed the concept of Eurobonds was weaved into the equation. Ancient George’s ONLY motivation is to save Uncle Sam – not Greece or Italy.
The main player in the Eurofarce , Germany, is NOT even remotely interested in the Eurobond because, effectively, it with be the “Deutschebond”. German Charity.
Barosso wants a United States of Europe. Pure and Simple.
He went on:
“I want to confirm that the Commission will soon present options for the introduction of Eurobonds.” Soon? How “soon”, Jose? “Options”? WTF?
Jose does NOT give up easily: “Some of these could be implemented within the terms of the current treaty, and others would require treaty changes.” “Treaty changes“, Jose?
That’s lots of meetings and could take years. That might just keep the markets interested!
He really declared his hand when he said that “the measure” on its own was not enough to solve the Eurozone debt crisis. (What “measure”, Jose? So far,we’ve only heard Eurobullshit)
He said Europe needed a “Federalist Moment” to rescue it. He argued that the solution to the crisis would have to involve the “Community method” which presumably, like the Rhythm Method involves someone being screwed. For instance: the Taxpayer and the Investor?!
( Isn’t it amazing how few NUMBERS there are in a statement about fiscal deficits?)
Dans la merde or in der Scheiße?
I just have a look at the European stock markets and on the surface everything appears to be quite normal.
The banks are doing especially well!
Today’s showing in the markets is the most clear indicator so far, as to the utter confusion generated by the intransigence and incompetence of senior politicians.
Today President Nicolas Sarkozy of France and Chancellor Angela Merkel are involved in pointless discussions with Greek Prime Minister George Papandreou. Why pointless? Because they probably all began their telephone conference chat with this afternoon’s communique already written.
Chancellor Merkel has expressed the schizophrenic views of the Eurozone. She has stated that the Eurozone will not allow Greece to default but on the other hand Greece will not secure access to the next 8 billion euro bailout unless new budget cuts are made.
Greece will be running out of cash in about three weeks.
Everyone, understandably, is beginning to feel frustrated and impotent at the pace of the so-called rescue package.
If the Eurozone is serious about the Greek bailout, the cash should be handed over today. That more than anything will placate the markets which must by now be feeling as if they’re on a bad acid trip. The current situation is certainly a candidate for the old 1960s hippie slogan ‘Stamp out reality’.
In reality though, the politicians will wish to leave all options on the table rather than make a move which could be catastrophic. The fact is that whichever move they make, there is bound to be either a national catastrophe or a pan-European catastrophe. More likely both.
That in turn will generate an American catastrophe ; the U.S has been teetering on the edge for many months.
There is only so much time that we can all just stand staring into the abyss.
Currently we are all keeping an eye on Ben Bernanke and the Federal Reserve, because we fully expect them to start printing money at any minute.
In fact we should be looking at the French because it cannot be too long before they make a similar decision – and they will probably ink their printing presses well ahead of the Americans.
If the French go ahead and print money in order to provide a cushion for the French banks against a Greek default and the Greek default overhead anyway, it will be the equivalent of them having unnecessarily dumped billions of euros.
Unfortunately, that’s the ONLY plan which the French government has.
Today, the United Kingdom has announced another 80,000 unemployed between May and July. That is NOT the sign of an economy in recovery. THAT is the sign of an economy still in recession. The official unemployment figure in now in excess of 2.5 million. In fact, the actual number has probably been in excess of 3 million for quite a while.
In recent months there has been a bit of Schadenfreude-induced gloating from the United Kingdom’s senior politicians and commentators in respect of the Eurozone’s woes. That will stop very soon – as our meagre exports dry up because no-one in Europe has the cash to pay for them.
It is not just the Eurozone which is crumbling, it is EUROPE.
It is NOT just the European Economic Class System which is going to be everyone’s downfall. It is NOT because the “HAVES” dictating to the “HAVE-NOTS”.
On a macro level, the vast socio-economic differences within the Eurozone do no more than reflect socio-economic differences within individual states.
They tried an experiment whereby the poor (countries) were expected to compete with the rich and as we should all know by now, this type of “Faux cross-border Socialism” can never work.
There can always be “liberté” and “fraternité” between such disparate states but there can never ever be anything even vaguely resembling “égalité” between the rich and the poor.
In the Eurozone, some are definitely more “égal” than others.
Currently, the more equal are terrified that the less equal will take them down.
(Personally, I believe that Greece will be allowed to default. Glad I kept those Drachmas!)
The Greek Entry.
Last week I predicted that it was Sarkozy’s turn to deliver yet another mealy-mouthed statement. Looks as if it’s this afternoon!
The question is CAN he save the French Banks whilst convincing an increasingly cynical public and sceptical markets that it’s all about saving Greece?
Money Market Funds have been selling French Bank Shares for about a year, during which time they have reduced their holding in French banks by about 50%.
After Sarkozy (or Angela Merkel) tells us that Greece is “doing the right things” or that ” it is making good progress“, it will be interesting to see what the markets make of it all.
The MOST likely outcome of today’s meeting between Sarkozy, Merkel and Greek Premier Papandreou is a statement indicating that Greece needs more time.
The Euro and the Eurozone both need time – another commodity which is fast disappearing.
Today’s summit has an interesting sub-plot. Rating agency Moody’s has just downgraded France’s two major banks. Credit Agricole has been busted down from Aa1 to Aa2 and Société Générale from Aa2 to Aa3.
Once again, this has come as both a surprise and relief to the experts because the downgrades were “not as bad as expected“. It seems that these days, NOTHING is as expected.
For politicians and most economists, these are indeed The Days of Mystery!
The seriousness of not-only the Greek but the entire Eurozone situation is exemplified by the fact that The US treasury secretary, Tim Geithner, will be attending Friday’s meeting of EU finance ministers.
Even the Americans can see that Greece is the No1 domino!
The hard fact is that Greece ought never have been allowed to join the Euro. It was a predictable accident waiting to happen.
As many politicians will attest – especially those who attended boarding school, the “Greek Entry” was always going to be painful.
After three years, the scales have fallen from our eyes and finally, the light has flooded in. It has been long time coming but suddenly – an Epiphany!
The politicians, bankers, economists and even the Central Bank astrologers have absolutely NO IDEA as to how to deal with the gradually building waves of a massive economic crisis which is about to sweep the world. They’ve been gambling that random fiscal and economic measures would somehow provide a solution and make everything well again!
Money has been printed and distributed, bonds have been issued, promises have been made, false political visions have been shared and yet the self-amplifying problem continues to self-amplify.
Some of us finally realised that the Eurozone had run out of ideas when the German authorities temporarily banned “naked short selling” of Eurobonds. The action had absolutely NO effect. However, it did demonstrate that the politicians (who initially blamed the bankers for the pit of shit that they had help to create) were now turning a rheumy eye on everyone’s new bête noire – the SPECULATORS!
Bankers were greedy bastards with large bonuses but now it was the turn of the “casino-banking” speculators. Spit!
In any crisis, it is always a good idea to look for the root or initial cause. In the case of the Euro and the Eurozone it was an ill-conceived plan which , without tighter integration of fiscal policies between states was doomed to failure.
Make no mistake, the increasingly pathetic bleating of the French and Germans in respect of the looming Greek collapse and default has absolutely NOTHING to do with Greece.
It is all about their joint delusive attempt to prevent the inevitable collapse of their banks – which are holding billions in Greek IOUs. Nothing at all to do with Franco-German altruism.
As the French and Germans intertwine, hug each other and panic, their assault on the “speculators” and the markets , although understandable is also ironic. Why? Because eventually, the Western-European begging bowl will be waved at the markets and the “speculators” – in the vain hope that they will lend the impoverished Eurozone BILLIONS so that the sacred Euro cow can be reprieved.
Biting the hand that could feed you is never a good plan but currently, the markets are dealing with increasingly desperate politicians who have painted themselves into a Euro corner with absolutely NO way out.
Euro and Western economies in general are in debt – both in the public and private sectors. Several countries are bankrupt.
The only REAL solution is GROWTH which unfortunately is NOT achieved by insisting that the weakest economies attempt to restore growth through the unusual and meritless medium of The Austerity Plan.
Austerity gains you a lot of points with the rating agencies, makes it easier for you to borrow more but in the long-term, it is NOT a sustainable strategy – as we in the West are ALL about to discover. Overborrowing is what caused the problem in the first place.
The economic affliction is the mire of public and private sector debt and uncompetitiveness into which the weaker economies of southern Europe have sunk.
The cure should be to create an atmosphere for economic growth.
Unfortunately, the generally accepted (unproved but imposed) speculation is to force broken countries to try and balance their budgets and restore economic growth whilst slashing expenditure and demotivating taxpayers through increased unemployment, inflation and the resultant decimation of tax-revenues.
It will NOT be long before the inevitable wake-up call is heard!
Casino economics does not work.
Wondering where real decisions are made? This is a list of attendees at this year’s Bilderberg Conference.
The conference is held annually with about 140 participants. This year the conference was on 11th June at the Suvretta hotel in St. Moritz, Switzerland.
If you scroll down the list, you will see familiar names. The Great Britain delegates’ list is particularly interesting. George Osborne was an attendee for a few years before he became Chancellor.
The list is incomplete because certain delegates requested anonymity.
· Coene, Luc, Governor, National Bank of Belgium
· Davignon, Etienne, Minister of State
· Leysen, Thomas, Chairman, Umicore
· Fu, Ying, Vice Minister of Foreign Affairs
· Huang, Yiping, Professor of Economics, China Center for Economic Research, Peking University
· Eldrup, Anders, CEO, DONG Energy
· Federspiel, Ulrik, Vice President, Global Affairs, Haldor Topsøe A/S
· Schütze, Peter, Member of the Executive Management, Nordea Bank AB
· Ackermann, Josef, Chairman of the Management Board, Deutsche Bank
· Enders, Thomas, CEO, Airbus SAS
· Löscher, Peter, President and CEO, Siemens AG
· Nass, Matthias, Chief International Correspondent, Die Zeit
· Steinbrück, Peer, Member of the Bundestag; Former Minister of Finance
· Apunen, Matti, Director, Finnish Business and Policy Forum EVA
· Johansson, Ole, Chairman, Confederation of the Finnish Industries EK
· Ollila, Jorma, Chairman, Royal Dutch Shell
· Pentikäinen, Mikael, Publisher and Senior Editor-in-Chief, Helsingin Sanomat
· Baverez, Nicolas, Partner, Gibson, Dunn & Crutcher LLP
· Bazire, Nicolas, Managing Director, Groupe Arnault /LVMH
· Castries, Henri de, Chairman and CEO, AXA
· Lévy, Maurice, Chairman and CEO, Publicis Groupe S.A.
· Montbrial, Thierry de, President, French Institute for International Relations
· Roy, Olivier, Professor of Social and Political Theory, EUI
· Agius, Marcus, Chairman, Barclays PLC
· Flint, Douglas J., Group Chairman, HSBC Holdings
· Kerr, John, Member, House of Lords; Deputy Chairman, Royal Dutch Shell
· Lambert, Richard, Independent Non-Executive Director, Ernst & Young
· Mandelson, Peter, Member, House of Lords; Chairman, Global Counsel
· Micklethwait, John, Editor-in-Chief, The Economist
· Osborne, George, Chancellor of the Exchequer
· Stewart, Rory, Member of Parliament
· Taylor, J. Martin, Chairman, Syngenta International AG
· David, George A., Chairman, Coca-Cola H.B.C. S.A.
· Hardouvelis, Gikas A., Chief Economist, Eurobank EFG
· Papaconstantinou, George, Minister of Finance
· Tsoukalis, Loukas, President, ELIAMEP Grisons
· Almunia, Joaquín, Vice President, European Commission
· Daele, Frans van, Chief of Staff to the President of the European Council
· Kroes, Neelie, Vice President, European Commission
· Lamy, Pascal, Director General, World Trade Organization
· Rompuy, Herman van, President, European Council
· Sheeran, Josette, Executive Director, United Nations World Food Programme
· Solana Madariaga, Javier, President, ESADE
· Trichet, Jean-Claude, President, European Central Bank
· Zoellick, Robert B., President, The World Bank Group
· Gallagher, Paul, Senior Counsel; Former Attorney General
· McDowell, Michael, Senior Counsel, Law Library; Former Dep. P.M
· Sutherland, Peter D., Chairman, Goldman Sachs International
· Bernabè, Franco, CEO, Telecom Italia SpA
· Elkann, John, Chairman, Fiat S.p.A.
· Monti, Mario, President, Univers Commerciale Luigi Bocconi
· Scaroni, Paolo, CEO, Eni S.p.A.
· Tremonti, Giulio, Minister of Economy and Finance
· Carney, Mark J., Governor, Bank of Canada
· Clark, Edmund, President and CEO, TD Bank Financial Group
· McKenna, Frank, Deputy Chair, TD Bank Financial Group
· Orbinksi, James, Professor of Medicine and Political Science, University of Toronto
· Prichard, J. Robert S., Chair, Torys LLP
· Reisman, Heather, Chair and CEO, Brookings Institution
· Bolland, Marc J., Chief Executive, Marks and Spencer Group plc
· Chavannes, Marc E., Political Columnist,Professor of Journalism
· Halberstadt, Victor, Professor of Economics, Leiden University
· H.M. the Queen of the Netherlands
· Rosenthal, Uri, Minister of Foreign Affairs
· Winter, Jaap W., Partner, De Brauw Blackstone Westbroek
· Myklebust, Egil, Former Chairman of the Board of Directors SAS
· H.R.H. Crown Prince Haakon of Norway
· Ottersen, Ole Petter, Rector, University of Oslo
· Solberg, Erna, Leader of the Conservative Party
· Bronner, Oscar, CEO and Publisher, Standard Medien AG
· Faymann, Werner, Federal Chancellor
· Rothensteiner, Walter, Chairman of the Board, Raiffeisen Zentralbank
· Scholten, Rudolf,Board of Executive Directors, Oesterreichische Kontrollbank AG
· Balsemão, Francisco Pinto, Chairman and CEO, IMPRESA, S.G.P.S.
· Ferreira Alves, Clara, CEO, Claref LDA; writer
· Nogueira Leite, António, Member of the Board, José de Mello Investimentos
· Mordashov, Alexey A., CEO, Severstal Schweden
· Bildt, Carl, Minister of Foreign Affairs
· Björling, Ewa, Minister for Trade
· Wallenberg, Jacob, Chairman, Investor AB
· Brabeck-Letmathe, Peter, Chairman, Nestlé S.A.
· Groth, Hans, Senior Director, Healthcare Policy & Market Access, Pfizer
· Janom Steiner, Barbara, Head of the Department of Justice
· Kudelski, André, Chairman and CEO, Kudelski Group SA
· Leuthard, Doris, Federal Councillor
· Schmid, Martin, President, Government of the Canton Grisons
· Schweiger, Rolf, Ständerat
· Soiron, Rolf, Chairman of the Board, Holcim Ltd., Lonza Ltd.
· Vasella, Daniel L., Chairman, Novartis AG
· Witmer, Jürg, Chairman, Givaudan SA and Clariant AG
· Cebrián, Juan Luis, CEO, PRISA
· Cospedal, María Dolores de, Secretary General, Partido Popular
· León Gross, Bernardino, Secretary General of the Spanish Presidency
· Nin Génova, Juan María, President and CEO, La Caixa
· H.M. Queen Sofia of Spain
· Ciliv, Süreyya, CEO, Turkcell Iletisim Hizmetleri A.S.
· Gülek Domac, Tayyibe, Former Minister of State
· Koç, Mustafa V., Chairman, Koç Holding A.S.
· Pekin, Sefika, Founding Partner, Pekin & Bayar Law Firm
· Alexander, Keith B., Commander, USCYBERCOM; Director, NSA
· Altman, Roger C., Chairman, Evercore Partners Inc.
· Bezos, Jeff, Founder and CEO, Amazon.com
· Collins, Timothy C., CEO, Ripplewood Holdings, LLC
· Feldstein, Martin S., George F. Baker Professor of Economics, Harvard
· Hoffman, Reid, Co-founder and Executive Chairman, LinkedIn
· Hughes, Chris R., Co-founder, Facebook
· Jacobs, Kenneth M., Chairman & CEO, Lazard
· Johnson, James A., Vice Chairman, Perseus, LLC
· Jordan, Jr., Vernon E., Senior Managing Director, Lazard Frères
· Keane, John M., Senior Partner, SCP Partners; General, US Army, Retired
· Kissinger, Henry A., Chairman, Kissinger Associates, Inc.
· Kleinfeld, Klaus, Chairman and CEO, Alcoa
· Kravis, Henry R., Co-Chairman and co-CEO, Kohlberg Kravis, Roberts & Co.
· Kravis, Marie-Josée, Senior Fellow, Hudson Institute, Inc.
· Li, Cheng, Senior Fellow and Director of Research, Brookings Institution
· Mundie, Craig J., Chief Research and Strategy Officer, Microsoft Corporation
· Orszag, Peter R., Vice Chairman, Citigroup Global Markets, Inc.
· Perle, Richard N., Resident Fellow, American Enterprise Institute for Public Policy Research
· Rockefeller, David, Former Chairman, Chase Manhattan Bank
· Rose, Charlie, Executive Editor and Anchor, Charlie Rose
· Rubin, Robert E., Co-Chairman, Council on Foreign Relations
· Schmidt, Eric, Executive Chairman, Google Inc.
· Steinberg, James B., Deputy Secretary of State
· Thiel, Peter A., President, Clarium Capital Management, LLC
· Varney, Christine A., Assistant Attorney General for Antitrust
· Vaupel, James W., Founding Director, Max Planck Institute
· Warsh, Kevin, Former Governor, Federal Reserve Board
· Wolfensohn, James D., Chairman, Wolfensohn & Company
Bend Over, America!
We have all known for some time that the ongoing banking crisis was originally started by some sort of banker-naughtiness and what we have in common with the vast majority of Bank Directors is that we don’t really understand WHAT happened. But we do know that someone somewhere is guilty and needs to be spoken to very severely.
It was good to hear that the US government via its regulator (Federal Housing Finance Agency), has filed suit against seventeen financial institutions. Specifically, they want answers as to why $200 billion in bad mortgage-backed securities was sold to mortgage companies Fannie May and Freddie Mac.
They made their announcement just as the Stock market closed last Friday afternoon – their timing was exactly what you would expect but nevertheless totally wasted. Today will be the day when their proposed action will shake out on the markets. Fortunately for the stock prices, the Swiss have moved to protect their own currency which has had a small positive impact on equities.
So what did the bankers do?
Imagine that a bank grants a $100,000 mortgage which results in the borrower repaying say, $1000 per month. Now imagine 1000 such mortgages. If the mortgages were pooled , you’d have a “product” which generates an income $1,000,000 per month. Then you sell shares in the product to investors such as other financial institutions. Here comes the good bit: You omit to tell the institutions buying shares in your new product that the mortgagors (the borrowers) have absolutely no chance of making the $1000 per month repayments. Thus, the banks sold and also invested in worthless products because they could not generate any income.
These were the famous Sub-prime Bonds. The term “sub-prime” describes the borrowers – the so-called NINJAS to whom the banks lent billions. NINJAS? No Income, No Job or Assets.
(That was a very simplified explanation but it does demonstrate the principle of dealing in debt – you create debt by lending and then sell shares in it).
Embarrassed financial institutions then either sold-on these “investments” and/or attempted to hide their mistakes through the medium of creative accounting, by keeping these items “off balance sheet”.
The US Government’s move on the banks is perfectly justified but any legislation will take years and so leave the banks with permanently damaged balance sheets and income.
The other downside will be that banks, having been bitten once by their OWN greed are unlikely to ever lend money for house purchase as aggressively ever again.
The Fed now fully expects the banks to pay for mortgages which they granted five or six years ago.
Fannie May (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) guaranteed most of the dodgy mortgages and are currently the subject of a Federal takeover and have been placed into conservatorship, which in US law is a form of temporary nationalisation
US banks have so far benefited from a $700 billion Federal bailout but nevertheless both Obama as well as the Federal Reserve have been accused of being too easy on the banks.
In fairness to the American banks, most of the money that they were handed by the Fed has been repaid. However, the rescue of Fannie and Freddie could cost the government as much as $350billion.
To add to the banks’ headaches, they are not only being sued by the US Government but also by many private investors who have also lost money.
So, at a a time when the banking industry is trying to rebuild whilst at the same time being urged to lend, it is having its share values decimated. Then there’s the inevitable and customary Lawyer Bonanza which could add BILLIONS more to their expenses.
The principle of the legal actions is simple: The banks screwed-up through near-fraudulent activities and pushed all Western economies into recession.
Someone HAS to pay.
The FHFA claims that banks were negligent and misrepresented the mortgage-based bonds they were selling because of sloppy underwriting, that is to say, they did NOT carry out proper checks on the people to whom they were lending money.
That is going to be a very difficult defence for the banks.
The FHFA further argues that the Sub-Prime Bonds should NEVER have been marketed because the underlying “assets” did not conform to normal investor criteria. Yet another difficult position to defend.
Meanwhile, some bankers are attempting to shift the blame to Fannie May and Freddie Mac, while others are hoping to settle the claims in order to limit litigation. Our own RBS intends to fight any action. RBS is being sued for over £30 billion.
The most sensible outcome will be for all lawsuits to be settled. That would generate another outflow of cash from the banks but would also draw a firm line under the shenanigans leading up to the 2008 crash.
In the United States, the banks are not just being sued by the government for marketing questionable financial products. They are also being sued in respect of bad foreclosure practices and evictions as well as lawsuits over mortgage debt losses.
Such bank payouts will reduce and weaken their capital levels – further harming banks’ ability to lend.
With politicians everywhere pointlessly (and theatrically) screaming for banks to enable economic growth as well as stimulate housing markets, the road to full economic recovery looks more impossible than ever.
Over here in the UK, we are still awaiting ANY indication from the government of ANY litigation.
So far, the best that we can do is PPI – but even after being TOLD to pay out, our banks continue to drag their feet and not distribute refunds as fast as they might.
It seems that here in the UK, the promise and lure of fat post-Westminster banking directorships is far too strong – as well as the rather ambiguous relationship between our bankers and politicians.
Nowadays, even on the world stage, politicians become bankers and bankers become politicians – especially in Europe.
It’s the ONLY logical reason for our politicians to sanction not-only immunity to our bankers but even after such catastrophic failures, to continue rewarding them with the glittering prize of the over-inflated, stock-market-generated bonus.
Between Gold & a Hard Place.
2011 will be remembered as the year when the gold price really took off. It will also be remembered as the year of the PIIGS.
That’s Portugal, Italy, Ireland, Greece, Spain.
So what would happen if we combined the two? What would happen if the PIIGS decided to sell their gold in order to clear their debt? (As recently suggested by Germany’s Vice Chancellor).
And while we’re at it, let’s get away from expressing sovereign debt in percentages of GDP. No-one understands that anyway.
Let’s be different and look at it all in cash terms:
The total gold holding of the PIIGS is about 3250 tonnes. At current prices that’s worth about 132 billion euros. That’s 132,000,000,000 euros.
Unfortunately their combined outstanding sovereign debt is about 3,300 billion euros. That’s 3,300,000,000,000 euros
For instance, Portugal has about 390 tonnes of gold, currently worth about 15 billion euros. That is about 20% of its latest bailout package.
The biggest Eurozone gold hoarder is Italy. It is also the world’s fourth-largest owner of the metal . Italy’s 2,450 tonnes is worth about 95 billion euros at today’s prices. That’s 95,000,000,000 euros.
Italy’s government has $2.45 trillion dollars in debt. That’s 2,450,000,000,000 euros.
It is estimated that as a result of inevitable defaults, banks will LOSE £200 billion euros. That’s 200,000,000,000.
Hence all that nervousness around bank shares.
It’s all theoretical anyway because gold is not the property of the PIIGS’ governments to sell. Gold is part of a country’s Foreign Exchange Reserves which are managed by central banks and cannot be used to finance the public sector – except apparently, in certain Middle Eastern states.
What a mess!
Finally, in case you’re still wondering why the politicians have not actually put into place a plan to sort-out the debt-related issues, it is because they don’t really know what to do. Plus, they are playing the NOMW game.
NOMW? Not On My Watch.
President Sarkozy has an election to fight in 2012 and Bundeskanzlerin Merkel has one in 2013.
Can they possibly keep it all going until then?
Banks? It won’t be long!!
When the big boxes of money arrived in Libya yesterday, I bet that there were several European states who were slavering and wishing that someone would send them a box too!
Especially Greece. Plus other states who don’t really want to admit it!
Greece has been back to the well for another 109 billion Euro bailout. That bailout could well be the last one because the well is now well and truly dry.
Even quiet and up-to-now compliant Finland is becoming a little bit fractious and will not contribute any more money to the bottomless pit that is Greece without a Charge on Greek assets. The Finns want collateral – and who can blame them?
The German electorate and many politicians are also beginning to voice their displeasure at having to hand over vast volumes of cash to the Greeks, no doubt followed by others.
Quite rightly, German Chancellor Angela Merkel insists she won’t be “blackmailed” into backing Eurobonds and the Germans have every reason to be worried! If they put their national balance sheet at risk just to support countries like Greece and Ireland, Germany’s borrowing costs would be driven up by an unsustainable additional 50 billion euros!
The simmering Eurocrisis could explode at virtually any moment because the politicians’ “Let’s wait and see” tactics have failed.
That is what sent European bank stocks lower today. They tanked!
The other day, Warren Buffett threw $5 billion at “near-death” Bank of America. In spite of Warren’s munificence, the bank has now been asked to sort out any potential problems. The bank’s fire sale continues with them now trying to offload their non-profitmaking Countrywide lending unit.
Does the Fed know something that we don’t?
America and Europe do NOT have a liquidity crisis! It is a MAJOR SOLVENCY problem.
Banks do not have enough capital to absorb losses on all the European sovereign debts that they are now loaded down with.
Pan-Western bank failures are now inevitable!!
The politicians? They will be doing what they do best.
Observing, having meetings and telling us not to worry.
p.s Sorry of this post does not make total sense. It was typed in a hot un-airconditioned dump on a Blackberry and then emailed for tarting up. But hopefully, you get the gist.
Syria and Hilary.
The reason NATO is showing no interest in direct assistance to Syrian rebels is because they have requested NO foreign interference.
They’ve seen the results in Afghanistan, Iraq, Croydon and now Libya. They are obviously very happy to trash their own country without NATO’s help.
Statement from Hilary Clinton:
Go for Gold!
Eighteen months ago, I predicted that during 2011, gold would hit $2000 per ounce. So far, it has I topped-out at just over $1900 and then pulled back to about $1750
There was a 10% price drop in three days! That appears to have frightened some but has also done a lot of good because gold has been hugely overbought in the last few months and was due a correction.
This correction is likely to continue to well below $1500. I am therefore no longer predicting $2000 per ounce.
It will rise to above $4000!
Within a few months, Ben Bernanke’s “do nothing , wait and see” policy will no longer be viable and the American economy will begin to crumble, closely followed by a mega-slide in Euro stocks.
At that point, those who do not become jammed in the exits will once again rush for gold – at the point when Bernanke and other Finance Ministers begin to oil the money-printing presses for more empty Mickey Mouse “quantitative easing” money!
Although we are already in a Bear Market, there will still be unexplained rallies, falls and adjustments but thanks to politicians who have lost the art of decision-making, gold is still the way to go.
p.s. this is a fitting time to once again pay tribute to our former Prime Minister, Gordon Brown.
States of the economies.
The next economic and banking collapse is going to make the 2008 crash look like a slight adjustment.
Once-powerful Western economies are booking quarterly GDP growths of 1% or less. For the non-mathematicians, that is within a rounding error of ZERO growth. So when you hear a Chancellor deriving solace from an economy achieving a growth of say 1.5% which was “better than the expected” 1.3%, we know that they and we are in trouble.
Politicians and central bankers have exhausted their entire repertoire on a THREE YEAR attempt to put their economies in order whilst at the same time propping-up a broken banking system. None of it has worked!
They all know that the tsunami is coming but there is no high ground to run to.
European politicians are rushing about, turning inaction into an art-form whilst economies and banks are merely standing on the trapdoor and holding hands hoping that somehow all this will go away and the entire system will somehow self-right. Their impotent prevarication can (and will) only result in two things – collapse and bankcrptcy.
Bankruptcy of governments, business and of private individuals.
Last week we had the very first example of a banker who more-or-less threw-in his hand, admitting that there was little-else that money could do. The Federal Reserve’s Ben Bernanke had the choice of either printing more empty dollars or not. The so-called Quantitative Easing 3 would have increased US inflation and made Investment Bankers happy. It would have enabled the bankers to further plunder the markets and create more of those illusory profits. They’ve been operating on that basis for two years now and perhaps Bernanke decided that enough was enough.
Mainlining money is never the long-term solution – it’s too addictive!
However, No U.S Quantitative Easing has simply accelerated the collapse of the United States economy.
Yes! It’s as clear-cut as that.
In the end, Bernanke took a leaf from the politicians’ book and decided to do nothing but sit and wait. NO mention of QE3 and no steps to promote economic growth.
He has decided to kick the the whole thing forward yet another month in the vain hope that Congress can deliver the next promise. THAT’S what you call a long-shot!
For the moment both Europe and the USA appear to be quite content to pause and doze in the middle of their joint economic tightrope until someone else (as yet unknown, probably China) comes along to coax them out of their torpor.
Unfortunately, America and Europe are entwined in such a way that if Europe falls, so will the USA.
We used to dismiss the PIIGS nations as the ones heading for the econo-slaughter house — Portugal, Italy, Ireland, Greece and Spain. Their problem is very simple – they have debts so huge that there is absolutely NO prospect of them ever being repaid. Their politicians are also waiting for something miraculous to happen sometime in the future.
The Euro saviour WAS supposed to have been the “strong man of Europe”, the one with the largest economy – Germany. Unfortunately,Germany has also hit the economic buffers. It’s growth in this year’s second quarter was just 0.1 percent!
France, Europe’s second-largest Euro-economy, has also ground to a halt. President Sarkozy’s has followed the UK route with huge budgetary cuts. That certainly looks good on paper and may lower deficits but will produce an impossible drag on an already-waning economy. THAT will inhibit growth and ultimately lower tax revenues – which will inevitably result in higher taxation.
The United Kingdom’s Chancellor can take the credit for showing everyone else the way to economic stagnation through the triple whammy of Government budget cuts, rising inflation and plunging consumer confidence. EXACTLY the conditions to discourage anyone from risking any sort of entrepreneurial initiative or borrowing from the banks to fund commercial expansion. That is, if the banks weren’t continuing to sulk.
Europe is frantically cutting spending in a desperate attempt to postpone the inevitable debt meltdown. Meanwhile Washington continues to rack-up up its national debt at the eye-watering rate of more than 10 percent per year.
All that America has achieved so far is to have its credit-rating slashed by Standard & Poor’s while its local governments, states and cities frantically try everything from releasing prisoners early to selling off the family silver.
The ENTIRE Western economy has ground to a shuddering halt with the weird unwanted bolt-ons of climbing inflation and consumer confidence at near an all-time low.
So what IS the solution?
The solution is comparatively simple and should be attempted in stages.
The first would be to reconcile ALL sovereign debt.
Secondly, the markets and banks would collapse – but at a controlled rate.
Thirdly, it should be admitted that the Euro and the Eurozone were both very bad ideas which developed into a grotesque sacred cow.
Then we could ALL start again.
The alternatives are greater budget shortfalls, greater deficits, even faster growths in government debt, followed by catastrophic collapses and Depression.
The former all require political decisions of such magnitude that even the politicians have come to realise that we do not have anyone with even remotely the courage to raise his or head above the parapet to take control.
So for the moment, it seems as if we’re knowingly headed for an economic holocaust.
So, unless the politicians wake up soon, we need to create hell and not wait for it.
From “Brother, Can You Spare a Dime,” lyrics by Yip Harburg, music by Jay Gorney (1931)
Survival of the Weakest?
Usually when there is any battle between two factions, the stronger of the two wins. It triumphs because there are more of them, they are better organised or have better equipment.
This is NOT the case in Libya. Without the NATO intervention, there is absolutely NO WAY that the so-called rebels would have conquered Gaddafi’s army. NATO had to provide air support and effectively fight most of the battle as the rebels careered up and down the road in their Toyota pickups firing their guns into the air and posing for macho pictures.
So what happens now? Does NATO continue to hold the rebels’ hands? Once NATO backs off and the Gaddafi supporters wake up, they will soon realise that it would not take much of an effort to overwhelm the former rioters.
There are scores to be settled, relative seniorities to be re-established and government coffers to be plundered.
Tribal leaders will want to make sure that their people are heard at government level. Women will want to continue to be heard and respected.
For instance, it is only since 1969 that women’s rights have been on the agenda. Under Gaddafi’s predecessor King Idris, even the education of women was frowned upon and positively discouraged.
Without NATO, the rebels who appear to have Allah (but more importantly, NATO) on their side are a bit like the bespectacled playground wimp who has been adopted by the school bully. He can say and do whatever he likes to his enemies but only for as long as the bully is behind him. Otherwise, he’s in big trouble.
If , like me, you have always had a feeling that there has been something missing from the whole Get-Gaddafi production – apart from hubcaps – it was a total lack of any expression of idealism, binding ideas, political concepts or the future.
The rebels do not have common political beliefs. All that they have is a common enemy. THAT is what has been holding them together for six months.
Once Gaddafi is gone, the glue which held the rebellion together will be gone. There’s no stronger bond than that provided by fear or hatred of a common enemy. Then, new enemies will be sought. Unfortunately the new enemies will be former neighbours.
As I have said before, this has NOT been about the D-word (democracy). This has been about power.
Power is OK if you genuinely want to do something with it – but it looks increasingly as if the Libyan Islamists are becoming the most influential group within the National Transitional Council. That does not bode well for “democracy and freedom” – especially for women.
It looks as if the school bully may have to stay-on much longer than has been anticipated.
Even post-euphoria, the “conquering” rebels will have over-high expectation levels. Within weeks, we should fully expect to see demands for better living conditions, more income and lower prices. The D-word will be consigned to the slogan drawer from which it should never have been taken and the Mullahs will slowly seep even further into Libyan society.
Those flags that everyone in Libya seems to be waving – the plain green Socialist Arab Peoples Gaddafi-supporters’ flag, versus the rebels’ 1951 Independence tricolor – where have they all suddenly appeared from? It’s as if boxes of flags magically materialised out of thin air!
Now what was it I spotted on one of the flags? It looked like a maker’s name…must have stood for Created In Algeria.
Can’t be! What a coincidence!
They’ll know what to do once the post-Gaddafi explosions start.