President Vladimir Putin and Chinese leader Xi Jinping have signed a memorandum of understanding on the so-called “western” gas supplies route to China. The agreement paves the way for a contract that would make China the biggest consumer of Russian gas.
Russia’s so-called “western” or “Altay” route would supply 30 billion cubic meters (bcm) of gas a year to China.
The new supply line comes in addition to the “eastern” route, through the “Power of Siberia” pipeline, which will annually deliver 38 bcm of gas to China. Work on that pipeline route has already begun after a $400 billion deal was clinched in May.
“After we have launched supplies via the “western route,” the volume of gas deliveries to China can exceed the current volumes of export to Europe,” Gazprom CEO Aleksey Miller told reporters, commenting on the deal.
Speaking to journalists on the eve of his visit to Beijing, Putin was optimistic about prospects for the new gas deal with China.
“We have reached an understanding in principle concerning the opening of the western route,” Putin said. “We have already agreed on many technical and commercial aspects of this project, laying a good basis for reaching final arrangements.”
The “western” route deal is one of the 17 agreements signed at the Sunday meeting between Putin and Xi.
They also included a framework agreement between Gazprom and China’s CNPC on gas deliveries and a memorandum of understanding between Gazprom and another Chinese energy giant, CNOOC.
Gazprom and CNPC have also signed a preliminary agreement for China National Oil and Gas Exploration and Development to take a 10 percent stake in Russia’s Vancorneft.
Among the business issues discussed by Putin and Xi at their fifth meeting this year was the possibility of payment in Chinese yuan, including for defense deals military, Russian presidential spokesman Dmitry Peskov was cited as saying by RIA Novosti.
November 9, 2014
Posted by aletho |
Economics | China, Gas, Russia |
Leave a comment
The iconic fall of the Berlin Wall 25 years ago today shocked international leaders from Washington to Moscow, London to Warsaw, as East German crowds took advantage of Communist Party fumbles to break down the Cold War’s most symbolic barrier, according to formerly secret documents from Soviet, German, U.S., Czechoslovak and Hungarian files posted today by the National Security Archive at George Washington University.
The historic events of the night of November 9, 1989 came about from accident and contingency, rather than conspiracy or strategy, according to the documents. Crowds of East Berliners, already conditioned by months of refugee flights to the West and weeks of peaceful mass protests in cities like Leipzig, seized on media reports of immediate changes in travel restrictions — based on a bumbled briefing by a Politburo member, Gunter Schabowski — and inundated the Wall’s checkpoints demanding passage. Television coverage of the first crossing that yielded to the self-fulfilling media prophecy then created a multiplier effect and more crowds came, ultimately to dance on the Wall.
The documents show that the actual collapse of the Wall began with Hungarian Communist reformers who proposed in early 1989 to open their borders to the West, while seeking particularly West German foreign investment to solve Hungary’s economic crisis. Hungarian Communist leaders checked in with Soviet general secretary Mikhail Gorbachev in March 1989, letting him know they planned to take down the barbed wire; and Gorbachev — true to his “common European home” rhetoric — responded only that “we have a strict regime on our borders, but we are also becoming more open.” (Document 1) The Hungarian decision sparked a stream and then a flood of East German refugees.
Gorbachev himself unintentionally gave a signal that the Wall could fall in his press conference on June 15, 1989 after a successful visit to West Germany, where in response to a question about the Wall, he said that “nothing [was] permanent under the Moon” and connected German rapprochement to the building of the common European home. In fact, his conversations with Kohl and other members of the West German government created a real breakthrough in Soviet-FRG relations, which would stand Kohl in good stead in the difficult reunification talks during the next year (Document 2). Gorbachev especially reinforced the theme of European unity in his speech to the European Parliament in Strasbourg where he presented his vision of the common European home on July 7, 1989. After speaking about an essentially united Europe based on universal human values, it would be hard to argue in favor of its continued division.
By August 1989, the Hungarian-initiated refugee crisis had become so acute that the West German embassy in Budapest had to shut down, unable to handle the hundreds of East Germans camped out there for visas. On August 19, Hungarian reformers even hosted a “Pan-European picnic” near the Austrian border, after which some 300 East Germans high-tailed across the former Iron Curtain. The subsequent negotiations on August 25, 1989 between Hungarian Communist leaders with West German chancellor Helmut Kohl and foreign minister Hans-Dietrich Genscher show the Hungarian calculation that only the deutschmark could save them, and by mid-September the Hungarians lifted all East-West controls (Document 3).
East German demonstrators take to the streets in Leipzig, October 9, 1989.
Other world leaders were not at all eager for the Wall to fall, notably the British prime minister, Margaret Thatcher, who told Gorbachev on September 23 to ignore those NATO communiqués about German unification, that even her buddy, U.S. president George H. W. Bush opposed that kind of change (she would be wrong, when the time came. See document 4). As Gorbachev later commented to his Politburo on November 3, the West did not want German unification, but it wanted to prevent it “with our hands, to push us against the FRG” so as to head off any future Soviet-German cooperation — but Gorbachev believed European integration was the ultimate solution to Soviet economic problems (Document 6).
Czechoslovakia was closer to East Germany than Hungary was, and after Hungary opened its gates, Prague quickly filled with East Germans willing to dump their Trabant cars in the streets for a chance to clamber over an embassy wall and flee to the West. By November 8, Prague had become so choked with East Germans that the hard-line Czechoslovak Communist Party’s Central Committee made a demarche to East Berlin demanding they open their borders — a moment of pressure from fellow Communists that played a key role in the East German party’s decision to announce revised travel regulations the next day (Document 7).
The draft regulations were full of temporizing language and largely intended to let off steam while kicking the emigrant problem down the road. East Germans would have to apply for visas, and the vast majority who lacked passports would have to wait even longer for those. But the presentation of the new regulations came at the very end of a botched press conference from 6 to 7 p.m. Berlin time on November 9 by SED Politburo member Gunter Schabowski, who did not know the back story, the hedges, the limitations meant by the drafters of the documents. Visibly rattled from the shouted questions about travel and the Wall, Schabowski read from his briefing papers the words “immediately, without delay” when asked about the timing of the changes that would allow any East German to emigrate (Document 9).
Television news and the wire services as well promptly announced the opening of the borders, and in a kind of self-fulfilling prophecy reinforced by TV coverage, crowds of East Germans massed at the border crossings and ultimately persuaded the senior official at the largest inner-city checkpoint at Bornholmer Strasse to open the gates (a story told in fresh detail by Mary Elise Sarotte in her new book, The Collapse: The Accidental Opening of the Berlin Wall). Once Bornholmer opened, other crossings soon followed; and within hours, people were chipping off souvenir fragments from the concrete panels formerly surrounded by a “death strip” in which earlier Wall jumpers had died.
So unexpected was the Wall opening that Helmut Kohl himself was not even in the country. Instead, the West German chancellor had gone to Warsaw to meet the new Solidarity leaders of that country, and work out some long-standing Polish-German tensions. The transcript of Kohl’s discussions with Lech Walesa show the Polish leader complaining that events in East Germany were simply moving too fast, and even predicting, presciently, that the Wall would fall in a week or two — at which point Kohl would have no time (or money) for poor Poland (Document 8).
In Washington, the George H. W. Bush White House greeted the fall of the Wall not with joy or triumphalism (that would come much later, when the President was running for re-election in 1992), but anxiety and even fear about instability. When questioned by reporters why he did not show more elation, President Bush replied, “I am not an emotional kind of guy.” (Document 10)
Bush’s caution and prudence were appreciated in Moscow, where Gorbachev’s messages to Kohl centered on preventing chaos and reducing instability, keeping “others within limits that are adequate for the time being….” (Document 11)
But at Gorbachev’s side, his foreign policy adviser Anatoly Chernyaev in private let loose with one of the very few high-level expressions of real joy about the fall of the Berlin Wall. Chernyaev’s diary entry for November 10, 1989 (Document 12) contains the coda for the demise of the Iron Curtain, “the end of Yalta” and the Stalinist system, and a good thing, about time, in Chernyaev’s remarkable view.
THE DOCUMENTS
Document 1: Record of Conversation between Mikhail Gorbachev and Miklos Nemeth, Moscow, March 3, 1989.
Document 2: Mikhail Gorbachev Press Conference Excerpts, Bonn, June 15, 1989.
Document 3: Hungarian discussions (Nemeth/Horn) with West German leaders Kohl and Genscher, Bonn, August 25, 1989.
Document 4: Conversation between Mikhail Gorbachev and Margaret Thatcher, Moscow, September 23, 1989.
Document 5: Anatoly Chernyaev diary excerpt, October 5, 1989.
Document 6: Notes from the Soviet Politburo Session, November 3, 1989.
Document 7: Demarche from the Czechoslovak Communist Party to the GDR SED, November 8, 1989 (original German language version).
Document 8: Record of Conversation between Helmut Kohl and Lech Walesa, Warsaw, November 9, 1989.
Document 9: Documents from the East German Communist Party (SED) and the transcript of the Gunter Schabowski press conference, November 9, 1989.[1]
Document 10: President Bush Remarks to Reporters, Washington D.C., November 9, 1989.
Document 11: Record of Telephone Conversation between Mikhail Gorbachev and Helmut Kohl, November 11, 1989.
Document 12: Anatoly Chernyaev diary excerpt, November 10, 1989.
NOTE
[1] Document 9 is courtesy of the German scholar Hans-Hermann Hertle, who was the first to reconstruct in detail the Schabowski press conference debacle, including his own transcription of the Schabowski video and publication of the backstory documents of drafts and SED decision making on travel regulations, in his seminal article, “The Fall of the Wall: The Unintended Dissolution of East Germany’s Ruling Regime,” in the Cold War International History Project Bulletin No. 12/13, Fall/Winter 2001, pp. 131-164.
November 8, 2014
Posted by aletho |
Economics, Timeless or most popular | Human rights |
Leave a comment
A new report from the Center for Economic and Policy Research (CEPR) shows that most households now have less wealth now than they did in 1989. The report, “The Wealth of Households: An Analysis of the 2013 Survey of Consumer Finances,” presents data on household wealth by age cohort based on the results of the most recent Survey of Consumer Finances (SCF). The analysis shows little or no gains for the majority of Americans over the last 25 years, even in the years since the end of the recession. This is true of and particularly concerning for near retirees.
“This is especially bad for those nearing retirement,” said Dean Baker, a co-director of CEPR and an author of the paper. “Households in this age cohort will not have a chance to benefit from any strengthening of the economy and will only have the wealth they have accumulated to date to depend on in their retirement.”
The authors document several trends gleaned from the SCF. Between 1989 and 2013, average household net worth rose from $342,300 to $528,400 in 2013 dollars. However the average gains are misleading, as the population was older in 2013 than it was in 1989. More importantly, median net worth actually fell from $84,100 in 1989 to $81,400 in 2013, indicating that much of the gains of wealth accumulation went to those in the top quintiles. Other key points of the analysis include:
- The median net wealth of near retirees (ages 55-64) was $165,700 in 2013, down from 177,600 in 1989.
- The average non-housing wealth for the typical household in the 55-64 year old cohort was $89,300, compared to a peak of $160,700 in 2004.
- The net wealth for the middle quintile (ages 35-44) of mid-career workers averaged $50,100, less than half the net wealth of the same quintile ($103,800) in 1989.
- The average housing equity for the middle quintile of mid-career workers was also down considerably, from $63,500 in 1989 to $23,200 in 2013.
- There was some improvement for the middle quintile of recent retirees who saw their average net wealth go up from $142,900 in 1989 to $239,300 in 2013, but this was still less than the peak of $270,700 hit in 2007.
When compared with the previous Surveys of Consumer Finances, it can generally be said that wealth grew in the United States from 1989 to 2007 and shrank from then on. At the time of the 2013 survey, the stock market had almost recovered to its 2007 peak. House prices had not. With house prices representing a larger share of assets for the bottom three fifths of Americans, this helped increase the differences in wealth between the top and the bottom. All in all, the results of the survey yield a pessimistic picture of economic progress since the end of the recession.
The full report can be found here.
November 8, 2014
Posted by aletho |
Economics | United States |
Leave a comment
Chinese President Xi Jinping on Saturday announced China will contribute $40 billion to set up a Silk Road Fund to strengthen connectivity in the Asia-Pacific region.
Xi said the goal of the Fund is to “break the bottleneck in Asian connectivity by building a financing platform.”
The new Silk Road Fund will be used to provide investment and finance for infrastructure, industrial projects along the “Belt and Road”, Xi said, referring to China’s Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives.
He added that the fund will be “open” to investors from both within and outside Asia.
The Asian Development Bank has estimated that in the next decade Asian countries will need $8 trillion in infrastructure investments to maintain the current economic growth rate.
“The Silk Road boasts a 3-billion population and a market that is unparalleled both in scale and potential,” Xi said in September last year.
The Silk Road connected China and Europe from around 100 B.C.
The 4,000-mile road linked ancient Chinese, Indian, Babylonian, Arabic, Greek and Roman civilizations.
A new map unveiled by Xinhua shows the Chinese plans for the Silk Road run through Central China to the northern Xinjiang from where it travels through Central Asia entering Kazakhstan and onto Iraq, Iran, Syria and then Istanbul in Turkey from where it runs across Europe cutting across Germany, Netherlands and Italy.
The maritime Silk Road begins in China’s Fujian and ends at Venice, Italy.
In a landmark achievement, 21 Asian nations including China and India last month signed on a new infrastructure investment bank which would rival the World Bank.
One of the first projects of the new Bank is expected to be financing infrastructure projects along the “Silk Road Economic Belt” and the “Maritime Silk Road” re-establishment.
Meanwhile on Saturday in Beijing, the Chinese President stressed that efforts should be made to realize Asia’s connectivity by making Asian countries a priority.
“Asian countries are just like a cluster of bright lanterns. Only when we link them together, can we light up the night sky in our continent,” he said.
China will provide neighboring countries 20,000 training opportunities for connectivity professionals in the coming five years.
Experts say these new announcements will boost China’s global influence and enhance its soft power.
Apart from the AIIB, the BRICS new $100 billion Development Bank is also being headquartered in China.
“China has considerable experience in infrastructure planning and construction, and financing projects outside the country. As Finance Minister Lou Jiwei has said, China Development Bank’s commercial infrastructure loan is now far bigger than that of the World Bank and ADB combined. And surprisingly, this process started only 20 years ago,” write Asit Biswas and Cecilia Tortajada, China scholars at the Lee Kuan Yew School of Public Policy, Singapore.
TBP and Agencies
November 8, 2014
Posted by aletho |
Economics | China, Europe, India, Iran, Iraq |
Leave a comment
Despite numerous examples of runaway costs on expensive weapons programs, the Defense Department is resisting calls to make changes to its process for ensuring quality control.
The Pentagon’s inspector general (IG) recently reviewed the work of the Office of the Defense Undersecretary for Acquisition, Technology and Logistics and concluded in a report that it hadn’t “established an overarching quality management policy to ensure the consistent application of quality management system requirements across DoD components.”
In other words, do a better job of monitoring the development of new weapons systems before budget overruns result in soaring costs.
Not that there haven’t been a lot of examples of this problem:
· The Expeditionary Fighting Vehicle fell four years behind schedule and accumulated an overrun of $750 million.
· The Advanced Threat Infrared Counter Measure/Common Missile Warning System got five years off-track at a cost of $117 million.
· The F22A Raptor Advanced Tactical Fighter exceeded its budget by $400 million.
The USS San Antonio, an amphibious transport dock ship, took three years longer than planned to build and consumed an extra $846 million along the way.
The IG recommended the Pentagon create a central quality management oversight office to help reduce delays and cost overruns.
The response last month from the Defense Department was they don’t need another layer of bureaucracy. “While we agree there are benefits to central leadership, it already exists,” Katrina McFarland, director of Defense Acquisition Resources and Analysis, said according to Government Executive. These quality checks “are in many cases are working poorly right now for a very simple reason: a shortage of trained and qualified acquisition professionals in the quality field.”
The IG requested another response, this time one that addresses its concerns, by December 5.
To Learn More:
Pentagon’s Buying Managers Resist IG’s Call for Central Oversight Office (by Charles S. Clark, Government Executive)
Evaluation of Government Quality Assurance Oversight for DoD Acquisition Programs (Inspector General, U.S. Department of Defense) (pdf)
Unnecessary Defense Acquisitions are a Costly Mistake for the Pentagon, Taxpayers (by David Williams, Townhall.com)
Majority of Pentagon Weapons Contracts Go Over Cost Estimates (by Noel Brinkerhoff, AllGov)
Stunning Cost Overruns in Weapons Development Programs (by Noel Brinkerhoff, AllGov)
November 8, 2014
Posted by aletho |
Corruption, Economics, Militarism | United States |
Leave a comment
The United States is putting Hungary under great pressure due to its objections to the Russian-backed South Stream pipeline and the expansion of the Paks nuclear power station, Prime Minister Viktor Orban said in Munich on Thursday evening, after an address delivered at the Hanns Seidel Foundation.
At a question and answer session, Orban said the pipeline and expansion project were primarily economic issues, but they had become entangled in “geopolitical, military-policy and security-policy issues” due to the Ukraine-Russia conflict.
Washington interprets both issues as “getting closer to Russia”, whereas “we don’t want to get any closer to anyone; neither do we wish to distance ourselves from anyone.”
“We are not pursuing a Russia-friendly policy but a Hungary-friendly policy,” he added.
The prime minister said that construction of the South Stream gas pipeline and the Paks expansion were both in Hungary’s national interest.
The construction of South Stream, which is a “twin” of Nord Stream that supplies Russian gas to Germany, bypassing Ukraine, serves Hungary’s interests, ensuring secure gas supplies by eliminating risks posed by the situation in Ukraine, Orban said. Even if this project does not diversify gas sources, it does diversify delivery routes, he added.
Concerning the upgrade of Hungary’s sole nuclear power plant at Paks, Orban said cheap energy was key in strengthening Hungary’s competitiveness. Unlike Germany, Hungary does not have vast funds to direct towards supporting renewable energy production, and the country’s own energy resources are scarce, he said.
The “only possible means” for Hungary to reduce its dependence on external energy resources is the expansion of the state-owned Paks nuclear plant, he said. Since the plant has been built using Russian technology it is “evident” that its expansion must be carried out in cooperation with the Russians, Orban said. Yet the US interprets this as Hungary’s “moving closer to Russia” at a time when its position is that Europe should instead “move away” from Russia rather than cooperate with it. This is why the US “is strongly opposed” to Paks, Orban said, noting the US “would have also been rather keen” on constructing its two new blocks. … Full article
November 8, 2014
Posted by aletho |
Economics, Malthusian Ideology, Phony Scarcity | European Union, Russia, South Stream, United States |
Leave a comment
While the financial sector of the core capitalist economies is enjoying escalating asset price inflation, the real sector of these economies, especially those of Europe and Japan, is suffering from deflation, that is, stagnation and high unemployment.
And while the simultaneous occurrence of inflation and deflation sounds paradoxical, it is only superficially so. In reality it is simply the logical outcome of neoliberal monetary policies pursued in these countries: as these policies of austerity economics have since the 2008 financial collapse systematically drained the overwhelming majority of citizens of material resources and funneled those resources to the financial sector, the result has been the understandable contraction of the real sector concurrent with the expansion of the financial sector.
In the face of these apparently contradictory developments, economic pundits and financial “experts” at the helm of monetary policy-making apparatus feign bewilderment at how market developments have become increasingly more “complicated,” and how economic fine-tuning has accordingly become more challenging. Such pompous utterances are, however, hollow pretensions designed to obfuscate issues, to mystify economics and to confuse the people. In reality, there is absolutely nothing “complicated” or mysterious about the simultaneous expansion of the financial sector and contraction of the real sector. It is, indeed, altogether axiomatic that if you systematically rob Peter to pay Paul, you are going to impoverish Peter (the 99%) while enriching Paul (the 1%).
The concurrent enrichment of the financial plutocracy and impoverishment of the masses of the people is akin to the growth of a parasite in the body of a living organism at the expense of life-sustaining blood or nourishment of that organism. What is unknown to the public is that the parasitic transfer of economic blood from the bottom up is not simply the spontaneous outcome of the operations of the invisible hand of market mechanism, or the blind forces of competition. More importantly, the transfer is the logical outcome of deliberate monetary policies that are crafted by the financial elites and their proxies at the helm of economic policy making of most capitalist countries. As political economist Mike Whitney recently put it:
“As most people now realize, stocks haven’t tripled in the last 5 years because the economy is expanding. Heck, no. The economy is still on all-fours and everyone knows it. The reason stocks have been flying-high is because the Fed added a hefty $4 trillion in red ink to its balance sheet. Naturally, when someone buys $4 trillion in financial assets, the price of financial assets go up” (source).
The purported rationale behind the unremitting bestowing of the nearly interest-free money upon the financial institutions is that as these institutions receive cheap money from the printing presses of the government they would, in turn, extend low-cost credit to manufacturers, thereby prompting investment and job creation in the real sector of the economy.
This traditional/New Deal monetary policy worked fairly well as long as regulatory constraints—especially the Glass-Steagall Act that was in force from 1933 to 1998—strictly stipulated the types and quantities of investments that banks and other financial intermediaries could undertake. As those regulatory requirements prohibited banks from engaging in speculative or risky investments, they had very little choice but to behave or do business mainly as banks, or financial intermediaries, that is, funneling depositors’ savings and/or government-generated money to the real sector of the economy.
With the systematic removal of regulatory constraints, however, banks have been increasingly abandoning or marginalizing their traditional role as financial intermediaries. Instead, they now invest mostly in buying and selling of assets and other speculative activities, as such financial/speculative investments are much more lucrative than simply accepting deposits at certain rates of interest and then lending them at slightly higher rates.
Not only has this change in the behavior or function of the banking system drastically curtailed the flow of capital from the financial to the real sector, it has in fact reversed the flow of capital between these two sectors: there is now an alarming capital flight from the real to the financial sector in pursuit of higher, speculative rates of profit. Evidence shows that (in recent years) real sector corporate managers/CEOs are increasingly diverting their profits, as well the cheap money they borrow from governments (usually through the privately-owned central banks), to speculation instead of production. As I noted in an earlier article on this subject, “they seem to have come to think: why bother with the messy business of production when higher returns can be garnered by simply buying and selling titles.”
This steady transfer of money from the real to the financial sector is the exact opposite of what monetary policy-makers—and indeed the entire neoclassical/mainstream economic theory—claim or portray to happen: flow of money from the financial to the real sector.
One would imagine that these drastic changes in real world markets, which show how gravely mainstream economists have gone awry in holding tight to their abstract and largely obsolete theories, would have somewhat shaken the faith of these economists in their economic orthodoxy and prompted them to revise or adjust their traditional theories of money supply, of credit creation, of finance, and of investment.
Alas, the faith in market mechanism and economic orthodoxy seems to be as strong as the faith in any otherworldly religion. Whether as university professors or as advisors to policy makers, mainstream economists continue to teach the same materials and retell the same theories in the face of heavily financialized economies as they did in times long past, that is, in the era of relatively competitive markets and industrial/manufacturing economic structures of yore.
Under the sway of financial capital, monetary policy has increasingly turned into an instrument of asset price inflation, that is, of accumulation of ever more fictitious capital in the deep pockets of the financial oligarchy. While not openly acknowledged, the rationale behind the endless injection of cheap money into the financial sector—in the manner of pumping hot air into a balloon—is a desperate attempt or a vain hope on the part of economic policy makers that the so-called trickle-down effects of asset price bubbles may lead to economic recovery.
Admittedly, the presumed trickle-down effects on aggregate demand may have had some validity in the earlier (industrial or manufacturing) stages of capitalism where the rise in the wealth of nations also meant expanded (real) production and increased employment. However, in the era of heavily financialized economies, where the dominant form of capitalist wealth comes not so much from real production of goods and services as it does from asset price bubbles, trickle-down theory has lost whatever minimal validity it may have had at earlier phases of capitalism.
Sadly, monetary policy makers, who are often proxies of financial elites at the helm of privately-owned central banks (contrary to the widespread perceptions, the U.S. Federal Reserve Bank is also privately owned, its share-holders are commercial banks) are not deterred by real world economic developments that tend to contradict their religious-like theories. Their loyalty is first and foremost to the interests and agendas of their behind-the-scene bosses and benefactors―those who nurture, promote and place them at the seat of monetary/economic decision-making. Having abandoned traditional fiscal and monetary policies of demand management, asset-price inflation has now become the policy of choice of economic recovery—if not recovery, then of preventing an economic collapse.
Hostage to Banksters
This helps explain why the economies of most of the core capitalist countries have become hostage to banksters, to their insatiable appetite for ever more cheap money. This practice of continued injections of cash into the financial sector is obviously tantamount to ransom payments to the “too big to fail” banksters, out of an exaggerated fear that their failure would lead to “cataclysmic economic collapse.” It also helps explain the multiple renewals or endless extensions of the policy of quantitative easing (QE), as termination of this policy is bound to lead to another financial implosion.
As an indication of this destructive addiction of the financial markets to Uncle Sam’s generous cash injections, let us remember how these markets went into a tail spin in mid-October by the prospect that QE may not be extended beyond October; and how they immediately rebounded on the news that the Fed would indeed continue cash injections beyond October―that is, QE3 would be continued as QE4. This is how Mike Whitney described those turbulent days of the financial markets:
“By mid-day [of October 15, 2014], the Dow was down 460 points before clawing its way back to minus 173 points. It looked like the market was set for another triple-digit flogging on Thursday [October 16] when the Fed stepped in and started talking-up an extension to QE3. That’s all it took to ease investors jitters, stop the meltdown and send equities rocketing back into space. By the end of Friday’s session, all the markets were back in the green with the Dow logging an impressive 263 points on the day” (source).
While the policy of indefinite extension of QE (along with near-zero interest rates) may temporarily keep the financial markets from imploding, the policy simply delays the day of reckoning—more or less like keeping a terminally-ill patient alive on artificial life support. And therein lies the futile and, indeed, tragic aspect of this policy: monetary policy-makers’ obligation to constantly inject cash into the financial system in order to keep the system from collapsing is akin to the logic of the proverbial bicyclist who has to keep riding forward or else he would fall over.
Monetary policy-makers at the head of central banks and treasury departments, representing the powerful interests of big finance, would do everything they can to avoid going off the cliff, or to delay the approach to the cliff. In so doing, however, they drain the overwhelming majority of citizens of economic/financial resources—by transferring those resources (through austerity measures) to the financial oligarchy. Andre Damon (of the World Socialist Web Site ) succinctly captures the redistributive effects of this neoliberal monetary policy:
“The richest one percent of the world’s population now controls 48.2 percent of global wealth, up from 46 percent last year, according to the most recent global wealth report issued by Credit Suisse, the Swiss-based financial services company.
“Hypothetically, if the growth of inequality were to proceed at last year’s rate, the richest one percent for all intents and purposes would control all the wealth on the planet within 23 years.
“The report found that the growth of global inequality has accelerated sharply since the 2008 financial crisis, as the values of financial assets have soared while wages have stagnated and declined. . . . Emma Seery, head of Inequality at Oxfam, the British anti-poverty charity, commented, ‘This report shows that those least able to afford it have paid the price of the financial crisis whilst more wealth has flooded into the coffers of the very richest.’
“The study revealed that the richest 8.6 percent of the world’s population—those with a net worth of more than $100,000—control 85 percent of the world’s wealth. Meanwhile, the bottom 70 percent of the world’s population—those with less than $10,000 in net worth—hold a mere 2.9 percent of global wealth.
“The growth in inequality is bound up with a worldwide surge in paper wealth, fueled by the trillions of dollars pumped into the financial system by central banks via zero interest rate and ‘quantitative easing’ policies. . . .
“As the report noted, ‘The overall global economy may remain sluggish, but this has not prevented personal wealth from surging ahead during the past year. Driven by … robust equity prices, total wealth grew by 8.3% worldwide … the first time household wealth has passed the $250 trillion threshold’.” (Source).
What is To be Done?
The solution to the runaway financial sector, according to most liberal–Keynesian critics of financialization, is regulation, or re-regulation. While this would be a welcome improvement over the destabilizing behavior of the unbridled finance capital, it would represent only a tentative short- to medium-term solution, not a definitive long-term one. For, as long as there is no democratic control, regulations would be undermined by the influential financial interests that elect and control both policy-makers and, therefore, policy. The dramatic reversal of the extensive regulations of the 1930s and 1940s, which were put in place in response to the Great Depression, to today’s equally dramatic deregulations serves as a robust validation of this judgment.
Other critics of the out-of-control finance capital call for public banking. These critics argue that, due to their economic and political influence, powerful financial interests easily subvert government regulations, thereby periodically reproducing financial instability and economic turbulence. By contrast, they further argue, public-sector banks can better reassure depositors of the security of their savings, as well as help direct those savings toward productive credit allocation and investment opportunities. Ending the recurring crises of financial markets thus requires placing the destabilizing financial intermediaries under public ownership and democratic control.
While nationalization of commercial banks could mitigate or do away with market turbulences that are due to financial bubbles and bursts, it will not preclude other systemic crises of capitalism. These include profitability crises that result from very high levels of capitalization (or high levels of the “organic composition of capital” a la Marx), from insufficient demand and/or under-consumption, from overcapacity and/or overproduction, or from disproportionality between various sectors of a market economy.
Furthermore, as long as capitalism and, along with it, the lopsided distribution of economic surplus prevails, financial instability cannot be uprooted by bank nationalization. For, while nationalization of traditional/commercial banks may temper financial fragility, other types of financial intermediaries and institutions are bound to arise in order to circumvent regulation and/or nationalization, thereby precipitating financial instability. These include all kinds of shadow banks and speculative enterprises such as private equity firms, derivative markets, hedge funds, and more.
To do away with the systemic crises of capitalism, therefore, requires more than nationalizing and/or regulating the banks; it requires changing the capitalist system itself.
Ismael Hossein-zadeh is Professor Emeritus of Economics (Drake University). He is the author of Beyond Mainstream Explanations of the Financial Crisis (Routledge 2014), The Political Economy of U.S. Militarism (Palgrave–Macmillan 2007), and the Soviet Non-capitalist Development: The Case of Nasser’s Egypt (Praeger Publishers 1989). He is also a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press 2012).
November 7, 2014
Posted by aletho |
Deception, Economics | Capitalism, European Union, United States |
Leave a comment
Introduction
There are many fabrications and false assumptions underlying the Colombia peace negotiations between the Santos regime and FARC – EP (Revolutionary Armed Forces of Colombia – Peoples Army). The first and most egregious is that Colombia is a democracy. The second is that the Santos regime pursues policies which enhance non-violent social and political activity conducive to integrating the armed insurgency into the political system.
There is sufficient evidence to call into question both assumptions. Over the past two decades and a half nearly three thousand trade union leaders and activists have been murdered; over 4.5 million peasants have been dispossessed and displaced by the military and paramilitary forces; and over nine thousand political prisoners are being held indefinitely for engaging in non-violent socio-political activity. In addition scores of human rights lawyers, activists and advocates have been assassinated.
The vast majority of the victims are a result of regime directed military and police repression or paramilitary death squads allied with the military and leading pro-government politicians.
The scale and scope of regime violence against social opposition precludes any notion that Colombia is a democracy: elections conducted under widespread terror and whose perpetrators are allied with the state and act with impunity, have no legitimacy.
The re-election of President Santos and the convocation of peace negotiations with the FARC to end Latin America’s longest civil war is certainly a welcome step toward ending the bloodshed and providing the basis for a transition to democracy.
While the Santos regime has put a stop to the massive state terror regime of his predecessor, the US backed Alvaro Uribe regime, political assassinations still occur and the perpetrators continue to act with impunity.
For any peace process to culminate with success, the peace accords, agreed to by both parties, must be effectively implemented. Previous agreements ended in state massacres of demobilized guerrillas turned civil society activists and elected political representatives.
The peace negotiations have proceeded for two years and major accords have been reached on a series of vital areas of mutual concern. In particular both sides have signed off on 3 of 5 points on the peace agenda: rural developments, guerrilla participation in politics, policy on drug trafficking. Current negotiations focus on the contentious “transitional justice” for victims of the conflict. Most human rights groups and experts agree that the vast majority of victims are a result of military and paramilitary repression. However, the Santos regime and its backers in the media claim otherwise – blaming the FARC.
Is There a “Peace Process”?
The Santos regime has thrice rejected cease fire offers by the FARC who have gone ahead and unilaterally implemented them . The regime has chosen to continue the war in Colombia while negotiating in Havana. The two year time span of the peace negotiations provides deep insights into the viability of the peace accords signed in Havana. International and Colombian human rights groups and social movements provide timely reports on the scope and depth of ongoing violations of political and human rights in Colombia during the peace negotiations.
Based on data compiled by human rights attorneys and experts affiliated with the Marcha Patriotica (Patriotic March), an alliance of scores of neighborhood, peasant, trade union and human rights organizations, between April 2012 and January 2014, it is clear that the reign of state and paramilitary terror continues parallel to the peace negotiations.
During this 21 month period, twenty-nine Patriotic March (PM) activists were killed and three others were “disappeared” – and presumed murdered. Scores of others have received death threats.
The class background of the victims points to the vulnerability of the peace agreement. Twenty-three of the murdered members of the PM were peasant leaders and activists promoting agrarian reform, the repossession of land under the regime’s Land Restitution Law or engaged in other peaceful civil society activity. Four of the victims were active in social movements supporting a “peace with social justice” agenda; two were human rights lawyers; two were community and neighborhood organizers and one was a leader of a local youth movement.
None of the assailants were arrested. Military and police officials, who had previous notice of death threats, took no precautions. Nor were any investigations undertaken, even when family and neighbors were privy to relevant evidence.
In the face of the Santos’ government’s unwillingness to curtail military, police and death squad complicity in the murder of peasant activists during the peace negotiations, can the regime be trusted to implement the accord on “rural development”? Can the government guarantee the security of disarmed guerrillas as they enter the political system when over one hundred human rights activists received death threats in September 2014?
According to Amnesty International, during 2013, seventy human rights defenders were killed, including indigenous and Afro-Colombian leaders and twenty-seven members of trade unions. At least forty-eight homicides were committed by military units. Military commanders engaged in “false positives”, meaning murdered civilians were falsely labelled by the military as “armed insurgents”. Extra judicial killings by the military continue under the Santos regime.
Equally ominous, Santos has failed to disband the paramilitary death squads. As a result, the regime fails to protect land claimants. Dispossessed peasants and farmers attempting to resettle their land under Santos’ “Land Restitution Law” have been threatened or murdered by paramilitary gangs. As a result the Law has virtually no impact on resettling peasants because of landlord retaliations.
In fact the number of dispossessed has increased according to the United Nations: 55,157, mostly rural, Colombians fled their homes between January and October 2013, because warfare between and among drug and paramilitary gangs.
Presidential Santos War on Civil Society
The pervasive insecurity that rules the countryside, the murders, disappearances and jailing of social activists, accompanying the peace negotiations, call into question the “accords” thus far reached between the FARC and the Santos regime. Supporters of the regime argue that the number of state murders has declined over the past three years. Critics counter that relatively fewer assassinations have the same effect in generating fear, undermining citizen participation and the transition to a democratic political system.
The entire conception of a successful peace process rests on the assumption that the accords will result in constitutional guarantees of free and democratic citizen participation. Yet throughout the two year period, the regime has not demonstrated a clear and consequential commitment to elementary rights. If that is the case during the negotiations with the popular insurgency, still active and armed, how much worse will conditions become once the military, police and paramilitary are free of any retaliation, when they will have a free hand to intimidate and strike down disarmed political dissidents attempting to compete in local or national elections?
The Santos regime appears to have adopted a two prong strategy: combining violent repression of the social movements in Colombia while adopting the language of peace, justice and reconciliation at the peace table in Havana.
The Santos regime can promise to accept many democratic changes but its practice over the past two years speaks to an authoritarian, lawless regime, content with maintaining the status quo.
The Santos regime has three strategic goals: to disarm the popular insurgency; to regain control over the territory under insurgent control; and to weaken and undermine the popular social movements and human rights groups which are likely to form political alliances with the insurgents when and if they become part of the political system.
It is doubtful that the FARC will surrender their arms in a political climate in which paramilitary killers operate with impunity; military commanders still engage in ‘false positives’; and rural development projects are inoperative because of landowners’ terror tactics.
Unless the peace accords are accompanied by fundamental changes in the military; unless the paramilitary forces are effectively demobilized; unless the government recognizes the legitimacy of the demands of the mass social movements and human rights group for a freely elected constituent assembly is accepted, the peace process will end in failure.
Conclusion: Four Hypothesis on Santos Strategy for War and Peace
There are several hypotheses regarding why the Santos regime negotiates a peace accord while gross violations of human rights continue on a daily basis.
(1) The Santos regime is divided, with one sector in favor of peace and another opposed. This hypothesis lacks any credible basis as there are no visible signs of internal conflict and the regime acts with a unified command. While some state violence may be a result of local military commanders, at no point have national leaders reprimanded the “local” transgressors.
(2) The Santos regime actively pursues violent acts against the social movements to strengthen its bargaining position in the peace negotiations to secure a more favorable settlement – in other words to make the minimum of social concessions in order to placate oligarchs critical of any negotiations. This hypothesis explains the ‘dual strategy’ approach advocated by the regime with regard to the FARC, talking peace in Havana and rejecting a cease fire in Colombia; continuing the war while negotiating peace. But it also undermines the regime’s claim that Santos seeks to incorporate combatant groups into the political system.
(3) The regime is in a tacit pact with former death squad – President Alvaro Uribe. As a result the government’s military apparatus is still tied to paramilitary gangs, working with landowners, drug traffickers and businesspeople. There is no doubt that Santos has long-standing ties to Uribe – he was his Defense Minister. Moreover, after Santos defeated Uribe’s candidate for the Presidency by a narrow margin he has sought a political accommodation with Uribe’s Congressional and business supporters. On the other hand Santos recognizes that his economic strategy, especially his focus on promoting trade with Latin America and especially Venezuela, and his big push to exploit the energy and mining sector depends on reaching a peace agreement with the FARC, which controls substantial mineral rich regions. Hence Santos signs “paper agreements’ with the FARC, while applying a ‘hard fist’ (‘mano duro’) policy to the social movements.
(4) The upsurge of the mass social movements, including the Marcha Patriotica, demanding the effective implementation of the ‘rural development’ reforms and repossession of land to 3.5 million displaced families and the increasing role of the human rights groups in monitoring the ongoing violations of human rights, means that the Santos regime cannot secure ‘peace’ solely through an agreement with the FARC in Havana. If the Santos regime’s goal in the peace negotiations is to disarm the guerrillas and incorporate them into the electoral system, without dealing with the root socio-economic structural reforms, it must weaken the civil society popular movements.
This is the most plausible hypothesis. President Santos is capable of promising the FARC any sort of ‘democratic reforms’ and is willing to sign off on anti-drug agreements and even ‘agrarian development’. But what he is unwilling to accept is the emergence of mass peasant movements actively engaged in changing land tenure, repossessing their farms and reclaiming millions of acres of land granted to big foreign owned mining consortiums.
Santos will not ‘demobilize’ the paramilitary gangs because they are instruments of the big landowners and protect the state grants to the big mining companies. But he will try to limit death squad targets to specific activists and organizations in contentious regions.
Santos has not even curtailed the cross border attacks by Colombian paramilitary groups. Assassinations continue, the latest, the assassination of a Venezuelan Congressional leader. He has expanded military ties with the US by pursuing agreements to collaborate with NATO – offering combat units for the Middle East wars.
What is abundantly clear is that the Santos regime has not complied with the most elementary conditions necessary to implement any of the five point reform agenda set forth in Havana. Military impunity, rampaging death squads, scores of daily death threats to human rights activists, over nine thousand political prisoners and dozens of unsolved killings of peasant leaders is not compatible with a transition to a democratic peace. They are compatible with the continuity of an authoritarian oligarchical regime. A democratic transition and a peace agreement requires a fundamental change in the political culture and institutions of the Colombian state.
November 7, 2014
Posted by aletho |
Civil Liberties, Deception, Economics | Colombia, FARC, Human rights, Latin America, Marcha Patriotica, NATO |
Leave a comment
In perhaps the best mainstream report during the election season, the typically firmly D.C.-based Steve Inskeep went knocking on doors in Colorado and came across a woman, Ili Bennett, who told him she’s felt some excitement from both Elizabeth Warren — and in the past, the Tea Party.
Said Inskeep: “I think you’ve hit on something insightful here. And I want you to help me with this a little bit because the Tea Party, those are some very conservative people — Elizabeth Warren, very liberal person. But they both represent deep unhappiness with the way things are. And it sounds like they both struck a chord with you. Am I right?” He was and it’s not one woman in Colorado of course. Politico headline today states: “Exit polls 2014: Voters hate everyone.” It might seem that way to the insiders at Politico, but actually it’s that voters mostly just hate the establishment of both political parties, which to Politico might seem like “everyone”. And this isn’t new. From 2010: “CNN Poll: Majority angry at both political parties.”
The problem is that people feel they have virtually no where to go and can’t translate that anger to action. There is a de-facto anti-establishment, populist majority. But the entire structure of politics, media and elections is designed to keep them divided and prevent such populists from the left or right or wherever from coalescing politically. Third parties coming from either the left (Green, Socialist) or the right (Constitution, Libertarian) are automatically dismissed by the vast majority as potential spoilers. (I’ve set up VotePact.org to solve exactly this problem.)
Some sectors of the media have lauded the Republican establishment’s stepping into the primary process and preventing Tea Party candidates from getting nominations in so-called “swing states.” Those looking for salvation in presidential elections from the likes of Bernie Sanders or Elizabeth Warren or their Republican mirror images will have to bear in mind the obstacle in the primaries is “electability” (as defined by the establishment) and it’s a virtual certainty that candidates who seem serious about delivering real change will be denied any nomination. Rather, such candidates will likely mostly function as a way of keeping voters on the establishment party reservation, endorsing the ultimate nominee.
As for midterm elections, part of the equation is lower and lower voter turnout — the “leadership” of the parties is in effect firing and further marginalizing the public and their alleged bases.
The establishment will attempt to produce their own version of “bipartisanship” — pro-establishment bipartisanship that is. The mantra of “change” is being used to peddle the never ending use of the Reversible Straitjacket of the Democratic and Republican establishments. This manifests itself as “seesaw politics” and what I’ve called the guillotine pendulum, helping ensure the continuity of what some call the Deep State.
The major corporate media frequently focus on marginal differences between the two major parties, but the areas of agreement between them are sizable in terms of economic, trade, civil liberties, foreign policy and other issues. On these and other critical issues, the establishments of the duopoly are frequently aligned together against their alleged bases, explaining why the public “hates everyone”. Crazy public. Politicians of both parties talk about helping the little guy and then do the bidding of corporate interests.
Now, the political narrative is that Washington is dysfunctional and “can’t agree on anything”. The the general public is clearly being prepared to embrace whatever pro-corporate monstrosity President Obama and presumptive Senate Majority Leader McConnell agree on.
So, predictably, the Wall Street Journal is now reporting: “American businesses are hoping the dust will settle from Tuesday’s GOP takeover of Congress with new attention on corporate taxes, immigration, trade and energy, top priorities that have eluded breakthroughs in recent years. A post-election landscape that includes a more sharply divided government is likely to lead to continued frustration over some items on businesses’ wish list. At the same time, a reshaped political landscape could lead Congress and the White House to seek legislative breakthroughs on some economic issues before the 2016 election season heats up.”
So, the big business agenda on taxes and corporate trade deals like the Trans Pacific Partnership could well be advanced by establishment Republicans in Congress working with the Obama administration. This could well extend to other issues such as civil liberties, more war, etc.
The anti-establishment forces either still in the Democratic Party or that have given up on the electoral process all together should join with those deluding themselves into looking for the Republican Party for some salvation. They should work toward building new institutions that adopt their best beliefs.
And this must go beyond voters. There should be candidates running for Democratic and Republican nominations who — once the establishment ensures their defeat in the primaries — are willing, jointly perhaps, to bolt and not back the party’s establishment nominees.
The day after election day is the most important. Now is the time to reach out across the partisan divide and find populists on the other side to work with. You have nothing to lose but your perpetual chains.
Sam Husseini founded VotePact.org which encourages voters to pair up with their political “mirror image” and vote for their preferred candidates rather than the “lesser evil” offered by the establishment.
November 6, 2014
Posted by aletho |
Civil Liberties, Corruption, Deception, Economics, Timeless or most popular | Obama, United States |
Leave a comment
During a meeting Wednesday with the journalists in the coastal, economic hub of Guayaquil, Ecuadoran president Rafael Correa said that over 309,000 children had quit working to attend school.
According to official estimates, the number of working children decreased from 17 to eight percent.
Correa reiterated his commitment to eliminate child work in Ecuador, and sharply criticized the recent initiative of Guayaquil’s mayor, Jaime Nabot, to inaugurate a statue representing a shoeshine boy in the city center.
The head of state called the statue a “shame”, saying “(it) is not part of the folklore, it is part of exploitation.”
During the inauguration, Nebot himself took a picture simulating the act of having his shoes shined by the boy depicted in the statue.
“While the oligarchy builds statues about our exploitation, we build schools so children can keep studying,” added Correa.
November 6, 2014
Posted by aletho |
Economics | Ecuador, Human rights, Latin America |
Leave a comment
The Hungarian parliament has approved a law on Monday which allows building the South Stream gas pipeline without approval of the European Union. The European Commission has already demanded an explanation from Hungarian authorities.
The European Commission’s spokesperson said at a press briefing in Brussels on Tuesday that the EC was in contact with Hungarian authorities to get an explanation for their decision.
The law was passed with 132 votes in favor and 35 votes against, allowing a company to construct a gas pipeline even if it doesn’t have the licenses needed to operate it. According to the new law the only requirement for a company which wants to take part in construction is approval from the Hungarian Energy Office.
“This is meant to give a boost to South Stream and is to show Russia that Hungary is taking the project seriously,” Attila Holoda, an expert on energy regulation, said as cited by Bloomberg.
South Stream is “extraordinarily important” for Hungary because it enhances the security of gas supplies to the country, Janos Lazar, the Minister in Charge of the Prime Minister’s Office, told reporters on October, 22.
The South Stream gas pipeline was projected to deliver gas to south and central Europe via the Black Sea and the Balkans, bypassing Ukraine. The project, with a capacity of 63 billion cubic meters of gas a year, is seen as critical for European energy security. Ukraine has been an unreliable transit country, and building a new pipeline could result in avoiding numerous risks.
The South Stream would run across Bulgaria, Serbia, Hungary, Austria, and Slovenia before entering Italy and Greece. The crisis in Ukraine has made the South Stream project a political issue rather than a legal debate. The EU Commission has been pressuring member states to stop the building of the pipeline. Last year it started an investigation claiming the project contradicted the European Union’s Third Energy Package regulations.
Bulgaria and Austria have temporarily suspended the project but are leaving it on the table.
November 4, 2014
Posted by aletho |
Economics | Europe, European Union, Hungary, South Stream |
Leave a comment
Aletho News 