Tuesday, November 30, 2010
By Jason Overdorf
November 27, 2010
The fight battle against opium in Afghanistan is pushing the problem into Nepal....
KATHMANDU, Nepal – The southern plains of Nepal, which share an open border with India that stretches hundreds of miles, have long been a haven for marijuana farmers.
But as U.S.-led forces strike back against opium growers in Afghanistan, demand from India has turned the Terai region of Nepal into a burgeoning hub for the opium trade.
"Till now, there are no big gangs like in Mexico or Colombia. They are small farmers," a senior police officer told GlobalPost. "But tomorrow, it will be organized."
Once restricted to small pockets in the Parsa and Bara districts, this season’s poppy cultivation was prevalent in 25 of 82 villages, accounting for more than 1,500 acres of farmland. For the worldwide opium trade, that's nothing compared with the hundreds of thousands of acres devoted to poppy growing in Afghanistan — which still accounts for 90 percent of the world's supply, according to the United Nations.
But the new threat is nevertheless a major headache for officials in India and Nepal who are concerned about the spillover effects of the illegal trade — including an increase in organized crime and better financing and arms for local insurgent groups.
"My experience is that the trend is increasing," the police officer said. "If you go three or four years back, it [opium farming] was only in Parsa, but now it has spread into Bara and other districts."
According to the Kathmandu-based police officer, who asked not to be named because of restrictions on talking to the foreign media, the marijuana trade flourished in this area because of a power vacuum created during Nepal's 10-year civil war. Although the war ended in 2006, higher profit margins have tempted the farmers further into the opium business, while local corruption and central government malaise prevents any meaningful efforts at halting it.
"We have known [for some time] that even law enforcement officials and other administrative officials and local politicians – all of them profit from this business," the police officer said.
The latest World Drug Report from the U.N. Office of Drugs and Crime ranks India among the largest consumers of heroin in the world. Nepalese law enforcement officials said the demand creates a back-and-forth trade in raw opium and low-grade "brown sugar" between the two countries, whose citizens are allowed to cross each other's borders without a visa — and often without any kind of identification at all.
On the Indian side, Bihar is one of India's least developed and (until recently) worst-administered states. And in Nepal, though peace has returned, there's hardly a government at all.
After the end of the civil war, Nepal abolished its monarchy. Elections two years later installed Pushpa Kamal Dahal, the leader of the Maoist rebellion, as prime minister of the new republic. But since the war ended, a sometimes violent ethnic identity movement has begun. Prachanda and the Maoists have quit the government, and legislators have failed to agree on a new constitution —leading to a crisis of instability in which the bureaucrats, police and politicians of the hinterland are left to their own devices.
In recent months, for example, the country has been in limbo following the resignation of Prime Minister Madhav Kumar on June 30. After legislators failed to form a new government despite 16 rounds of parliamentary elections, the interim administration faced a funding crisis until last week because no national budget had been approved.
Though the local trade is small compared with global statistics, Nepal is a small country, and the intersection of armed insurgents and drug traffickers is already emerging to blight its southern plains.
With a veritable alphabet soup of rebel groups operating in the area, kidnapping and murder is rampant. And, as a series of executions of school teachers in recent years shows, nobody is safe from the mayhem.
"Where insurgencies are flourishing, opium cultivation is encouraged," said the police officer. "Now the international security forces are concentrating [on interdiction efforts] in Afghanistan, so we suspect more opium cultivation will be shifting toward Nepal."
For local farmers — and, often, the police — the profits are simply too big to pass up. According to local reports, a fertile acre yields between 3 and 9 kilograms of opium per year, and even the unprocessed opium brings $800 to $1,000 a kilo from traders in India, where illegal processing laboratories speedily turn the raw product into morphine and heroin, which sells for as much as $90,000 a kilo.
And that means payoffs are easy. It costs less than $10 an acre to convince the police to look the other way.
Officials say they're doing as much as they can, and it's impossible to control the trade when virtually every field of sugarcane has a poppy crop hidden in its center. This year alone, the police have destroyed 270 hectares of poppy fields, the Kathmandu Post reported, quoting the chief district officer of Bara as saying, “We will charge anyone who’s found to be cultivating or transporting opium.”
Yet the crime statistics are not encouraging. Not a single farmer has been charged with poppy cultivation in the district this year, though police said Bara alone must have produced nearly $7 million worth of opium this year, according to the Kathmandu Post.
Anil Giri contributed reporting for this article.
Editor's note: This story was corrected to remove the names of the Madhesi Janadhikar Forum (MJF) and Terai Madhesh Loktantrik Party (TMLP), which were incorrectly identified as rebel groups in the original version....
Coping with the aftermath of a massive scam
Nov 2011 | DELHI |Votes scandal adds to Manmohan's woes
After a series of corruption cases, WikiLeaks cables revealing that India's United Progressive Alliance government bribed lawmakers to pass a 2008 confidence vote have further damaged Prime Minister Manmohan Singh. Though he is widely viewed as incorruptible, the public is tired of his weak response to scandals and reluctance to punish officials.
- Sudha Ramachandran (Mar 23, '11)
Welcome to the scam capital
Multi-billion dollar scandals in India such as the 2G telephone license and Commonwealth Games scams this year are only the tip of graft riddling the system. The Supreme Court's high-profile attempt to prosecute the cases indicates it is finally strong enough to stare down the executive and bring a modicum of justice. However, the courts cannot act as parliament and police.
- Gautaman Bhaskaran (Mar 23, '11)
Even Manmohan Singh has been tarnished....
Japan's nuclear disaster spooks India
India's nuclear agency has defended existing reactors and planned new plants as Japan's Fukushima Daiichi plant teeters towards meltdown, claiming safer designs and locations ensure they will withstand earthquakes and tsunamis. The disaster, though, has reawakened fears over accident preparedness, as well as over "unproven" technologies to be implemented at a proposed plant set to become the world's largest.
- Sudha Ramachandran (Mar 16, '11)
SONIA GANDHI, the head of the ruling Congress party, laments that India’s “moral universe” is shrinking, as newspapers fill with ever more galling cases of political corruption. Manmohan Singh, the prime minister, says he feels like a schoolboy facing a series of agonising tests as scandals break one after another. Ratan Tata, head of the Tata Group, hints that the scourge is hurting the economy; officials’ expectations of bribes, he said, put him off launching a domestic airline. http://www.atimes.com/atimes/South_Asia/MB24Df01.html
It is tempting to hope this “season of scams” will concentrate the minds of India’s leaders. This month Congress sacked two prominent officials over graft. Suresh Kalmadi, who oversaw the Commonwealth games in Delhi in October, was sent running on November 9th as evidence of dubious contracts emerged. On the same day the party also toppled Ashok Chavan, chief minister of Maharashtra state, over a housing scam. His relatives and associates had taken flats in a new tower block that was supposedly set aside for veterans and war widows...
The fallout from the dodgy sale of 2G mobile-telephone licences nearly three years ago will be much worse. On November 14th Mr Singh at last forced a coalition ally, Andimuthu Raja, to quit as telecoms minister. Mr Raja had refused to auction the licences, preferring to dish them out in an underhand and chaotic way, awarding 120 in a single day. Favoured companies bought permits for a song. In the process, the state may have forfeited revenues worth a staggering 176,000 “crore” rupees (a crore is 10m: almost $40 billion in all), to judge by their resale value and by the sums raised by the auction of 3G airwaves.
Even Mr Singh, who is generally seen as a saintly technocrat floating above the fray, has been dragged down into the muck. Most unusually, the Supreme Court chided him last week. His sin was to act too slowly against his coalition partner. Congress, lacking a majority, relies on Mr Raja’s party, the DMK, for parliamentary support.
The opposition Bharatiya Janata Party (BJP) scents blood. It has blocked parliament to force a public inquiry into the 2G affair. More than 20 years ago a similar investigation seemed to show that a Congress government was bribed by Bofors, a Swedish artillery supplier. They lost the next general election.
But Congress retorts that the BJP’s record is no cleaner. It has been trying to show its resolve against corruption by pushing for the resignation of one of its own, B.S. Yeddyurappa, the chief minister of Karnataka state. He stands accused of giving away public land and taking money from a mining firm. Yet on November 24th he defied the BJP’s national leaders and stayed on, casting doubt on the BJP’s credibility in any fight against corruption....
The ex-boss of an anti-graft commission, Pratyush Sinha, threw his hands up in despair in September, saying his job was thankless and lamenting that increasingly materialistic Indians were becoming “utterly corrupt”. His complaints were writ large this month in a report by an American think-tank, Global Financial Integrity, which suggested that since 1948 India had lost over $460 billion in illicit financial flows, much of it through corruption.
The report concluded that the problem would worsen as the economy grows and incomes become more unequal. The moral universe may be getting smaller but, despite the shifting of a few high-profile figures, it seems that India is ready to do little more than shrug....
Miserly Indians see the light
A recent trip to India by American billionaire-philanthropist Warren Buffet threw a harsh spotlight on the contribution being made to the poverty and inequality-stricken society by corporate India and the wealthy. While philanthropy has been part of the Indian psyche and culture for centuries, such kindness has been eclipsed in recent years by ruthless ambition to amass individual wealth.
- Gautaman Bhaskaran (Mar 29, '11)
By Dr Bharat Jhunjhunwala
The stand-off between United States and China regarding undervaluation of the yuan can be understood by an example. The village landlord was buying milk from the milkman. Land reforms led to reduction of the landlord's income and it became difficult for him to pay for the purchase of milk. Instead of reducing his consumption of milk, the landlord wrote and gave promissory notes to the milkman and continued to consume large quantities of milk as previously. In this way large amounts of promissory notes were accumulated by the milkman. The landlord then began to feel threatened that the milkman will demand payment of these notes and may seek control of his grand mansion. To escape from such an eventuality the landlord accused the milkman of selling his milk cheap; promoting excess consumption of milk in the landlord's household and thereby pushing him into indebtedness. Obviously, the landlord's accusation is false. Instead of reducing his consumption according to his reduced income, he is accusing the milkman of selling milk cheap.
The stand-off between America and China is of similar nature. America was importing consumption goods like toys, shoes and electronics from China and exporting hi-tech goods airplanes, satellites and computer servers. All was well. Then America launched wars in Iraq and Afghanistan and encouraged its citizens to borrow and buy housing. America could not earn enough from exports of its hi-tech goods to bear these expenditures. Unable to meet its ends meet, the American Government issued Treasury Bills to foreign investors and raised the money for these expenditures. Large amounts of these T-Bills were purchased by the Bank of China. In this way America continued to export less and import more. It incurred a large trade deficit. This sale of US T-Bills and other American property continues unabated today. America is becoming hugely indebted. Its economic sovereignty is threatened. China can sell these T-Bills in the market and cause their price to decline. This will lead to an equally steep reduction in the price of the dollar and cause a collapse of the American economy. Thus America is putting pressure on China to revalue the yuan so that Chinese goods become expensive in the American market; American people consume less Chinese goods and the trade deficit is controlled.
The exchange rate of yuan has an important bearing on the price of Chinese goods in the American market. Presently one US dollar is exchanged for about six yuan. Say, the cost of production of pencils is similar in both America and China. American companies sell six pencils for a dollar while Chinese companies sell one pencil for a yuan or the same six pencils to a dollar. The American consumer may buy six American or Chinese pencils for a dollar. Now, let us say, the price of yuan is reduced and one can get eight yuan for a dollar instead of six at present. Now the American consumer can get eight Chinese pencils for a dollar against only six American pencils. Chinese pencils have become cheap and Americans will consume more of them. All Chinese goods have become cheap in the American market similarly because of such change in the exchange rate. American factories have started to close down. Thus America is asking China to increase the price of yuan so that the trade balance is reduced and American economy is saved.
The trade balance is automatically settled in normal circumstances. Say China exports more and imports less. China will receive large amounts of dollars from exports while lesser amounts will be used in paying for imports. There will be an excess supply of dollars in the Chinese foreign exchange market. This will lead to a reduction in the price of dollar vis-à-vis the yuan. American goods will become cheaper in China and China's imports will increase. Simultaneously, Chinese goods will become expensive in America and their exports will decline. In this way the trade balance will be attained.
We must understand the resolution of G-20 that exchange rates should be allowed to be determined by the market in this background. Truly, the exchange rate of dollar and yuan is determined by the market even today, exactly as it is determined in India. However, the Bank of China manipulates the exchange rate by intervening in the foreign exchange market and does not allow the yuan to rise. Bank of China buys the dollars when export incomes are large. This leads to reduced supply of dollars in the foreign exchange market. Correspondingly the price of dollar increases and that of yuan remains low. Bank of China uses these dollars to buy T-Bills issued by the American Government or other property in the United States. In other words, exchange rate of dollar and yuan is already determined by the market as resolved by G-20. Problem is that the market-determined rate is being manipulated by Bank of China by purchase and sale of dollars in the foreign exchange market.
Real question, therefore, is whether Bank of China may purchase and sell dollars in the Chinese foreign exchange market or not? It seems issues such as foreign investment, maintenance of foreign exchange reserves and purchase of foreign currency for the same, level of domestic money supply and similar issues fall squarely within the ambit of a sovereign government. Remember that four years ago our Reserve Bank of India had made precisely such an intervention when the rupee was rising and our exporters were facing problems. RBI bought the dollars and prevented them from entering our foreign exchange market. This action of the RBI was called ‘sterilisation’ i.e., excess dollars were sterilised and made impotent to disturb our foreign exchange markets. Bank of China has adopted precisely such a policy. It matters little that RBI used this policy instrument for a short while Bank of China has been using the same instrument for years. The basic question of sovereignty does not allow making such fine distinctions. It is for a sovereign government to decide whether to buy dollars for one month or one decade. G-20 has no locus to interfere here.
America should reduce the wages of its workers in order to reduce the cost of production of its goods and to make them competitive in the global market. America should stop selling T-Bills and impose restrictions on sale of shares and property to foreigners. America should reduce domestic consumption to levels that are commensurate with its income. These steps would lead to elimination of that country's trade deficit. Correspondingly the trade surplus of China will also reduce. America is encroaching on China's sovereignty instead of taking steps to set its own house in order. This is like the landlord asking the milkman to increase the price of milk sold by it instead of stopping the writing of promissory notes....
France, Ireland and Hungary Seize Pensions As Part of Move By Governments to Use Long -Term Assets to Fill "Short-Term Deficits"
Effectivement, nous sommes dans une crise économique et financière très grave dans un contexte de mondialisation où la Vieille Europe sénile ne fait plus le poids vu son manque de compétitivité en général et son incapacité à se réformer ou encore à innover (en termes aussi bien scientifiques que de gouvernance). Tout passe et doit passer absolument par l'Etat. Cette crise fait peur à beaucoup, c'est normal. Mais le discours général réclame plus de "solidarité", donc plus de social et donc encore plus de socialisme avec encore plus de fonctionnaires vu qu'il faut encore plus de contrôle et d'emplois fictifs. Le "encore" est voulu ici, car dans ce rayon, on a déjà donné et payé très cher. Ne faudrait-il pas simplement aller dans le sens exactement inverse, càd. enfin laisser la population se débrouiller elle-même car on n'est jamais aussi bien servi que par soi-même. C'est surtout plus une question de bon sens que d'idéologie ou de libéralisme soi-disant sauvage. Par contre, nous en avons soupé du socialisme sauvage. Posez-vous ces questions: aimez-vous payer des impôts à la française? Etes-vous satisfaits des "services" publics? Etes-vous heureux dans une société négative qui rabotent les libertés (propriété privée, apprendre, s'informer, entreprendre et gagner) et nivèle par le bas autant qu'elle le peut? Trouvez-vous normal que l'argent n'ait plus de valeur? Trouvez-vous normal que le mérite n'ait plus aucune valeur et que la prise de risque ne soit pas récompensée? Si la réponse a toutes ces questions est NON, alors le besoin de changer et de faire changer le système étatique étouffant est enfin arrivé. Malheureusement, il est déjà beaucoup trop tard pour envisager la moindre réforme sensée. Tout s'est comme auto-bloqué. C'est pourquoi il faut attendre que le régime socialiste à l'européenne s'écroule pour de bon et j'espère qu'il en est à son dernier souffle.
Au cours des trois premiers mois de 2011, la dette française s'est – encore !… – accrue. Et elle atteint plus de 1’646 milliards d'euros, soit plus de 84% du Produit Intérieur Brut français .....
Un nouveau record. Concrètement, la dette a augmenté de près de 55 milliards d'euros durant les trois premiers mois de l'année 2011.
Ces chiffres constituent un nouveau record d'endettement dans un pays officiellement gouverné par la « droite » (je n’ose donc pas imaginer ce que serait l’ampleur du désastre avec un (e) socialiste à l’Elysée en 2012…).
L’appareil de l'Etat et la Sécurité sociale sont les principaux acteurs de cette augmentation. Comme d’habitude depuis plusieurs générations. L’augmentation de la dette française, fin 2011, atteindra 200 milliards d’euros.
Ce qui portera la dette totale française à plus de 1'800 milliards d’euros. Et peut-être même 2'000 milliards d’euros, car l’ensemble de toutes les dettes pour 2011 n’a pas encore été consolidé. Pour un pays qui compte 65 millions d’habitants, cela commence à faire beaucoup.
Merci Madame Lagarde.
Merci Monsieur Baroin et le Mossadnik Sarkozy Bonaparte.
En 4 ans, la dette a explosé comme jamais. C'est le plus mauvais bilan depuis....depuis quand ?
Il aura fallut attendre l'élection d'un faux conservateur-libéral mais vrai keynesien Etato-bonapartiste pour réussir cet exploit !
Voici un bilan comparatif remarquable et terrifiant par la banque Natixis. Accrochez vos ceintures, les fondamentaux de l'économie française sont pires que ceux de l'Italie, la Belgique et l'Irlande. La France est de facto un Piigs....
Verdict de Natixis ? au vu de sa compétitivité, de sa capacité d'innovation, de son endettement et de ses perspectives de croissance, la place de la France se situe avec ceux du club med....
Bonne chance au FMI, avec Madame Lagarde, qui cite volontiers Mao Ze Dong dans ces discours.
A propos d’étatisme, je lis, sous la plume de Jacques Garello , que « La France mène une croisade vigoureuse pour sauver l’Etat, et souhaite une Europe politique centralisée, dirigiste et protectionniste. Gageons que beaucoup de nos partenaires se rallieront à une autre vision de l’avenir européen et mondial. Alors l’Etat français devra à son tour se démettre ou se soumettre ».
Par ailleurs, rappelons qu’il y a quelques temps, ‘Marianne’ révélait un rapport intermédiaire de la Cour des comptes sur les pratiques de Louis Schweitzer, président de la Halde de 2005 à 2010. La Cour relevait une absence de contrôle, des marchés passés à la limite de la légalité et une opacité dans les opérations financières. La Cour signalait, en outre, le coût des dépenses de communication, et, le loyer, de 1,8 millions d’euros (!) en 2009, payé par la Halde ....
Et puisque nous abordons le sujet des hausses et augmentations, sachez que depuis aujourd’hui, 1er juillet 2011 les allocations chômage augmentent de 1,5% ; les prix des billets de trains SNCF augmentent de 2,5 % ; les forfaits Pass Navigo augmentent de 2,7% ; les tickets de bus passent à 1,90 euro (augmentation de +5,5%).
Le carnet de 10 tickets passe à 12,5 euros (augmentation de +4,2%) ; pour l’électricité, la facture des ménages augmente de 1,7% ; et enfin, le prix du timbre, pour les envois de lettres de moins de 20 grammes augmente de deux centimes, passant de 0,58 à 0,60 centimes.
Autre gouffre financier, les 4,6 milliards d’euros que coûte, à la France, chaque année, l’immigration clandestine, selon une étude réalisée par l’universitaire et expert international en sciences humaines, Jean-Paul Gourévitch....
Les députés et sénateurs français ont décidé de relever l'impôt à payer lors successions. Dès le 1er janvier 2012, le droit de partage passera de 1,1 % à…2,5 % ! Le relèvement pour les successions est une atteinte à la propriété et une deuxième taxation de ce qui avait déjà été soumis aux prélèvements obligatoires auparavant ....
Bonnes vacances à toutes et à tous ! (Déplacez-vous à vélo, n’utilisez pas d’électricité, n’envoyez pas de courrier ; et ainsi, vos vacances seront gérables au plan budgétaire).
Et que l’on cesse, en France, de montrer du doigt, la Grèce, et, rien que la Grèce…
Par rapport au budget en cours, la Commission de l'Union Européenne ose proposer une hausse de 5%, à 1’025 milliards d'euros. Les principaux contributeurs du budget européen, l'Allemagne et la Grande-Bretagne ont réclamé, eux, un gel du prochain budget de l’UE .....
France is apparently following the example of Ireland and Hungary and seizing pension funds.
According to eFinancialNews, the French parliament passed a law last week allowing 36 billion Euros to be seized from the French reserve pension fund to be used to pay off the debts of France’s welfare system....http://www.mecanopolis.org/?p=20711
As eFinancialNews notes:
The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system.
There have been unsubstantiated rumors for years that the American government will also seize 401(k) money....THE Eurozone’s second biggest economy could be next on the hit list for bond markets, according to London Stock Exchange chief executive Xavier Rolet.
“It won’t be long before bond investors turn to France after they have
finished with Portugal and Spain,” he said over the weekend. “The country’s
deficit is much, much higher than anyone realises. No one, not even France,
can hide any more.”
Rolet’s comments were supported by bond investors, who said that markets
could lose confidence in the euro entirely if it becomes clear that France
cannot abide by Eurozone fiscal rules.
Matrix Group’s Bill Blain said: “To get into the euro, France put all its
borrowing state agencies off-balance sheet. When the crisis reopens, it’s
certainly possible that it will become a focus.”
The warning comes as the IMF puts pressure on the Eurozone to increase the
size of its €440bn bailout facility. A report by Dominique Strauss-Kahn,
head of the IMF, says that there is a “strong case for increasing the
resources available for this safety net”.
However, any increase is likely to face strong opposition from Germany,
where taxpayers are already incensed at paying for the Greek and Irish
bailouts. The Irish parliament will vote tomorrow on the emergency budget
that it must pass in order to qualify for the emergency funding....
La fin est proche.....
-Les fameux PIIGS sont obligés d'emprunter à des taux de plus en plus élevés. Si la FED élève son taux de base ça sera encore pire.
-Mai 2010, au moins 2 grosses banques européennes furent pendant quelques heures en cessation de paiement. La situation fut si tendue que les USA réactivèrent les accords de swap.
-Facteurs aggravants: Les ratio d'endettement de nos grosses banques européennes qui sont absolument hors-normes. Particulièrment en France, si une de nos 4 grosses banques fait faillite, tout le système s'écroule. Le montant cumulé des dettes de ces banques représentent plus de 3 fois le PIB français. Ne parlons pas bien sûr de la dette publique.
Ce n'est pas un hasard si des rumeurs de plus en plus insistantes éclosent à propos de la perte par la France de sa note AAA. Si cette évantualité se concrétise, cela signifie que nous ne pourrions plus emprunter aux taux préférentiels actuels. Les effets en seraient désastreux.
-sortir de l'Euro, revenir au franc, dévaluer le franc avec un taux de change fluctuant.
-démanteler les grosses banques, les recapitaliser, et forcer les dirigeants de ces banques à respecter les règles prudentielles élémentaires sous peine de graves sanctions
-Baisser le taux d'imposition absolument ahurrissant dans notre pays, particulièrment en ce qui concerne le travail.
Qui aura le courage en France de prendre de telles mesures? Personne pour l'instant. Il faudra pour cela que nous soyons au pied du mur. Cette échéance est je pense maintenenant proche.....
Ceux qui mettront des conditions pour "sauver l'Euro" ce sont les Allemands. Et les conditions qu'ils mettront seront tout simplement inacceptables pour les autre pays de la zone. En effet, on peut s'attendre à ce que les Allemands demandent à avoir tous les leviers pour diriger l'utopique gouvernement économique de l'Union. Hitler a échoué dans sa tentative d'unir l'Europe sous le IIIe Reich au prix de millions de morts, il reste à voir si l'Allemagne d'aujourd'hui peut y parvenir sans déclencher à travers l'Europe toute une collection de guerres civiles. Dans la mesure où, comme vous le dites, l'Europe s'est construite contre ses propres peuples, il n'y a pas d'alternative, dans un avenir prévisible, à l'émergence de conflits violents quelle que soit la voie suivie.....
FRANCE is the country that conducts the most industrial espionage on other European countries, even ahead of China and Russia, said leaked US diplomatic cables quoted today by Norway's Aftenposten.
"French espionage is so widespread that the damages (it causes) the German economy are larger as a whole than those caused by China or Russia," an undated note from the US embassy in Berlin said, according to a Norwegian translation by Aftenposten.
The Norwegian daily of reference said last month it had obtained all the 250,000 US diplomatic cables CIA/WikiLeaks had accessed and would publish stories based on them independently of the whistle-blowing website's own releases.....
Its article based on leaked cables included an October 2009 comment from Berry Smutny, the head of German satellite company OHB Technology, quoted in the diplomatic note.
"France is the Empire of Evil in terms of technology theft, and Germany knows it," a Norwegian translation of Smutny's comment in the cable read.
OHB Technology became known to the general public in January 2010 when it obtained a contract for the construction of several satellites for the Galileo satellite navigation system, a much-delayed European challenger to the American-developed Global Positioning System (GPS).
The small German firm won the bid for the contract over Astrium, a subsidiary of pan-European giant EADS.
A leaked US cable posted yesterday by Aftenposten described Franco-German competition in terms of spy satellite development.
The cable said Germany was developing, with the help of the US, its own High Resolution Optical Satellite System (HiROS), despite the objections of France, which is leading pan-European efforts in the field with its Helios satellites.....
Monday, November 29, 2010
Saturday, November 27, 2010
It is now common knowledge that there is a potential domino effect of European and US sovereign debt contagion in roughly the following order:
Greece → Ireland → Portugal → Spain → Italy → UK==> France==> USA.........
While some people have been writing about this for well over a year, many others have joined the party late (there are now over 600,000 hits from a Google search discussing this topic.)
It is also now common knowledge that while Greece and Ireland have relatively small economies, there will be real trouble if the Spanish domino falls....
Iceland has the world's 112th biggest economy, Ireland the 38th, and Portugal the 36th. In contrast, Spain has the world's 9th biggest economy, Italy the 7th and the UK the 6th. A failure by one of the latter 3 would be devastating for the world economy.
As Nouriel Roubini wrote in February:
But the real nightmare domino is Spain. Roubini refers to the Spanish debt problems as "the elephant in the room".
"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."
"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."
With Spain, the first problem is the size of its public debt: €1 trillion. (Greece, by contrast, has €300 of public debt.) Spain also has €1 trillion in private foreign liabilities.
And for problems of that magnitude, there simply are not enough resources—governmental or super-sovereign—to go around....
And as I've previously pointed out, Germany and France - the world's 4th and 5th largest economies - have the greatest exposure to Portuguese and Spanish debt. For more on the interconnections between Euro economies adding to the risk of contagion, see this.
While it is tempting to assume that the Eurozone bailouts mean that creditor nations which have managed their economies well and saved huge amounts of excess reserves which they lend out, Sean Corrigon points out that the European bailouts are a Ponzi scheme:
Under the rules of this multi-trillion shell game, the sovereigns guarantee the ECB which funds the banks which buy the government debt which provides for everyone else's guarantees.
(America is no different: Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky and the Wall Street Journal all say that America is running a giant Ponzi scheme as well. And both America and Europe are trying to cover up the insolvency of their banks by running faux stress tests.)
It didn't have to be like this. The European nations did not have to sacrifice themselves for the sake of their big banks.
As Roubini wrote in February:
"We have decided to socialize the private losses of the banking system.
Roubini believes that further attempts at intervention have only increased the magnitude of the problems with sovereign debt. He says, "Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing out these sovereigns."
Essentially, the super-sovereigns underwrite sovereign debt—increasing the scale and concentrating the problems.
Roubini characterizes super-sovereign intervention as merely kicking the can down the road.
He says wryly: "There's not going to be anyone coming from Mars or the moon to bail out the IMF or the Eurozone."
But, despite the paper shuffling of debt at the national level—and at the level of supranational entities—reality ultimately intervenes: "So at some point you need restructuring. At some point you need the creditors of the banks to take a hit —otherwise you put all this debt on the balance sheet of government. And then you break the back of government—and then government is insolvent."
As I pointed out in December 2008:***
The Bank for International Settlements (BIS) is often called the "central banks' central bank", as it coordinates transactions between central banks.
BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk from default.
But They Had No Choice ... Did They?
But nations had no choice but to bail out their banks, did they?
Well, actually, they did.
The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach (as are other central bankers).
Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the government's attempts to prop up the price of toxic assets no one wants is not helpful.
BIS slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, "the use of gimmicks and palliatives", and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts "will only make things worse".
Remember, America wasn't the only country with a housing bubble. The world's central bankers let a global housing bubble development. As I noted in December 2008:... The bubble was not confined to the U.S. There was a worldwide bubble in real estate.BIS also cautioned that bailouts could harm the economy (as did the former head of the Fed's open market operations). Indeed, the bailouts create a climate of moral hazard which encourages more risky behavior. Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers.
Indeed, the Economist magazine wrote in 2005 that the worldwide boom in residential real estate prices in this decade was "the biggest bubble in history". The Economist noted that - at that time - the total value of residential property in developed countries rose by more than $30 trillion, to $70 trillion, over the past five years – an increase equal to the combined GDPs of those nations.commercial real estate is also bursting world-wide. See this.
These truths are as applicable in Europe as in America. The central bankers have done the wrong things. They haven't fixed anything, but simply transferred the cancerous toxic derivatives and other financial bombs from the giant banks to the nations themselves.
Paul Krugman wrote yesterday:
These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts.Mike Whitney noted yesterday:
Punishing the populace for the bankers’ sins is worse than a crime; it’s a mistake.
Don't believe the hype about European unity or saving Ireland. My ass. This is about bailing out the banks. The bondholders get a free ride while workers get kicked to the curb.And Mish pointed out last week:
Today the Irish Government sold its citizens into debt slavery by agreeing to guarantee stupid loans made by German, British, and US banks.
Why the average Irish citizen should have to bail out foreign bondholders is beyond me, but I do note that the same happened in the US with taxpayers footing an enormous bill for Fannie Mae, Freddie Mac, and AIG/CIA.....
It's not just the "peripheral" European countries which are in trouble.
As Ambrose Evans-Pritchard reported yesterday:
The escalating debt crisis on the eurozone periphery is starting to contaminate the creditworthiness of Germany and the core states of monetary union.
Credit default swaps (CDS) measuring risk on German, French and Dutch bonds have surged over recent days, rising significantly above the levels of non-EMU states in Scandinavia.
"Germany cannot keep paying for bail-outs without going bankrupt itself," said Professor Wilhelm Hankel, of Frankfurt University. "This is frightening people. You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings."
The refrain was picked up this week by German finance minister Wolfgang Schäuble. "We're not swimming in money, we're drowning in debts," he told the Bundestag.
While Germany's public and private debt is not extreme, it is very high for a country on the cusp of an acute ageing crisis. Adjusted for demographics, Germany is already one of the most indebted nations in the world.
As I wrote in May:
As the following Reuters chart shows (based on information provided by BIS), France and Germany are the largest holder of Greek debt:
As The Street notes, France and Germany are also greatly exposed to Portugal and Spain:And as Tyler Durden points out, France Germany and the UK are getting hit with wider credit default swap spreads:
France's banking sector has the second-largest exposure to Portugal and Spain debt loads, after Germany, according to the BIS.
European banks have more at-risk assets in Portugal and Spain than in Greece. European lenders are holding Portugal debt issues of $240.5 billion -- including $47.4 billion by German banks and $44.9 billion by French firms, according to BIS figures from the end of 2009 quoted in a Bloomberg report.
With a stunning $630 million, $558 million and $370 million in net notional derisking, France, UK and Germany are the top three most active recipients in negative bets in the prior week, not just in sovereigns but in all names...Given that central bankers have - for several years - focused on credit default swaps as the most important economic indicator (see this and this), widening spreads are a bad sign, indeed.
Zero Hedge's outside bet to be the first core country to blow up, thanks to its massive PIIGS exposure, France, finally made the top spot in net derisking, with $629 million in net notional, or 189 contracts. The smart money is now massively betting that Europe's core is done for; as the PIIGS have demonstrated, the blow out in spreads for the core trifecta can not be far behind.
As the Washington Post points out today, the U.S. is not immune:
U.S. banks hold about $133 billion in debt from Ireland, Spain, Portugal and Greece ....
A full-blown debt crisis in Europe could ... also send the euro plunging against the dollar, making the greenback stronger on world markets and undermining the efforts of the Obama administration to boost U.S. exports overseas.
"For now, the U.S. is kind of insulated," said Simon White, a partner at the London-based research firm Variant Perception. But whether it stays that way, he said, "depends on how deep the crisis goes."
Americans will not be spared if there's a recession in Europe, even if U.S. bank exposure to European government debt is relatively limited.
The European Union is the second largest market for U.S. exports, behind only Canada. The EU bought about $175 billion in U.S. goods in the first three quarters of this year. That's up about 8% from a year ago.So worsening problems in Europe will clearly be a drag on the U.S. as well.
But the question of what country the "contagion" might spread to next is really the wrong question altogether.
The real question is whether the wealth of the people around the world will continue to be shoveled into the bottomless pit of debts held by the big banks, or whether the people will prevail and the giant banks and bondholders will be forced to take a haircut. See this, this and this.
For what I read in the BIS quarterly report, the country most exposed by far to Portuguese debt is Spain. Greek and Portuguese liabilities are relatively small, while the Irish one is enormous compared to its size, almost as big as the Spanish one - Britain and Germany being the most exposed ones.
As for Spain, the debt is some 25% larger than the Irish one (only) but has greater implications for the real economy because its companies and market are much larger (actually Spain would merit to be in the G7, as it ranks above Canada and even Russia, but for historical reasons it is not a member). France, Germany, the USA, Britain and the other EU countries group (that includes the Netherlands, Belgium, etc.) are quite similarly exposed to the Spanish debt (almost 1/5 each).
But why has debt skyrocketed. At least partly, and this seems very clear and extreme in the Irish case, because states have attempted to save banks from their own mad gluttony, trying to prevent a private financial sector domino effect... to no avail. Today the private debt has been nationalized (instead of nationalizing bank management after due bankruptcy), what is absurd and has no run.
Core countries like Germany or France have tried to prevent this peripheral, mostly private, financial problems from spreading to them, by forcing peripheral states to bailout and cut budgets, making the peoples the ultimate payers of a debt they never contracted.
However, now it seems all this is failing anyhow, and core Europe will also suffer the strike. Germany, France and the Benelux are between a rock and a hard place and it's also their fault anyhow (their leaders', their banks') - so it's not that unfair. They cannot bailout anymore but they cannot either afford to suffer the unavoidable bankruptcies that will come.
So the best is to make a jubilee and start all over, maybe even trying some other formula than brute force capitalism. The invisible hand either has never existed or is like the Black Death (violent spurts of radical destruction), so we better consider that liberal economics is wrong and start reorganizing on other basis before we destroy all the productive fabric, that is still there to serve our needs.EU, Un lien :
A noter que le Livre Noir de l'Europe est dispo gratuitement en
On se fout de qui ?
Quelques exemples :
411.000 €, en 2009, pour un centre de “fitness” pour chiens en Hongrie,
visant à « améliorer la qualité de vie et le niveau de vie des chiens ».
La société bénéficiaire de la subvention a construit des bâtiments… qui
sont restés vides et sont aujourd’hui envahis par la végétation…
Un contrat de 5,25 millions € passé avec la firme Biribin Limousines
pour véhiculer les députés européens dans Strasbourg. La firme garantit
« l’absolue discrétion » de ses chauffeurs : ça se paye…
16.394 € pour un programme au Tyrol visant à « accroître la connexion
émotionnelle des paysans avec les sites qu’ils cultivent ».5.000 € pour
le « cheval européen », une bande dessinée pour les enfants de
Basse-Saxe racontant le périple d’un cheval qui va d’Allemagne à
Bruxelles et rencontre en chemin des personnalités européennes qui «
expliquent » comment fonctionne l’UE.
900.000 € pour un complexe de golfs et d’hôtels de grand luxe qui est un
club privé : 1.100 € la cotisation annuelle, en Mecklembourg-Poméranie –
où se rend volontiers Angela CIA Merkel....
7,5 millions € pour financer une campagne publicitaire du gouvernement
d’Andalousie sur les réalisations effectuées grâce aux subventions
1,6 million € au roi de Suède pour compenser les pertes financières de
sa « ferme » du Sörmland....
5,1 millions € pour le « Cercle culture des Institutions européennes »,
à Luxembourg, réservé aux fonctionnaires européens. On y trouve de
nombreux clubs, dont le cercle de danse des Highlands et un club de
dégustation de vins....
Thursday, November 25, 2010
November , 2010 -- The U.S. economy: stand by for even worse news...
A top economic adviser to the Democratic Party, speaking on deep background, told WMR that the domino-like collapse of the economies of Iceland, Greece, Ireland, and, now, possibly Spain, is coming also to the United States.
One of the triggering mechanisms will be at the end of this month when two million idled workers, now collecting unemployment, will be dropped from the rolls. At the end of December, another two million workers will join the ranks of those who have exhausted their unemployment benefits and a total of 4 million Americans will be without unemployment checks and face destitution.
Four million Americans will put financial pressure on municipalities and state governments already facing bankruptcy. Unlike Iceland, Ireland, Greece, Portugal, and, to some extent, Spain, which have strong central government control, the United States is a federal republic and, as such, the collapse of the economy will be state-by-state and begin at the municipality level, according to our source who has contacts within the Obama White House and the Democratic leadership of the Congress.
Municipalities, which guarantee the pensions of their retired employees through the issuance of municipal bonds, will find themselves faced with bankruptcy and the "Muni" bonds will be rated at junk status. Municipalities unable to pay out pensions will discover their pension funds can be bailed out by the Pension Benefit Guaranty Corporation (PBGC) in Washington, a federal corporation set up by the Employee Retirement Income Security Act of 1974.When the first municipality declares bankruptcy and seeks a bailout from the PBGC, there will be a domino effect, with others seeing it as a quick way out. Soon, the PBGC will, itself, be forced into bankruptcy. WMR has been told by our source it is doubtful that a Republican Congress will be interested in bailing out the PBGC.
The wildfire of municipality bankruptcies will then spread to the states, with California and Illinois likely to be the first two states to default on their debts and declare bankruptcy.
In order to raise quick cash for a financially-desperate state government, California Governor Arnold Schwarzenegger plans to sell 24 state buildings, including the Earl Warren Building in San Francisco, headquarters for the California Supreme Court, and then rent them back from the new owners. However, such desperate moves by states, including the selling off of their turnpike systems and state buildings -- with parks maybe next on the auction block -- is not enough to forestall bankruptcy. Unlike the federal government, which can print as much cash as it likes and needs, states do not have that luxury. However, given the imminent collapse of the national economy, some states may decide to print their own currency, an act that would lead to the dissolution of the present 50-state union.
As far as bank accounts are concerned, our source recommended avoiding large national and regional banks that have a high percentage of toxic assets, especially in the commercial real estate area. The next major bust, after the residential real estate plunge, will be commercial real estate, where values of buildings and shopping centers have been halved. Our source sees smaller, state-based banks, as safer for account holders. Also, as more and more large shopping malls begin to close across the country, the unemployment numbers will also skyrocket.
WMR was also informed that President Obama will not seize the bully pulpit and level with the American people about who and what caused the present economic crisis. "Obama is subservient to his teleprompter," the White House insider source said, "if he'd scrap the teleprompter and speak directly to the American people, he might help things, but right now, he's a disaster."