Aletho News

ΑΛΗΘΩΣ

Cuba Denounces US for Manipulation of Terrorism Claims

teleSUR | October 9, 2014

Cuba has been on the U.S. State Department’s list of countries that according to Washington supports terrorism since 1982, despite lack of evidence that the Caribbean country has been supplying arms or other support to extremists.

In a statement before the United Nations, Cuba denounced the United States for its use of the term “terrorism” saying they manipulate the term for political purposes.

​Tanieris Dieguez, the third secretary of the permanent mission of Cuba, Wednesday said that it was absurd that Cuba remains on the U.S. list of countries that support terrorism, referring to the report published April 30 by the State Department naming Cuba a “State Sponsor of Terrorism.” Dieguez statements were published Wednesday by the Cuban news agency Prensa Latina.

The list was created by the State Department in 1979, and is meant to apply to countries that it considers as having “repeatedly provided support for acts of international terrorism,” according to their website. It includes providing administrative and arms exports, as well as other foreign assistance to terrorist bodies. The penalties for the countries on the list are strong sanctions.

Cuba has been on the list since March 1, 1982. The other countries on the list are Iran, Sudan and Syria.

In a forum of the Sixth Committee of the General Assembly – the primary U.N. forum for considering legal questions – Dieguez said Washington keeps Cuba on the list to justify the harsh economic, commercial and financial sanctions imposed on the island, despite the lack of evidence that the government is aiding extremist organizations.

The main focus of the assembly was the elimination of international terrorism, where Dieguez rejected “the manipulation of such a sensitive issue.”

The Cuban diplomat also reminded the U.N. that Cuba has been hosting Colombia’s current peace negotiations since 2012, showing support for the peace process. She also reaffirmed Cuba’s backing the adoption of a general convention on terrorism, and a UN sponsored world conference on the topic to attempt to find coordinated global solutions to the problem.

Cuban citizens had hoped that the U.S. would not keep the island on the “State Sponsor of Terrorim” list this year – a decision that is evaluated and made yearly – because it “fails to meet the statutory criteria for being removed,” say U.S. officials.

October 10, 2014 Posted by | Deception, Economics | , , | Leave a comment

New frontiers for oil palm

Communities lose out to oil palm plantations

GRAIN |  September 22, 2014

Palm oil is not something you would associate with a Mexican kitchen. But go to any supermarket in the country, and you will find countless products containing it. The country’s food system has changed immensely since the North American Free Trade Agreement (NAFTA) came into effect in 1994 and multinational companies moved in to take control of the country’s food supply. The alarming rate of obesity, now higher than that of the US, is one manifestation of Mexico’s changing food landscape, and tied to this is the escalating consumption of palm oil.

Palm oil consumption has increased by over four times since NAFTA was signed, and it now accounts for one quarter of the vegetable oil consumed by the average Mexican, up from 10% in 1996. Other countries in Latin America undergoing similar changes to their food systems have also increased their consumption of palm oil. Venezuelans have doubled their intake, and Brazilians are consuming 5 times what they did in 1996.

This growing consumption is matched by growing production, not in Mexico, but in those countries where oil palm can be most cheaply produced. A third of Latin America’s palm oil exports now go to Mexico.

Colombia, with about 450,000 ha under production, is the biggest palm oil producer in the Americas. Since the late 1990s, Colombia’s palm oil production has taken off for several overlapping reasons, including government incentives and a national biodiesel mandate. Oil palm has also been promoted as a substitute crop for coca as part of the US-backed “Plan Colombia” – a programme aimed at ending the country’s long-standing armed conflict and curbing cocaine production. Paradoxically, palm oil is also proving a useful way for drug cartels, paramilitaries and landlords to launder money and maintain control of the countryside.

The most notorious land grabs for palm oil in Colombia have occurred in the north west Chocó province, where businessmen and paramilitaries have colluded to force Afro-Colombian communities to cede their territories for palm oil plantations and contract farming. After dozens of Afro-Colombian leaders were killed resisting such land grabs, Colombia’s Prosecutor General’s Office brought forward charges against 19 palm oil businessmen for crimes of conspiracy, forced displacement, and the invasion of ecologically important land. Three of these businessmen have so far been convicted.

Disease outbreaks have limited palm oil’s expansion in Chocó Province and most of the expansion has instead happened on the pasture lands of the central and eastern parts of the country, where the oil palm industry claims there is little deforestation and displacement of peasants. But studies show that these pasture lands are in fact typically common areas vital to peasants for the production of their food crops and the grazing of their livestock. The “pasture lands” are often the only lands that peasants have access to, and palm oil companies routinely use force and coercion, including paramilitaries, to take control of these lands from them or to force them into oppressive contract production arrangements. Across Colombia, the expansion of palm oil and the presence of paramilitaries are tightly correlated.

Ecuador, Latin America’s second largest palm oil producer, has also seen a recent expansion in oil palm production. While much of its palm oil is produced on farms of less than 50 ha, new expansion is driven by private companies who have been moving into the territories of Afro-Ecuadorians and other indigenous peoples in the Northern part of the country, leading to severe deforestation and displacement and meeting with stiff local resistance.

Land conflicts over palm oil are also erupting in Central America. In Honduras, peasants in the Aguan Valley have been killed, jailed and terrorized for trying to defend their lands and small palm oil farms from powerful national businessmen who have been grabbing their lands to expand their palm oil plantations with the backing of foreign capital. Ironically, these peasant families first moved into the forests of the Aguan in the 1970s as part of a government land reform programme, and were encouraged to grow palm oil and establish their own cooperatives. The neoliberal policies of the 1990s and a coup d’état in 2009, opened the door for powerful local businessmen like Miguel Facussé, to destroy the peasant cooperatives, violently grab lands for plantations, and reorient the supply chain towards exports for biofuels and multinational food companies. Likewise in Guatemala, where production of palm oil has quadrupled over the past decade, the palm oil sector is now entirely controlled by just eight wealthy families who have been aggressively seizing lands from indigenous communities, such as the Q’eqchi,

Some industry insiders predict that an expansion of oil palm production in Brazil will soon dwarf all other production in the region. Brazil is a net importer, and production has so far been confined to a small area of Pará, in the North. But, unlike in other regional palm oil producing countries where production is dominated by national companies and wealthy landowning families, transnational corporations have recently made significant investments in Brazilian palm oil production, such as the mining company Vale, energy companies Petrobras and Galp, and ADM, one of the world’s largest grain traders and a major shareholder in the world’s largest palm oil processor Wilmar.

Going further

Tanya M. Kerssen, “Grabbing Power: The New Struggles for Land, Food and Democracy in Northern Honduras,” FoodFirst, 1 February 2013

Human Rights Everywhere, “The flow of palm oil Colombia- Belgium/Europe: A study from a human rights perspective,” 2006

More frontiers

October 5, 2014 Posted by | Economics, Environmentalism, Ethnic Cleansing, Racism, Zionism | , , , , , , , , , | Leave a comment

Illusionary Growth

By PAUL CRAIG ROBERTS | CounterPunch | October 3, 2014

It is amazing how the government manages to continue selling Brooklyn  Bridges to a gullible public. Americans buy wars they don’t need and economic recoveries that do not exist.

The best investment in America is a highly leveraged fund that invests only in large cap companies that are buying back their own stocks. Many of the firms repurchasing their stocks are borrowing in order to push up their stock prices, executive “performance bonuses,” and shareholders’ capital gains. The debt incurred will have to be serviced by future earnings.  This is not a picture of capitalism that is driving the economy by investment.

Neither is consumer spending driving the economy. The US Census Bureau’s 2013 Income and Poverty Report concludes that in 2013 real median household income was 8 percent below the amount in 2007, the year prior to the 2008 recession and has declined to the level in 1994, two decades ago! Even though real household income has not regained the pre-recession level and has declined to the level 20 years ago, the government and financial press claim that the economy has been in recovery since June 2009.

Neither is an increase in consumer debt driving the economy. The only growth in personal debt is in student loans.

Real retail sales (corrected with a non-rigged measure of inflation) remain at the level of the bottom of the recession in 2009. Macy’s , J.C. Penny’s, and Sears store closings are further evidence of the lack of retail sales growth, as is the fact that two of the three dollar store chains are in trouble. Walmart’s sales are declining.

The basis of auto sales hype is subprime loans and leases taken by those who cannot qualify for a loan to purchase.

Housing starts remain far below the pre-recession level, which is not surprising when available jobs are part-time with no benefits. Such jobs cannot support the formation of households and purchase of homes.

Where does the government’s second quarter 2014 real GDP growth rate of 4.6 percent come from?  It comes from an understated inflation measure and jiggled numbers.  It is not a correct figure.  Nothing has occurred in the economy to turn it from a first quarter decline of more than 2 percent into a second quarter growth of 4.6 percent.

The 4.6 percent number is pulled out of a hat to set the stage for the November election.

It is extraordinary that economists and the financial media permit the government to get away with its false economic reporting. Of course Wall Street likes good news . . . but fake news that misleads investors and covers up economic policy mistakes?

Clearly, something is wrong with the government’s economic reporting. It is not possible to have real GDP growth when real median family incomes are declining and business investment consists of corporations buying back their own shares.  Either the government’s GDP estimate is incorrect or the Census Bureau’s Income and Poverty report is incorrect.  Apparently Washington doesn’t understand that if it is going to rig the numbers, it must rig all the numbers.

The rigged inflation measures create illusionary real GDP growth. They also block cost-of-living adjustments to Social Security pensions.  Indeed, the main purpose of the rigged inflation measures is to get rid of “socialistic” Social Security by allowing inflation to gradually erode away the real values of “entitlements.” Republicans always want to cut “entitlements” that people have paid for over their working lifetime with the payroll tax. But Republicans never want to cut the payroll tax. They need the revenues in order to bail out the big banks and to pay for never-ending wars.

Washington has been conducting needless wars abroad for 93 percent of the 21st century at a cost of trillions of dollars. More trillions have been wasted bailing out banks that deregulation permitted to become “too big to fail.”  During the past seven years, millions of Americans have lost their jobs and their homes, and food stamp rolls have reached record numbers. These hurting Americans have been ignored by policy-makers in Washington.

Clearly, government in America is focused on something different from a healthy economy and the well being of citizens. We call it democracy, but it’s not.

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal.

October 3, 2014 Posted by | Deception, Economics | | Leave a comment

Pentagon: US to Sell New Missiles and Rocket Launchers to Saudi Arabia, UAE

Al-Manar | October 2, 2014

US Defense Department will sell Patriot missile batteries of $1.57 billion to the Saudi Arabia and rocket launchers of $900 million to the United Arab Emirates, Pentagon said on Wednesday.

The initial details of the sale came public in April, and the Pentagon announcement informed Congress of the intention to follow through on the previously reported plans.

The Saudi government had requested the purchase of 202 Patriot Advanced Capability (PAC)-3 missiles — the most sophisticated version of the Patriot anti-missile weapons — as well as a flight test target, telemetry kits and other related equipment, the Defense Security Cooperation Agency said in a statement.

“The proposed sale will help replenish Saudi’s current Patriot missiles which are becoming obsolete and difficult to sustain due to age and the limited availability of repair parts,” the agency said.

“The program will contribute to the foreign policy and national security of the United States by helping to improve the security of a partner which has been, and continues to be, an important force for political stability and economic progress in the Middle East,” it added.

Both Kuwait and Qatar already have purchased the PAC-3 weapons, which are designed to knock out incoming ballistic missiles as well as enemy aircraft and cruise missiles using ground radar.

The system “will improve the UAE’s capability to meet current and future threats and provide greater security for its critical infrastructure,” the Defense Security Cooperation Agency said.

The weapons, which deliver precise and powerful artillery fire at a long range, would also bolster the UAE military’s ability to operate with US forces, it noted.

Congress has 30 days to raise objections to the potential arms sales. Without any move to block the deals, the US government can then negotiate contracts with the two countries.

October 2, 2014 Posted by | Corruption, Economics, Militarism | , , | Leave a comment

US Judge Claims Argentina ‘in Contempt’ of Court

teleSUR | September 30, 2014

U.S. Judge Thomas Griesa, who has repeatedly sided with vulture funds, has declared Argentina in contempt of court for its attempts to pay back over US$200 million in interest to creditors.

The Argentinian debt case reached a new landmark on Monday, as U.S. Judge Thomas Griesa ruled Argentina “in contempt” of court for attempting to pay back the debt it owes to bondholders.

Argentina defaulted in 2001 but reached debt exchanges with nearly all the creditors in 2005 and 2010, with a tiny minority refusing the deal.

Griesa justified his latest decision by saying the country is taking “illegal” steps to avoid his orders. Griesa had previously ruled that hold out creditors, known as vulture funds, had to be paid before other creditors could be settled with.

“These proposed steps are illegal and cannot be carried out,” Griesa said, during a court hearing in lower Manhattan, referring to the steps that Argentina has taken to pay back bondholders.

The judge also rejected any recognition of the newly approved law on Sovereign Debt in Argentina, passed by both its Congress and Senate.

In a further extraordinary rejection of Argentine sovereignty, Griesa warned that he will impose unspecified penalties on Argentina.

Argentine Foreign Minister Hector Timerman said in a statement late on Monday that the judge’s decision was a “violation of international law” and would have no impact other than to embolden the vulture funds against Argentina.

“The Argentine government reaffirms its decision to continue defending national sovereignty and asking the U.S. government to accept the jurisdiction of the International Court of Justice to resolve this controversy between both countries,” he said.

September 30, 2014 Posted by | Economics | , | Leave a comment

Raising minimum wage reduces poverty while increasing GDP in Brazil

Report Examines Economy and Social Indicators During the Past Decade in Brazil

CEPR | September 29, 2014

The Center for Economic and Policy Research (CEPR) released a research paper today that looks at social and economic indicators, as well as policy changes that have occurred since 2003 in Brazil.

“The lives of tens of millions of Brazilians have been transformed by the economic and social policy changes of the past decade,” said CEPR Co-Director Mark Weisbrot, lead author of the paper. “A sharp increase in economic growth, combined with increased social spending, large increases in the real minimum wage, and increased bargaining power for labor allowed for greatly reduced poverty and unemployment, as well as declining inequality.”

“These changes appear to be durable, having mostly withstood the world recession and the slowdown in worldwide economic and trade growth of the past few years.”

Among the paper’s findings:

  • Since the Workers’ Party (PT) won the presidency with Lula da Silva taking office in 2003, poverty has been reduced by over 55 percent, from 35.8 percent of the population to 15.9 percent in 2012. Extreme poverty has been reduced by 65 percent, from 15.2 percent to 5.3 percent over the same time period. Over the last decade, 31.5 million Brazilians were lifted out of poverty and, of that number, over 16 million out of extreme poverty.
  • GDP per person grew at a rate of 2.5 percent annually from 2003-2014, more than three times faster than the 0.8 percent annual growth of the prior government (1995-2002). This was in spite of the 2008-09 world financial crisis and recession, which pushed Brazil into recession in 2009; and also including the slowdown of the past few years.
  • While inequality remains high, there were large changes in how the gains from economic growth were distributed as compared with the prior decade. For example, the top 10 percent of households received more than half of all income gains from 1993-2002, but this fell to about one-third for 2003-2012.
  • Social spending has consistently increased since 2003, rising from 13 percent of GDP to over 16 percent in 2011, the last year for which data is available. Education spending has increased from 4.6 percent of GDP in 2003 to 6.1 percent of GDP in 2011.
  • Unemployment has decreased from 13.0 percent in 2003 to an average of 4.9 percent in the first quarter of 2014, a historic low.

The paper finds that these results were achieved due to policy choices, including often counter-cyclical fiscal and monetary policy, a reactivated industrial policy, lowered domestic interest rates and a break with IMF conditionalities following Brazil’s paying off its IMF debt early, in 2005. Economic stimulus helped Brazil rebound strongly from the 2008-2009 global recession. The government has raised the real (inflation-adjusted) minimum wage by 84 percent; this boosted pensions and public sector wages that are tied to it, as well as other wages and salaries.

Programs such as Bolsa Familia (BF) helped bring down poverty; since 2003, expenditures on the program in real (inflation-adjusted) Reais increased from 4.8 billion to 20.7 billion (0.2 percent of GDP to 0.5 percent of GDP). From 2003 to 2012 the number of individuals covered by Bolsa Familia increased from 16.2 million to 57.8 million. As a percent of the population, coverage increased from below 9 percent in 2003 to nearly 29 percent in 2012.

The PT government has aided the country’s industrial sector in part through the national development bank BNDES. Disbursements from BNDES have increased from 2.2 percent of GDP in 2005 to nearly 4 percent in 2013, with priority sectors for Brazil’s industrial policy receiving about 80 percent of BNDES disbursements between 2006 and 2012.

In the last few years the economy has slowed, although unemployment has continued to decline, and average wages have risen. The paper faults overly-tight and sometimes pro-cyclical macroeconomic policies, including monetary and fiscal policy, since 2011, for the economic slowdown; as well as the slowdown in world economic and trade growth.

September 30, 2014 Posted by | Economics, Video | | Leave a comment

Record global debt risks new crisis – Geneva report

RT | September 30, 2014

A record level of $158.8 trillion in global debt, together with low economic growth is creating a serious threat of a new financial crisis, says the sixteenth annual Geneva Report.

Total world debt, excluding the financial sector, has risen from 180 percent of global output in 2008 to 212 percent last year, according to the report written by a panel of senior economists including three former senior central bankers.

“Contrary to widely held beliefs, the world has not yet begun to deliver, and the global debt to GDP ratio is still growing, breaking new highs,” the report said.

The World Bank data showed that in 2013 global GDP was $74.909 trillion.

source: Geneva Reports on the World Economy

source: Geneva Reports on the World Economy

At a world level, there was acceleration in real growth from the mid-1990s until the mid-2000s, largely driven by the impressive performance of emerging markets over this period.

However, output growth in advanced economies has been declining for decades, which accelerated after the crisis. The developed economies enjoyed only a temporary improvement in real output growth in the late 1990s which had already started gradually eroding by the mid-2000s.

A “poisonous combination of high and rising global debt and slowing gross domestic product, driven by both slowing real growth and falling inflation,” may cause a crisis, warns the report.

Despite the modest decrease in household debt in the UK and the rest of Europe, the credit binge in Asia has offset the improvements, pushing the global private and public debt to a new high in 2013.

Until 2008, the leveraging up was being led by developed markets, but since then emerging economies led by China have been the driving force in the process, thus becoming the most vulnerable to the next crisis.

“Although the level of leverage is higher in developed markets, the speed of the recent leverage process in emerging economies, and especially in Asia, is indeed an increasing concern,” says the report.

September 30, 2014 Posted by | Economics | , , , | Leave a comment

Massive new debt hides years of negative GDP growth in EU and USA

By Jon Hellevig | Oriental Review | September 29, 2014

Finland – In a groundbreaking study Awara Group reveals that the real GDP growth of Western countries has been in negative territory for years. Only by massively loading up debt have they been able to hide the true picture and delay the onset of an inevitable collapse of their respective economies. The study shows that the real GDP of those countries hides hefty losses after netting the debt figures, which gives the Real-GDP-net-of-debt.

The moral of the study is that GDP growth figures as such reveal very little about the underlying dynamics of an economy if one does not simultaneously attempt to analyze what part of the growth is credited to simply artificially fueling the economy with new loans.

The study has found that the Western countries have lost the capacity to grow their economies. All they have left is a capacity to pile up debts. By massively accumulating new debt, they are able to keep up a semblance of at least sluggish growth, or of hovering around the zero growth mark.

If this massive debt would go towards investments, then there would be nothing wrong with it. But, it is not. The debt is going towards financing the losses in the national economies and essentially it all is wasted on consumption that the countries in reality cannot afford. The Western countries act like a 19th century heir to aristocratic wealth, borrowing from year to year to keep up the former lifestyle, while the estate is relentlessly dwindling. Sooner or later the prodigal heir would be forced to face reality and sell the remaining property to stave off the creditors, downgrade his dwellings, and rein in spending. Inevitably, the European countries and the USA will have to curb their excessive consumption, too, but for the time being they are putting off the final reckoning with new debt rather the way a drunkard reaches for the morning after drink to put off sobering up. In the case of the EU and the USA, we are speaking about a debt binge that has been going on for a decade.

While the situation has been generally bad for the last decade or so, it took a dramatic turn for the worse, or should we say for the catastrophic, following the onset of the global financial crisis in 2008. The shocking figures depicting the virtual crippling of the Western economies from 2009 to 2013 are illustrated in Chart 1. It depicts the development of real-GDP-growth per country in years 2005 to 2013. The chart shows that during this period Russia has been able to deliver real non-debt fueled GDP growth, whereas the Western countries are running huge deficits. The accumulated growth of the Russian economy from 2005 to 2013 was 147% while the Western countries accumulated losses from 16.5% (Germany) to 58% (USA). In the case of Russia, the real-GDP-net-of-debt figure is also corrected to adjust for the calculation error caused by an erroneous GDP deflator that Russian Statistics Agency (Rosstat) has used. We have discussed the persistent problem of Russia’s GDP growth having been underestimated due to the use of a wrong GDP deflator in the study Awara Group Research on the Effects of Putin’s Tax Reforms 2000-2012 on State Tax Revenue and GDP

Chart1

Chart 2 shows the real GDP growth net-of-debt after deducting the growth of public debt from the GDP figure. Net of debt we see the scale of the Western economies, for example the Spanish economy, which amounts to the staggering figure of minus 56.3%. This while the conventional official method of crediting GDP growth with growth of debt would give only minus 6.7%.

Chart2

The analysis shows that by these measures Russian economic growth, unlike that of the Western countries, has been comparatively healthy and not debt-driven. Russia has in fact a resoundingly positive ratio by these measures, where GDP growth has exceeded growth of debt by a staggering 14 times (1400%). The figure is astonishing when compared with the Western countries that have been flooded with new debt.

Chart3

Chart 3 shows how much the accumulation of debt in the Western countries exceeds the official GDP growth. The USA is leading the pack with an increase in the debt load in years 2004 to 2013 of USD 9.8 trillion (in the chart in euros, EUR 7 trillion). In those years, the growth of the USA public debt exceeded the GDP growth 9 times (900%), which is illustrated by Chart 4, comparing the proportion of growth of debt to that of growth of GDP.

The comparison of growth of debt to growth of GDP reveals the UK, as the country that has amassed the most amount of new debt relative to GDP growth, having a new-debt-to-GDP-growth ratio of 9 to 1; in other words UK has taken on 900% new debt relative to the GDP growth. But the picture is grim for all the Western countries surveyed, less so for Germany, while Russia’s debt increase amounts to only a fraction of the GDP growth.

Chart4

The analysis shows that by these measures Russian economic growth, unlike that of the Western countries, has been comparatively healthy and not debt-driven. Russia has in fact a resoundingly positive ratio by these measures, where GDP growth has exceeded growth of debt by a staggering 14 times (1400%). The figure is astonishing when compared with the Western countries that have been flooded with new debt.

The above figures are adjusted taking into account public debt (general government debt), but the situation is even worse when we consider the effect of private debt on the GDP. New debt of corporations and households have at least doubled private debt of most of the Western countries since year 1996 (Chart 5).

Chart5

Reviewing these figures, it becomes evident that in reality Western economies have not grown in the past decade, rather the countries have massively inflated their debt load. With these levels of debt reached this cannot continue for long. There is a real risk that the bluff will be called sooner rather than later dropping the Western economies to GDP levels that they can carry without debt leverage. But in that situation they will not be able to serve the accumulated debts leading to catastrophe scenarios.

We have not included Japan and China in the analysis due to the difficulties attributed to finding consistent data for all the input variables. For those countries we have come across problems of fractured data that do not capture all the relevant years; inconsistent data across the samples we looked at; and uncertainties about conversion of the input data into euros. (We are sure that major research houses could overcome such problems, having greater and more sophisticated resources than ours). This exclusion of Japan and China is regrettable as Japan is the country worst affected by the problem of debt-fueled GDP growth, having a public debt to GDP ratio of well above 200%, and would therefore have been very instructive for our purposes.

Japan has been essentially living on debt since the early 1990’s. However, some of the more irrational Western analysts want to take Japan as a prime example to follow, arguing that since Japan has been able to pile up debt for some 25 years now, all the Western countries would be able to do it as well for the foreseeable future. In this they fail to grasp that Japan earlier had the luxury of being the sole country living on such exorbitant levels of debt. Japan has enjoyed great support from the Western countries to be able to continue that practice, not least for political reasons. Another important consideration against the idea that Western countries could continue to accumulate debt is that they have, since the early 1990’s, rapidly lost their economic hegemony in terms of share of world trade and global GDP. I have written about this in a recent article entitled Why the West is Destined to Decline.

The West is fast shrinking in economic significance relative to the rest of the world. This is demonstrated by comparing the GDP of the Western powers as represented by the G7 countries (USA, Japan, Germany, France, UK, Italy and Canada) with the GDP of emerging powers. As recently as 1990, the combined GDP of the G7 was overwhelming in relation to that of today’s 7 emerging powers: China, India, Russia, Brazil, Indonesia, Mexico and South Korea (not necessarily constituting one political block). In 1990, the G7 countries had a combined GDP of USD 14.4 trillion and the emerging 7 had a GDP of USD 2.3, but by 2013 the tables had been turned, as the G7 had USD 32 trillion and the emerging 7 had USD 35 trillion. (Chart 6).

Chart6

With the challenge of the ever increasing share of world economy belonging to the emerging countries, it becomes clear that the Western countries will not be able to profit sufficiently from world trade to service their debt loads.

For the time being the Western countries benefit from the privilege of having currencies that the rest of the world still largely trusts as reserve currencies. In essence, the USD and the euro enjoy a kind of monopoly status. This is what allows Western countries to gain access to cheap debt and fuel their economies with central bank financing (quantitative easing or “printing of money”). But the risk is that, with the deteriorating debt situation and diminishing share of the global economy, they will forfeit this privilege, perhaps even in the near future. What would follow from this is sharply more expensive financing and inflation, with hyperinflation as the eventual outcome. In this scenario – which I consider inevitable over the next 5 to 10 years – the economies of Western countries would essentially collapse.

The problem is that there is no way of averting this scenario, because the Western powers have lost their competitive advantages as economic powers. Eventually, their economies must shrink to match their resource and population bases. (I have written about this in the article referred to above). But it seems that the ruling Western elites have no intention of facing up to these realities. They will try to keep up a semblance of prosperity with ever new debt, as long as they can. The political parties of the West have been essentially converted into voting machines with one singular concern – that of winning the next elections. To do that they will continue to engage in what amounts to bribing of the electorate – creating new debt that fuels the national economy.

But there is no way to turn back this historical tide. Just as the aristocrat of the old regime eventually squandered his legacy, so will the Western powers. This inevitability of the process is what makes it really scary, because I am afraid that the Western elite might be tempted to bail itself out from this doomsday scenario with a war of epic proportions. We are now truly approaching the Armageddon between the West, with its desperate economic circumstances, and the emerging world powers.

Jon Hellevig is a business consultant and economic and political observer. He is the co-editor and co-author of Putin’s New Russia and several books on philosophy and political and social sciences.

September 30, 2014 Posted by | Deception, Economics | , , , , , , , , | Leave a comment

G-77, China condemn coercive sanctions against Iran

Press TV – September 27, 2014

The coalition of developing countries at the United Nations has categorically condemned unilateral sanctions against Iran over its civilian nuclear energy program.

In a resolution issued on the sidelines of the 69th annual session of the UN General Assembly in New York on Friday, foreign ministers of the Group of 77 plus China for the first time explicitly rejected as unacceptable the imposition of unilateral economic sanctions against Iran.

Such sanctions would have adverse consequences on the development of the Iranian nation, the resolution said, calling for the immediate removal of the bans.

The illegal US-engineered sanctions on Iran have been imposed based on the accusation that Tehran is pursuing non-civilian objectives in its nuclear energy program.

Iran rejects the allegation, arguing that as a committed signatory to the Non-Proliferation Treaty (NPT) and a member of the International Atomic Energy Agency (IAEA), it has the right to use nuclear technology for peaceful purposes.

The 133-member Group of 77 plus China strongly rejected any unilateral punitive moves such as sanctions against developing countries and called for the removal of all such measures.

The foreign ministers of the member states noted that such measures would not only undermine the UN charter-based international law, but also would leave a negative impact on the freedom of trade and investment.

They further called on the international community to take an effective collective action to stop unilateral economic sanctions against developing states.

The Group of 77 was founded on June 15, 1964, by the “Joint Declaration of the Seventy-Seven Developing Countries” issued at the conclusion of the United Nations Conference on Trade and Development (UNCTAD) in Geneva.

The Group of 77 holds a one-year and rotating presidency among Africa, Asia and Latin America. Bolivia holds the chairmanship for 2014.

September 27, 2014 Posted by | Economics | , , | Leave a comment

How Harvard Exercises Power

By SUREN MOODLIAR | teleSUR | September 23, 2014

It began with a call from his distraught daughter, writes Harvard professor Ricardo Hausmann. On national television, Nicholas Maduro, Venezuela’s president, had threatened the good professor with a legal investigation. And the professor’s daughter was worried. So too were the Harvard Crimson, whose editorial staff challenged President Maduro’s alleged “bullying,” and the Boston Globe, which promptly published a Hausmann missive. Lest one fears for the professor’s wellbeing, he assures us that he is free and unafraid, adding that he has “the protection of the U.S… the protection of Harvard.” Now we can all feel good, the USA’s robust free press, together with its august academic institutions, and the state itself, appear to be standing for academic freedom and empowering a lowly professor to speak truth to presidential power. Closer scrutiny suggests that quite the opposite may be true.

So how did the professor come to do the Joropo with the president? The latter was most outraged by an opinion piece Professor Hausmann co-wrote for Project Syndicate, “Should Venezuela Default?” President Nicholas Maduro recognized that Hausmann is an influential actor on the international banking scene and that his default prescription would only cause more fear, uncertainty and doubt.

And risk perception has a price. Hausmann’s article opens with exactly that measure. “Markets fear” that Venezuela may default on its debt and the price of this fear is that the interest rates on Venezuelan bonds are significantly higher than those on Mexico or Nigeria. This, in turn, has a negative impact on the lives of regular folk. Although Hausmann fails to note effective government countermeasures to protect the poor, the thrust of his remarks are true – higher interest rates hurt ordinary people… while the creditors’ returns are all the more secure.

In a man-bites-dog like inversion of roles, Hausmann, a JPMorgan Chase consultant and former chief economist at the Inter-American Development Bank, concludes that to “default on 30 million Venezuelans, rather than on Wall Street, is a… signal of moral bankruptcy.” The article had its all too predictable outcome. Interest rates shot up even more, settling back somewhat only after vigorous assurances from President Maduro.

All of this should immediately dispel any image of Hausmann as a cloistered academic analyzing reams of computer printouts in some basement office or lost in the stacks of Widener Library. In fact, Hausmann is a power player on the global scene and his dance with Venezuela’s revolutionary leadership began long ago.

Not immediately apparent from his Harvard CV is the gravity of his 1980s involvement in the Venezuelan government. Specifically, in the late 1980s, Hausmann was part of President Carlos Andres Perez’s economics cabinet. They implemented an IMF-style austerity program setting off the 1989 Caracazo—a popular rebellion put down by a massacre claiming over a thousand lives. Surely, given the resolve it demonstrates, this is an impressive fact meriting its own CV entry!

This success was followed by his promotion to Minister of Planning in the early 1990s and then, after Carlos Andres Perez was forced out of office for embezzlement, Hausmann’s career advanced with him becoming the Chief Economist of the Inter-American Development Bank. Today, in addition to his Harvard gig, Hausmann is an advisor to many banks, governments and inter-governmental bodies.

Besides the massacre, none of this is particularly objectionable. Indeed these are the hallmarks of a successful career within the international mandarinate that governs the global economy. Of course, this belies the image of the innocuous and vulnerable professor that opens Hausmann’s Globe piece. There he also suggested the improbability of an American president attacking a professor; were it to happen, he speculates that an impeachment could follow. But there is precedent involving a powerful president attacking a real professor.

Ronald Reagan and the Professor

Consider the case of Ronald Reagan and E. Bradford Burns. A UCLA historian of Latin America, Burns debunked Ronald Reagan’s claims about Sandinista Nicaragua in a short 1985 article. At a dangerous moment in the Cold War, this was a truly brave act, one that could damage careers and worse. In fact, a well-known, award-winning actor, Edward Asner, had his CBS series, the Lou Grant Show, cancelled in 1982 after criticizing Reagan’s Central America policies. Solidarity activists in Burn’s Los Angeles lived in a charged atmosphere facing the real threat of thuggish repression from any number of sources. By 1988, activists reported death threats and alleged cases of kidnapping and rape. At the same time, the establishment in Southern California thrived on federal investment in Reagan’s war economy. Burns’ dissent, which undermined the rationale for Central American intervention and therewith part of the justification for the lucrative arms build-up that made Reagan so popular with regional elites, was therefore a real example of a humble professor speaking truth to power.

Ronald Reagan’s response was a televised attack that labeled Burns a purveyor of disinformation, and in vintage Reagan, the President promised to “pray for [Burn’s] students.” It also fueled the re-emerging academic McCarthyism and Oedipal resentments of folks like David Horowitz, who would later publish his infamous, The Professors: The 101 Most Dangerous Academics in America. But people fought back; with good humor, Burns recalled a student’s response, “As a citizen, I ask God to help President Reagan; Professor Burns’ students are doing fine.”

As we weigh the differences between Burns and Hausmann, it is worth noting the way in which each exercised power. Two years after Reagan’s attack, Burns won a distinguished teaching award. Notwithstanding his well-received research, Burns’ passion was for teaching. A former student recalls Burns’ view that, “We must learn to teach better… We must constantly transfer our conviction of the significance and relevance of history to the young. Tedium has no place in our lecture halls… We must convey that excitement.” And this was part of a broader perspective on social change, “Go ahead and do your research, publish your books,” he advised fellow academics, “A few of your colleagues will read and enjoy it, but if you want to change the world… teach undergraduates.” For the cynical, this idealism may be the long game of a presently enfeebled left, but it is certainly true to the picture that one imagines on hearing the word, “professor.”

More than a suave professor or deceptive editorialist, Hausmann is a man of action. No teaching awards adorn his CV. Perhaps he received some, but these are not deemed important enough to add. Since the early 2000s, he has been associated with the Venezuelan opposition’s hard right. Working for María Corina Machado’s Súmate to routinely predict the defeat of the Chavistas via statistical analyses anticipating election outcomes only to have their claims falsified by real world voters, Hausmann is a partisan actor. Having failed at running the Venezuelan economy in the late 80s and into the 90s, he now attacks from the secure parapets of Harvard. As noted, his essay impacted the markets in entirely predictable ways.

Harvard as an Imperial Enterprise

It would behoove those interested in the development of the global economy to more closely, indeed, to forensically, examine the connections between Harvard, its faculty, and the economic policies of many governments. Beyond the scope of this article and the capacity of this author, such scrutiny should go beyond mere intellectual influence to uncover the interests involving the institution, its investments, its faculty, the advice they offer, and the actual flow of material benefits.

One gets a glimpse of what these may be in VERITA$: Everybody Loves Harvard, a documentary that explores the connections between Harvard and Russian economic policies. The late director Shin Eun-jung examined the relationship between the Harvard Institute for International Development and Russia’s conversion to a market economy. This was the Harvard Institute’s largest project. Earlier, it was involved in the financial liberalization of Indonesia and helped extend the Washington Consensus to Zambia, Kenya and Pakistan.

Receiving in excess of $40 million in grants for its Russia work, the Harvard Institute’s policies were adopted by end running the democratic process and helped enrich the privatizer of the Russian economy, Anatoly Chubais. Today a wealthy entrepreneur, Chubais is also an advisor to JPMorgan Chase. Together with Chubais, the Institute established the Russian Privatization Center which received more than $147 million in foreign funding that would have to be repaid at some point by the Russian people. With no constitutionally-defined role, the Center soon became fully embroiled in Russia’s corrupt transition to a market economy… and in benefiting the Harvard Management Company in the order of millions of dollars until the Asian banking crisis of the late 90s. So extreme was the corruption that even the US Justice Department investigated the mess. It later caught up with Harvard and the Institute, alleging false claims and conflicts of interest. It sued for $1.2 billion and settled in 2005 for $31 million, the largest suit in Harvard’s history according to Shin.

None of the foregoing suggests any kind of similar behavior on the part of Chubais’ fellow JPMorgan Chase advisor, Hausmann. But it does dispel the myth of Harvard as a purely academic institution. Instead, Harvard is clearly an economic actor on a global scale. Its faculty, especially those with Hausmann’s CV, have to be assessed in this light.

For those of us who respect Venezuelan sovereignty and admire that country’s attempt to transform its economy into one that works for working people, we have to acknowledge that this is a difficult time. Venezuela’s Revolución Bolivariana faces difficult choices between deepening the economic transformation with its attendant dislocations and accommodating parts of the splintering opposition. In this context, Hausmann’s intervention and feigned concern for “30 million Venezuelans” is a deft move likely aimed at aggravating an acute hard-currency shortage and provoking a political crisis.

If there are any doubts as to Hausmann’s concerns for the poor, we must ask where those rested when he was in power and implementing a harsh austerity program. Hausmann’s own values are hinted at when he castigates Nicholas Maduro by calling the president a “tropical thug.” One can and should denounce thuggish behavior, but his adding the adjective “tropical” casts things in a different light. Those of us from the Global South or familiar with ruling class racism readily recognize what is intended by the word.

Rather than suggesting any debate over academic freedom and the rights of Professor Hausmann, the media would be best advised to look at his intervention and President Maduro’s rebuke in the light of an extended class war playing out on a global stage. A critical media analysis will reveal that the partisan Hausmann knows how to navigate between the super-charged rhetoric of a country in the throes of an intense class struggle and the placid world of his university on the banks of Cambridge’s Charles River. Venezuelan rhetoric reflects the class struggle and also a different political rhetoric.  Alma Llanera, Venezuela’s “second” anthem, celebrates claveles de pasión – “carnations of passion” – while Hausmann’s numbers games on the Charles River speaks to a coiffed banker’s calm exercise of power protected by the United States, protected by Harvard.

Suren Moodliar lives in Boston and finds much to admire at Harvard University. He may be contacted at suren <a.t> fairjobs >d o t< org. Although they are not responsible for any errors, Suren is grateful to Dave Burt, Umang Kumar, Mirna Lascano, Ben Manski, Jorge Marín, Christine O’Connell, Jason Pramas and Sandra Ruiz-Harris for their pre-publication comments.

Links included in this article:

On E. Bradford Burns: https://www.h-net.org/~latam/threads/thrdburns.html

Ricardo Hausmann and Miguel Angel Santos, “Should Venezuela Default?” Project Syndicate, September 5, 2014, https://www.project-syndicate.org/print/ricardo-hausmann-and-miguel-angel-santos-pillory-the-maduro-government-for-defaulting-on-30-million-citizens–but-not-on-wall-street

Ricardo Hausmann, “Venezuela’s president is crafting a disaster.” Boston Globe, September 18, 2014, http://www.bostonglobe.com/opinion/2014/09/18/amid-venezuela-economic-woes-president-attacks-harvard-academic/j6H2tUj4vGLuKaf0yStfQL/story.html

Ricardo Hausmann, CV http://ksgfaculty.harvard.edu/faculty/cv/RicardoHausmann.pdf

Ricardo Hausmann, Transparent Engagement, http://ksgfaculty.harvard.edu/Faculty/PublicDisclosure.asp?id=102152

Harvard Crimson, “Maduro Madness” September 19, 2014, http://www.thecrimson.com/article/2014/9/19/harvard-maduro-madness/

September 24, 2014 Posted by | Economics, Mainstream Media, Warmongering, Timeless or most popular | , | Leave a comment

‘Made in Palestine’: New sales pitch for marketing Israeli products

MEMO | September 23, 2014

Along one of the roads in the city of Ariha in the north of the occupied West Bank, merchants Khaldoun and Hassan regularly receive 30 tons of dates produced in the neighbouring Israeli agricultural settlements, in preparation for their transfer to one of the packaging factories built on the outskirts of the city, Anadolu news agency reported.

Inside the factory, about 13 minors are working on “screening” the dates and repackaging them in bags that read “dates of the Holy Land” in both Arabic and English and “Made in Palestine” in order to market them locally, in the Arab states and in Europe.

This is what one of the farms that is owned by Israeli settlers does in order to market its produce of dates to customers of European Union countries after the enforcement of a decision earlier this year to boycott any products of settlements in the West Bank.

Anadolu cited a statement issued by the Palestinian national economy minister saying that members of the ministry have found dozens of tons of produce coming from the settlements in this way, on its way to either the local market or to the packaging factories in the city of Ariha and the neighbouring villages.

Merchant Khaldoun, 45 years, told Anadolu’s reporter, “We do trade in dates of the settlements, which we buy at prices that are 40 per cent lower than the market price. And in order to be able to market the dates, we clean and re-package them and choose the best in preparation for selling them in the local market, as well as the Arab and European markets.”

He added that the annual volume of his seasonal sales of dates is nearly 350 tons, pointing out that other merchants who work in this field and in other varieties of vegetables and fruits, such as citrus fruits, nuts, and medical herbs have similar practices.

His fellow trader Hassan said that he has a licensed company that is registered officially. The export process takes place after the official bodies check the quality and specifications of the product, ensuring the product’s conformity with European specifications and international standards. It is then exported under the “Made in Palestine” label.

The minister of economy said in its statement that any truck carrying dates must also be carrying a transfer permit to move the dates from inside the farm of production to the factory that will process the packaging, noting that it has begun to take stricter steps over the trade of dates through listing the names of the farmers who grow dates, the number of trees they own and their annual average production.

Palestine enjoys customs exemptions and export-related facilities in trade with the countries of the European Union, so the Israeli companies cooperate with Palestinian merchants to export the dates produced in the settlements illegally established in the West Bank to the European Union, while benefiting from such exemptions.

In the beginning of 2014, the European Union announced its decision to boycott economic, scientific and academic relations with institutions, factories and farms that have any investments or presence in the Israeli settlements established in the occupied Palestinian territories.

Earlier, the ministry of economy confiscated more than 20 tons of corrupt and damaged dates coming from the Israeli settlements while on their way to one of the factories for repackaging to later sell them as a product of Palestine.

September 24, 2014 Posted by | Deception, Economics, Ethnic Cleansing, Racism, Zionism, Illegal Occupation | , , , | Leave a comment

An unsettled climate

By Judith Curry | Climate Etc. | September 21, 2014

In a press conference last week, UN Secretary-General Ban-Ki Moon stated: “Action on climate change is urgent. The more we delay, the more we will pay in lives and in money.” The recently appointed UN Messenger of Peace Leonardo DiCaprio stated “The debate is over. Climate change is happening now.”

These statements reflect a misunderstanding of the state of climate science and the extent to which we can blame adverse consequences such as extreme weather events on human caused climate change. The climate has always changed and will continue to change. Humans are adding carbon dioxide to the atmosphere, and carbon dioxide and other greenhouse gases have a warming effect on the climate. However, there is enduring uncertainty beyond these basic issues, and the most consequential aspects of climate science are the subject of vigorous scientific debate: whether the warming since 1950 has been dominated by human causes, and how the climate will evolve in the 21st century due to both natural and human causes. Societal uncertainties further cloud the issues as to whether warming is ‘dangerous’ and whether we can afford to radically reduce carbon dioxide emissions.

At the heart of the recent scientific debate on climate change is the ‘pause’ or ‘hiatus’ in global warming – the period since 1998 during which global average surface temperatures have not increased. This observed warming hiatus contrasts with the expectation from the 2007 IPCC Fourth Assessment Report that warming would proceed at a rate of 0.2oC/per decade in the early decades of the 21st century. The warming hiatus raises serious questions as to whether the climate model projections of 21st century have much utility for decision making, given uncertainties in climate sensitivity to carbon dioxide, future volcanic eruptions and solar activity, and the multidecadal and century scale oscillations in ocean circulation patterns.

A key argument in favor of emission reductions is concern over the accelerating cost of weather disasters. The accelerating cost is associated with increasing population and wealth in vulnerable regions, and not with any increase in extreme weather events, let alone any increase that can be attributed to human caused climate change. The IPCC Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation found little evidence that supports an increase in extreme weather events that can be attributed to humans. There seems to be a collective ‘weather amnesia’, where the more extreme weather of the 1930’s and 1950’s seems to have been forgotten.

Climate science is no more ‘settled’ than anthropogenic global warming is a ‘hoax’. I am concerned that the climate change problem and its solution have been vastly oversimplified. Deep uncertainty beyond the basics is endemic to the climate change problem, which is arguably characterized as a ‘wicked mess.’ A ‘wicked’ problem is complex with dimensions that are difficult to define and changing with time. A ‘mess’ is characterized by the complexity of interrelated issues, with suboptimal solutions that create additional problems.

Nevertheless, the premise of dangerous anthropogenic climate change is the foundation for a far-reaching plan to reduce greenhouse gas emissions. Elements of this plan may be argued as important for associated energy policy reasons, economics, and/or public health and safety. However, claiming an overwhelming scientific justification for the plan based upon anthropogenic global warming does a disservice both to climate science and to the policy process. Science doesn’t dictate to society what choices to make, but science can assess which policies won’t work and can provide information about uncertainty that is critical for the decision making process.

Can we make good decisions under conditions of deep uncertainty about climate change? Uncertainty in itself is not a reason for inaction. Research to develop low-emission energy technologies and energy efficiency measures are examples of ‘robust’ policies that have little downside, while at the same time have ancillary benefits beyond reducing greenhouse gas emissions. However, attempts to modify the climate through reducing CO2 emissions may turn out to be futile. The hiatus in warming observed over the past 16 years demonstrates that CO2 is not a control knob on climate variability on decadal time scales. Even if CO2 mitigation strategies are successful and climate model projections are correct, an impact on the climate would not be expected until the latter part of the 21st century. Solar variability, volcanic eruptions and long-term ocean oscillations will continue to be sources of unpredictable climate surprises.

Whether or not anthropogenic climate change is exacerbating extreme weather events, vulnerability to extreme weather events will continue owing to increasing population and wealth in vulnerable regions. Climate change (regardless of whether the primary cause is natural or anthropogenic) may be less important in driving vulnerability in most regions than increasing population, land use practices, and ecosystem degradation. Regions that find solutions to current problems of climate variability and extreme weather events and address challenges associated with an increasing population are likely to be well prepared to cope with any additional stresses from climate change.

Oversimplification, claiming ‘settled science’ and ignoring uncertainties not only undercuts the political process and dialogue necessary for real solutions in a highly complex world, but acts to retard scientific progress. It’s time to recognize the complexity and wicked nature of the climate problem, so that we can have a more meaningful dialogue on how to address the complex challenges of climate variability and change.

Related essays

In the midst of preparing my essay, Steve Koonin’s WSJ op-ed was published Climate Science is Not Settled.  Most of Koonin’s points are very similar to what I have been saying, I would say the main difference is related to decision making under deep uncertainty. Koonin states “We are very far from the knowledge needed to make good climate policy.” I argue that there are strategies for decision making under deep uncertainty that can be useful for the climate change problem, particularly if you are not trying to solve the problem of extreme weather events by reducing carbon dioxide emissions. But overall I am thrilled by Koonin’s op-ed — since he operates higher in the scientific and policy food chain than I do, his voice adds much gravitas to the message that I think needs to get out regarding climate science and policy. I would also like to add that Koonin chairs the APS Subcommittee that is reviewing the APS climate change policy statement (see my previous post on the APS Workshop, where I met Koonin).

In the midst of the ‘mad crowd’ in New York City attending the People’s Climate March, sober people are trying to figure out ways to broaden the policy debate on climate change and do a better job of characterizing the uncertainty of climate change (both the science itself and the media portrayal of the science). There is concern that the institutions of science are so mired in advocacy on the topic of dangerous anthropogenic climate change that the checks and balances in science, particularly with regard to minority perspectives, are broken.

Richard Lindzen’s CATO essay Reflections on Rapid Response to Unjustified Climate Alarm discusses the kickoff of CATO’s new center on rapid response to climate alarmism. Anthony Watts has announced the formation of a new professional society The Open Atmospheric Society for meteorologists and climatologists, with a new open access journal.  Both of these efforts emphasize public communication. I’m not sure what kind of impact either of these efforts will have, but I wish them well.

My thinking is that we need more voices from influential scientists like Steve Koonin, along with a more mature framing of the climate science problem and decision making framework that allows for dissent and examines a broader spectrum of solutions and approaches.

September 23, 2014 Posted by | Economics, Science and Pseudo-Science, Timeless or most popular | , | Leave a comment

« Previous Entries     Next Entries »