Merkel wants new "economic government" for the eurozone

Chancellor Angela Merkel is according to Der Spiegel planning a new "economic government" for the eurozone in order to avoid the euro crisis to escalate:

German Chancellor Angela Merkel is to propose a "pact for competitiveness" to the member states of the euro zone in a bid to get countries to harmonize their policies. The plan, which is intended to calm the financial markets' fears about the euro, would introduce a kind of economic government in the euro zone that goes far beyond what has so far been agreed.

Plans by German Chancellor Angela Merkel to introduce an economic government in the euro zone are taking concrete form, SPIEGEL has learned.

The chancellor intends to propose a "pact for competitiveness" to the 17 member states of the monetary union. The planned agreement will "contain concrete commitments to strengthen competitiveness that are more ambitious and more binding than those that have already been agreed by the EU-27," reads a Chancellery document, referring to the wider group of the 27 European Union members. The paper, which has been seen by SPIEGEL, argues that "closer integration of national financial, economic and social policies is necessary" in order to dispel financial markets' concerns about Europe's common currency.

Read the entire article here.

PS
No matter how hard Merkel would like e.g. Greece, Ireland, Spain and Italy to start acting like Germany, it will not succeed. The euro group of countries will never be able to act together in an effecient way, unless they are a part of the federal state of Europe - and even then it would be quite a challenge! But this talk about economic government maybe buys a few months of time ahead of important elections in Germany.

Egypt is burning - Ban Ki Moon and others blabber about climate change in Davos

While Egypt was burning, UN secretary general Ban Ki Moon and other world leaders gathered in Davos were busy blabbering about the imaginary threat of human-enduced "climate change".

Ban Ki Moon:
The United Nations chief pointed out that Washington should set its own house in order instead of waiting for others to take action.
"You have to do your own homework before waiting for others to do."
There are "psychological games" between the United States and Europe on one side, and China, India and Brazil on the other, said Ban.
"They ask you should do first. I think all the proposals are on the table.
"We know each other's pollution. I think they should be responsible for humanity, we have a responsibilty to keep this world sustainable," said Ban.
Making a plea for action on climate change, Ban noted that the world has believed in "consumption without consequences" until now.
"Climate change is showing us that the old model is more than obselete. It has rendered it extremely dangerous. It is a recipe for natural disaster. It is a global suicide attack,(sic!)" he charged.

(entire story here)

AFP reports: "Presidents Felipe Calderon of Mexico and Jacob Zuma of South Africa, hosts of global climate change summits, on Thursday urged the United States to take stronger action on the issue."
"The world needs action from the United States," Calderon said.
But climate change legislation is all but dead in the United States for the forseeable future. Instead, Obama has floated the idea of reducing the country's emissions by requiring that 80 percent of the country's electricity come from "clean energy" sources like wind, nuclear and natural gas by 2035.
At the Davos summit, European Union Climate Commissioner Connie Hedegaard said that, lacking strong policy, U.S. businesses must act to reduce their greenhouse gas emissions.
"The solutions have to come from business," she said, according to The Associated Press. "They will have to come up with alternative ways of doing things."

Allan Friedman, writing in the Atlantic describes the atmosphere in Davos:

It was truly surreal however to watch Ban Ki-moon, Bill Gates, and world leaders sitting on stage to calmly discuss climate change and sustainable development while Egypt was burning. When the UN chief addressed the crowd he waxed eloquently about scarce resources, saying "we have mined our way to growth and pawned our way to prosperity and now supplies are scarce and the scarcest resource is time."

PS
It is time for the organisers to start rethinking about the whole Davos concept. The event has become much too big and bureaucratic. And the participants should seriously consider, whether it really is worthwile to fly to Davos only to hear "world leaders" repeating the same old political, economic and environmental propaganda phrases. But maybe the allure of the Swiss winter paradise blinds their sense of reality? And, of course, there is always the lavish blick tie soarée on Saturday evening to look forward to - all in the name of making the world a better place for us ordinary tax payers.

(image by antiqueprints.com)

"George W. Bush was right about freedom in the Arab world"

The Obama administration - like so many other left leaning politicians in Europe and elsewhere - dismissed George W. Bush´s "freedom agenda" for the Arab world as empty rhetoric to justify the war in Iraq. But - as Elliot Abrams rightly points out in his Washington Post article - Bush was right:

"Are the peoples of the Middle East somehow beyond the reach of liberty? Are millions of men and women and children condemned by history or culture to live in despotism? Are they alone never to know freedom and never even to have a choice in the matter?"
The massive and violent demonstrations underway in Egypt, the smaller ones in Jordan and Yemen, and the recent revolt in Tunisia that inspired those events, have affirmed that the answer is no and are exploding, once and for all, the myth of Arab exceptionalism. Arab nations, too, yearn to throw off the secret police, to read a newspaper that the Ministry of Information has not censored and to vote in free elections. The Arab world may not be swept with a broad wave of revolts now, but neither will it soon forget this moment.
---

All these developments seem to come as a surprise to the Obama administration, which dismissed Bush's "freedom agenda" as overly ideological and meant essentially to defend the invasion of Iraq. But as Bush's support for the Cedar Revolution in Lebanon and for a democratic Palestinian state showed, he was defending self-government, not the use of force. Consider what Bush said in that 2003 speech, which marked the 20th anniversary of the National Endowment for Democracy, an institution established by President Ronald Reagan precisely to support the expansion of freedom.
"Sixty years of Western nations excusing and accommodating the lack of freedom in the Middle East did nothing to make us safe - because in the long run, stability cannot be purchased at the expense of liberty," Bush said. "As long as the Middle East remains a place where freedom does not flourish, it will remain a place of stagnation, resentment and violence ready for export."

Jay Nordlinger, writing in the National Review, on the same subject:

Today, as Egypt explodes, I can’t help thinking of George W. Bush. I think in particular of an appearance he made in Sharm El Sheikh, in May 2008. I wrote about that appearance here. Before a conference of Middle Eastern elites, and their Western associates, Bush gave a speech that stood on the side of the men and women in the prison cells. And the people throughout the region who were hoping for a more democratic, freer, worthier life.

I will quote from my piece (written in the present tense, journal-style):

In due course, Bush slaps down the notion that democracy is a Western value, which America seeks to impose on unwilling people. “This is a condescending form of moral relativism,” he says. “The truth is that freedom is a universal right — the Almighty’s gift to every man, woman, and child on the face of the earth.” 

This was the sort of talk that drove many Middle Eastern elites crazy. (They worried for their positions, for one thing.) It drove many Westerners crazy, too. In America, the Left hated any talk from Bush about freedom and democracy. They thought it was bigoted, dangerous, ethnocentric, theocratic, insensitive, self-congratulatory, hypocritical, warmongering, McCarthyite, crude, etc. As for conservatives, many of them harrumphed, as only conservatives can: “‘Freedom’! ‘Democracy’! A desire ‘beating in every human heart’! What a crock!”

Timothy Garton Ash gets it wrong

There was a time when I thought that Timothy Garton Ash was a man with interesting views. But that was long ago. His article, published in the Los Angeles Times, shows that we are here talking about a man without strong moral values. Garton Ash is clearly much too impressed by the (temporary) success of China and now thinks that the we in the West should "cut our coat to suit our cloth":

But Yan Xuetong, a bracing Chinese analyst of international relations, argues that emerging powers naturally bring to the table their own norms and attempt to spread them as best they can. He has a point. Are China and Russia, or even India and Brazil, more or less ready to adopt Western norms than they were 10 years ago? Less. Are countries in the global south more or less torn between Western and Chinese norms than they were 10 years ago? More.

We should still try to work toward those "shared norms." But let's start by acknowledging that one of the defining features of the new reality is, in fact, that there are divergent norms. China's rulers, for example, would probably be quite happy with a world in which the Americans, the Chinese and the Europeans each conducted their affairs after their own fashion within their own borders, and to some extent — here is where things get fuzzy and dangerous — within their spheres of influence.

The shared norms would then be limited to a fairly minimal set of rules for international order, trade, air traffic and so forth, with a strong presumption of respect for national sovereignty. So one of the fundamental divergences of our time is precisely about how many or how few shared norms we need.

What follows from this for people in countries that do have more-or-less liberal, more-or-less democratic versions of capitalism? Two things above all.

First, we in the West must put our own houses in order. Physician, heal thyself. The most important steps we can take for our influence abroad are those we take at home. We have lived for decades with a paradigm of progress, in which each generation would be better off than the last. Now we'll be hard put to ensure that our children are not less prosperous, less secure and less free than we were.
Second, we probably have to scale down — at least for now — our expectations for those shared norms. This means making hard choices. Do we put the preservation of peace, in the minimal sense of the absence of major war, before all else? Or reversing global warming? Or keeping open the pathways of international trade and finance? Or speaking up for basic human rights? Of course we want all these good things. But we have to cut our coat to suit our cloth.
Read the entire article here.

(image by antiqueprints.com)

Himalayan glaciers growing - not melting

No wonder that former railway engineer Rajendra Pachauri has been rather quiet on this:

Researchers have discovered that contrary to popular belief half of the ice flows in the Karakoram range of the mountains are actually growing rather than shrinking.

The discovery adds a new twist to the row over whether global warming is causing the world's highest mountain range to lose its ice cover.

It further challenges claims made in a 2007 report by the UN's Intergovernmental Panel on Climate Change that the glaciers would be gone by 2035.

Although the head of the panel Dr Rajendra Pachauri later admitted the claim was an error gleaned from unchecked research, he maintained that global warming was melting the glaciers at "a rapid rate", threatening floods throughout north India.

The new study by scientists at the Universities of California and Potsdam has found that half of the glaciers in the Karakoram range, in the northwestern Himlaya, are in fact advancing and that global warming is not the deciding factor in whether a glacier survives or melts.

Read the entire story here.

Joe Biden on Mubarak

Joe Biden thinks that the non-dictator Mubarak should begin to "be responsive to" the needs of the Egyptian people. Good point - if he had said e.g. 20 years ago. Mubarak has been around for only about 30 years, so he has probably not yet had a chance to consider that option ....

Ahead of a day that could prove decisive, NewsHour host Jim Lehrer asked Biden if the time has "come for President Mubarak of Egypt to go?" Biden answered: "No. I think the time has come for President Mubarak to begin to move in the direction that – to be more responsive to some... of the needs of the people out there."
Asked if he would characterize Mubarak as a dictator Biden responded: “Mubarak has been an ally of ours in a number of things. And he’s been very responsible on, relative to geopolitical interest in the region, the Middle East peace efforts; the actions Egypt has taken relative to normalizing relationship with – with Israel. … I would not refer to him as a dictator.”

Read the entire article here.

(image by antiqueprints.com)

Former investor spoils the the day for Russians in Davos

Bill Browder, a former  big investor in Russia, spoiled the party for the Russians in Davos:

(Reuters) - A former big investor in Russia, who accuses the government of stealing his firms and killing his lawyer, spoiled on Thursday a Russian show in Davos meant to woo investors.
Bill Browder, who had around $4 billion invested in Russia through his Hermitage fund, says he had to flee Russia after accusing officials of corruption and saw some of his firms being stolen from him by Interior Ministry officials.
One of his lawyers, Sergei Magnitsky, died in jail last year from what Browder says was torture.
The case has shaken investor confidence and draw criticism from Western organizations and governments. President Dmitry Medvedev ordered an investigation in the case, fired several officials but Browder says the main culprits remain unpunished.
"The president of the country called for an investigation into the people who killed my lawyer," Browder told a panel chaired by Russia's first deputy Prime Minister Igor Shuvalov and a hall packed with Western executives.
"One year after the investigation people who killed the lawyer have been promoted higher by state orders... My question to you, Igor, is what will prevent other investors to have the same experience after my experience in Russia," he said at the discussion, entitled "Russia's Next Steps to Modernization."

It is encouraging that people like Browder speak out loud and clear. Most CEO:s - whose companies have business interests in Russia, choose to ignore the widespread corruption in Russia:

Most CEOs, whose companies have large deals and ventures in Russia, spoke in very gentle terms about the need for increased transparency and barely mentioned corruption and the rule of law, often named by other investors as Russia's main problems.

"The government is doing everything possible to encourage foreign investors," said the CEO of PepsiCo, Indra Nooyi, praising Prime Minister Vladimir Putin for a speedy blessing of PepsiCo's latest acquisition in Russia in late 2010, which she said was granted within hours.

It certainly looks like Putin has caught the Pepsi spirit. He probably also likes the other old Pepsi slogan "Taste That Beats The Others Cold".

Read the entire Reuters article here.

The end of the German export miracle - and what it means for the euro

Jeff Randall, writing in the Telegraph, thinks that the end of the euro in its present form is near:

On current form, Greece will be paying nearly 10 per cent of its GDP in interest by 2015. Portugal’s 10-year borrowing costs are close to an unsustainable 7 per cent and would be even higher were it not for market manipulation by the European Central Bank. And Spain is sitting on 700,000 unsold homes, 20 per cent unemployment and a 33 per cent deterioration in competitiveness against Germany since the euro was formed.
Yes, the system is working a treat. No luck required, just more money. But from where will it come? The bail-out fund of 750 billion euros, cobbled together by the European Union and IMF, will not be enough. It may buy time, allowing Athens, Lisbon and Madrid to play the wheel for longer than they should, but their financial attrition grinds on.
Of the six eurozone countries that still have triple-A credit ratings – Austria, Finland, France, Germany, Luxembourg and the Netherlands – only one really matters: Germany. As the EU’s economic powerhouse (GDP growth was 3.6 per cent in 2010), it has become the lender of last resort. So far, Berlin has paid up, but 62 per cent of Germans now oppose further rescue packages for EU losers. Faced with choosing between Europe’s olive belt and her own electorate, Chancellor Angela Merkel will turn off the aid tap.

Randall thinks that a new strong euro will follow the secession or expulsion of the weak euro members:

Thus the euro, as we know it, is finished. Which is why… I’m a buyer of the euro. When the crunch comes – and the laggards secede or are expelled – the residue will be a group of solvent nations, unhindered by chronic budget and trade imbalances. As veteran investor Jim Rogers explains: “The more I look at it, the more I see Germany taking control of the euro.” That’ll do nicely.

Read the entire Telegraph article here.

Of all the comments to Randall´s article, this one is the most interesting:

"Of the six eurozone countries that still have triple-A credit ratings – Austria, Finland, France, Germany, Luxembourg and the Netherlands – only one really matters: Germany."

And when the Chinese house of cards collapses, as it will, so will the German export miracle.

This is exactly where the danger is from Germany´s point of view. Of course, nobody in Germany is speaking about what the bursting of the China bubble will mean for the present German economic boom, but Merkel and other key decision makers must be aware of this very real danger. In such a situation Germany will most certainly not be able to continue as paymaster of the eurozone. Then there will be a totally new ball game in Europe .... 

The Wikileaks cables and Arab democracy

Tom Malinowski´s article in Foreign Policy is worth reading. He asks the following question:

Did the Wikileaked State Department cables that described Tunisia's deposed leader Zine el-Abedin Ben Ali as the head of a corrupt police state play any role in encouraging the democratic uprising against him -- and thus spark the wave of protests now spreading across Egypt?

The answer seems to be, yes:

In one fell swoop, the candor of the cables released by WikiL,eaks did more for Arab democracy than decades of backstage U.S. diplomacy.

Malinowski offers the following conlusion:

America's relationship with China did not crumble when Hillary Clinton challenged its government to stop censoring the Internet last year, or when she challenged the country to account for the dissidents it has disappeared over the years just days before last week's summit between presidents Barack Obama and Hu Jintao. America's Arab friends did not walk away from their alliances with the United States after Clinton told them, at a recent public forum in Qatar, that "people have grown tired of [their] corrupt institutions and stagnant political order." Such public candor not only encourages dissidents in repressive societies, but stimulates debate among elites, who often privately admit that the Americans have a point. It can contribute to those magical moments -- unpredictable, infrequent, but in the longer scheme of things inevitable -- when stagnant order gives way to vibrant change.

The people of Tunisia shouldn't have had to wait for Wikileaks to learn that the U.S. saw their country just as they did. It's time that the gulf between what American diplomats know and what they say got smaller.

Read the entire article here.

BBC - a propaganda machine for climate alarmists

For myself - and quite a lot of other observers - the sad truth has been quite obvious already for a number of years: When it comes to global warming (or "climate change") the BBC has lost all journalistic credibility by choosing to act as a propaganda machine for all the world´s climate alarmists. Now one of the BBC´s most respected (former) news anchors, Peter Sissons, gives us an insider´s view of what has been - and still is -going on in the Beeb:

For me, though, the most worrying aspect of political correctness was over the story that recurred with increasing frequency during my last ten years at the BBC — global warming (or ‘climate change’, as it became known when temperatures appeared to level off or fall slightly after 1998). 
From the beginning I was unhappy at how one-sided the BBC’s coverage of the issue was, and how much more complicated the climate system was than the over-simplified two-minute reports that were the stock-in-trade of the BBC’s environment correspondents. 
These, without exception, accepted the UN’s assurance that ‘the science is settled’ and that human emissions of carbon dioxide threatened the world with catastrophic climate change. Environmental pressure groups could be guaranteed that their press releases, usually beginning with the words ‘scientists say . . . ’ would get on air unchallenged.

On one occasion, an MP used BBC airtime to link climate change ­doubters with perverts and holocaust deniers, and his famous interviewer didn’t bat an eyelid.

On one occasion, after the inauguration of Barack Obama as president in 2009, the science correspondent of Newsnight actually informed viewers ‘scientists calculate that he has just four years to save the world’. What she didn’t tell viewers was that only one alarmist scientist, NASA’s James Hansen, had said that.

Sissons continues:

It’s the lack of simple curiosity about one of the great issues of our time that I find so puzzling about the BBC. When the topic first came to ­prominence, the first thing I did was trawl the internet to find out as much as possible about it. 
Anyone who does this with a mind not closed by religious fervour will find a mass of material by respectable scientists who question the orthodoxy. Admittedly, they are in the minority, but scepticism should be the natural instinct of scientists — and the default setting of journalists.
Yet the cream of the BBC’s inquisitors during my time there never laid a glove on those who repeated the ­mantra that ‘the science is settled’. On one occasion, an MP used BBC airtime to link climate change ­doubters with perverts and holocaust deniers, and his famous interviewer didn’t bat an eyelid.
Meanwhile, Al Gore, the former U.S. Vice-President and climate change campaigner, entertained the BBC’s editorial elite in his suite at the Dorchester and was given a free run to make his case to an admiring internal audience at Television Centre. 
His views were never subjected to journalistic scrutiny, even when a British High Court judge ruled that his film, An Inconvenient Truth, ­contained at least nine scientific errors, and that ministers must send new guidance to teachers before it was screened in schools. From the BBC’s standpoint, the judgment was the real inconvenience, and its ­environment correspondents downplayed its significance.

Read the entire Daily Mail story here.

The world´s first "green" empire

(image by wikipedia)

A new study shows that Genghis Khan was the founder of the world´s first "green" empire:

In 1206 AD Genghis Kahn began the Mongol invasion: a horse-crazed bow-wielding military force that swept through much of modern-day Asia into the Middle East and Eastern Europe. But aside from creating the world's largest empire, the Mongol invasion had another global impact that has remained hidden in history according to new research by Julia Pongratz of the Carnegie Institution's Department of Global Ecology. Genghis Kahn and his empire, which lasted nearly two centuries, actually cooled the Earth. 

The answer to how this happened can be told in one word: reforestation. When the Mongol hordes invaded Asia, the Middle East, and Europe they left behind a massive body count, depopulating many regions. With less people, large swathes of cultivated fields eventually returned to forests, absorbing carbon dioxide from the atmosphere. 


The study mentions the massive body count, true. But it does not seem to give the actual figure; this body count is estimated to have been about 40 million people! Genghis Khan thus equals Mao Zedong in getting people killed. 

With that kind of a historic role model, I am not at all surprised that many of today´s greenies and climate alarmists - led by NASA´s James Hansen - put their last hope on communist China becoming the long awaited climate saviour:

In the op ed piece for the Chinese newspaper, which he (James Hansen) entitled Chinese Leadership Needed to Save Humanity (published as The Price of Change) Hansen placed the blame for the vast majority of Co2 emissions supposedly causing global warming on his home country of America, and appealed to China not to follow the same path. Hansen said that China was the world’s “best hope” and called for them to “lead the world through the most dangerous crisis that humanity and nature have ever faced”.

In a follow-up article published on his website Hansen calls Americans “barbarians” and slams American democracy, calling for China to raise tariffs on American-made products until such time as America falls into line.

Read the entire story here.

PS
It is more and more difficult to understand why and how a person like James Hansen is allowed to continue his insane propagand and still keep his job at NASA.

Get ready for COLD winters!

Europeans should be prepared for cold winters over the the next  20 to 40 years, according to the US-based Weather Services International:

“We have recently noticed a change in [weather] patterns back to what we had in the 1950s and 1960s in Europe... We’ve had three cold winters in a row in the UK,” WSI’s chief meteorologist Todd Crawford told Platts.
“We believe there is a strong likelihood that it’s going to hang around for the next 20 to 30 years.”
If true, the findings could have important implications for the European energy markets, where demand typically increases during winter because of higher heating and lighting requirements.
Peak electricity demand hit an all-time record in France at the beginning of December, and was near its historic record in the UK, amid temperatures that were more than 10 degrees Celsius below the seasonal norm.
Natural gas and gasoil demand also soared. Behind the freezing temperatures is the North Atlantic Oscillation, a climatic phenomenon that normally sends wind from western European countries to the east, keeping cold air from the Arctic at bay. But in December the current was flowing in the opposite direction, bringing cold Arctic air to western European regions and sending energy demand to fresh highs.

Read the entire article here.

PS
Those - e.g. in Germany, Denmark and Sweden - who dream about "green" energy soon replacing traditional fossile and nuclear energy should take note. With colder winters, a few thousand tax payer subsidized wind turbines will not be enough to keep us warm.

PS 2
And it looks like at least this winter is continuing to be cold in the US.

"West dismisses Russian threat at its own peril"

Oksana Bashuk Hepburn, former senior policy adviser for the government of Canada is - rightly - worried about the lack of criticism towards Putin´s Russia in the Western countries: 
Russia’s lawlessness is evident. It invades sovereign territory, issues passports to citizens of other states and fails to honor agreements to withdraw troops. It ranks in the top 10 percent of the world’s most corrupt states; the only G-20 country with such a distinction. There’s mischief-making in Transdnistria, cyber attack on Estonia, interference in Kyrgyz Republic's internal affairs. Relations with neighbors are consistently confrontational. It even uses orthodoxy to spread 19-century pan-Russianism worldwide.

The state, under President Dmitri Medvedev and Prime Minister Vladimir Putin, controls virtually all aspects of domestic affairs: Political opposition in the Duma; parliament is stifled. Much of the Russian media serve its oligarch -- read government --owners. Insubordinate journalists are murdered; the leading independent paper Novaya Gazeta lost five, including Anna Politkovskaya; three others have been killed in the last few weeks.

Business shenanigans are legion, best exemplified by the lengthy incarceration of Mikhail Khodorkovsky, Russia’s former energy czar. Most of Russia’s wealth is controlled by oligarchs favoring the state. Those who do not, like Boris Berezovsky, must flee.

And matters are getting worse. Liberties at home are declining and aggression towards neighbours is rising as Russia, once again, pursues its 19th century imperialist doctrine of Czar Nicholas I “autocracy, orthodoxy and nationalism”.
Yet, Russia is accommodated by Western powers.

Following the West’s Cold War victory which liberated some 500 million people and 15 states plus the satellites, from the concentration camp that was the Soviet Union, Russia was in no better position to negotiate terms than post-war Germany. Yet, some--Stalin’s moniker for Western apologists of the USSR had been “useful idiots” -- lobbied hard to stop the “humiliation” of Russia and blessing its unilateral claim to a new “near abroad” empire. To this end, Ukraine and Kazakhstan were threatened with aid withdrawal if exclusive control of the Soviet nuclear arsenal were denied Russia. And when NATO membership support was nearing 70 percent in Ukraine, Western democracies sided with Russia’s nyet rather than admit the largest European country-- a fledgling democracy aiming to embrace the West--into its fold. The pattern persists: there was tepid consternation rather than outrage as Putin threatened Ukraine and Georgia with nuclear annihilation were NATO membership to be granted.
Russia appeasement is alive and well as short-term interests get in the way of principles and strategic goals. This gets France technology transfer contracts for Russia’s naval fleet enlargement. Germany’s Angela Merkel--with roots in East Germany where Mr. Putin served as a KGB operative, speaks Russian at official bilateral meetings and works hard to be on the right side of Russia’s energy policies. The United States may have a new START agreement, open bases in Kyrgystan and cooperation in dealing with Iran’s nuclear threat but at what price?

Read the entire article here.

China - a warning to international investors

Chinese and international newspapers are full of reports like this one:

China is poised to become the world's largest luxury goods market in the next five to seven years, according to Boston Consulting Group in its latest survey of Chinese consumer trends released in Beijing yesterday.

"By 2015, 29 percent of global luxury product consumption will come from China, making it the world's largest luxury market," Vincent Lui, principal of Boston Consulting's Hong Kong office, said at a news conference yesterday.

----

China's booming luxury goods market makes it an oasis of hope for global luxury brands, which are losing ground in other markets.

At present, Shanghai and Beijing have as many luxury point-of-sale locations per capita as both New York and Chicago. Plus, the two Chinese cities have a slightly higher concentration of luxury watch outlets than other major city in the world.

For luxury purveyors, a big part of China's allure is the rapid pace of wealth accumulation.

At the end of 2008, China boasted 417,000 households each with a net worth of more than $1 million in assets under management, according to research by Boston Consulting and leading Chinese banks.

Boston Consulting also pointed out that this category is expanding quickly and is expected to top 609,000 households by the end of 2011.

However, foreign investors (and other decision makers) should understand that the Chinese bubble will burst before long. Lawrence Solomon, writing in the Canadian National Post, looks at the other side of the China story:

China’s stability today is more precarious than was the Soviet Union’s before its fall. China’s poor are poorer than the Soviet Union’s poor, and they are much more numerous — about one billion in a country of 1.3 billion. Moreover, in the Soviet Union there was no sizeable middle class — just about everyone was poor and shared in the same hardships, avoiding resentments that might otherwise have arisen.
In China, the resentments are palpable. Many of the 300 million people who have risen out of poverty flaunt their new wealth, often egregiously so. This is especially so with the new class of rich, all but non-existent just a few years ago, which now includes some 500,000 millionaires and 200 billionaires. Worse, the gap between rich and poor has been increasing. Ominously, the bottom billion views as illegitimate the wealth of the top 300 million.
How did so many become so rich so quickly? For the most part, through corruption. Twenty years ago, the Communist Party decided that “getting rich is glorious,” giving the green light to lawless capitalism. The rulers in China started by awarding themselves and their families the lion’s share of the state’s resources in the guise of privatization, and by selling licences and other access to the economy to cronies in exchange for bribes. The system of corruption, and the public acceptance of corruption, is now pervasive — even minor officials in government backwaters are now able to enrich themselves handsomely.

But China is a powder keg, waiting to explode, says Solomon:

The government tries to tamp down the outrage over the abuses inflicted on the public by banning demonstrations and censoring the Internet. But it is failing. Year by year, the number of demonstrations increases. Last year alone saw 100,000 such protests across the county, directly involving tens and indirectly perhaps hundreds of millions of protesters.
China is a powder keg that could explode at any moment. And if it does explode, chaos could ensue — as the Chinese are only too well aware, the country has a brutal history of carnage at the hands of unruly mobs. For this reason, corrupt officials inside China, likely by the tens of thousands, have made contingency plans, obtaining foreign passports, buying second homes abroad, establishing their families and businesses abroad, or otherwise planning their escapes. Also for this reason, much of the middle class supports the government’s increasingly repressive efforts.

Read the entire arcticle here.

The real Galileo story

Christopher Booker, writing in the Telegraph, gives us the real story behind the EU´s scandal-ridden Galileo project:

The cover story for Galileo, from the time of its launch in 2000, was that it was a civil project, largely to be paid for by private investors, who could then charge its users. GPS, on the other hand, is funded by US taxpayers as an openly military project, which is why its spin-off uses, such as to the owners of sat-navs, are free. It was hoped that Galileo could be paid for through a satellite-based road-charging scheme across the EU. But in 2007, after it became clear that this was not viable, the private partners pulled out, landing the entire, ever-rising bill on EU taxpayers.

The real story of Galileo, however – as a French defence minister admitted in 2004, and as I have been reporting here for years – is that it has always been pushed by France as a military system which in time of war could operate independently of the US system. It is seen as the key to France selling billions of pounds worth of satellite-guided missiles, above all to China, which in 2003 bought a 20 per cent share in Galileo.


Read the entire column here.

PS
As we reported earlier, The CEO of the German satellite technology company OHB System was suspended because he told senior American officials at a private dinner that Galileo was a "stupid idea" intended only to serve French interests.