Saturday, 16 April 2011

Nouriel Roubini thinks China will suffer a "hard landing"



"Beijing's Empty Bullet Trains"

"Dr. Doom", professor Nouriel Roubini, is joining the group of economists, who think the China bubble will burst:

The problem, of course, is that no country can be productive enough to reinvest 50 percent of GDP in new capital stock without eventually facing immense overcapacity and a staggering nonperforming loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.
Commercial and high-end residential investment has been excessive, automobile capacity has outstripped even the recent surge in sales, and overcapacity in steel, cement, and other manufacturing sectors is increasing further. In the short run, the investment boom will fuel inflation, owing to the highly resource-intensive character of growth. But overcapacity will lead inevitably to serious deflationary pressures, starting with the manufacturing and real-estate sectors.
Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment—including East Asia in the 1990s—have ended with a financial crisis and/or a long period of slow growth. To avoid this fate, China needs to save less, reduce fixed investment, cut net exports as a share of GDP, and boost the share of consumption.

The trouble is that the reasons the Chinese save so much and consume so little are structural. It will take two decades of reforms to change the incentive to overinvest.

Read the entire article here

Planning of the UN multibillion dollar climate money machine to start

At the UN climate change meeting in Cancun the leaders of the "developed" countries committed their countries to "a goal of mobilizing jointly USD 100 billion per year by 2020" to "developing" countries, all in the name of fighting imaginary human induced "climate change".

The countries on the receiving end - and of course the UN climate change bureaucracy - are now pressing full steam ahead in order to organize the massive money transfer, which could be a real bonanza for many of the world´s less than democratic governments and dictators.

The UNFCCC has proudly announced the names of the 40 people, who will start planning the bureaucracy needed for the money transfers:

Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have agreed the selection of the forty members who will be entrusted with the task of designing the Green Climate Fund, the new institution which will manage long-term finance mobilized to enable developing countries to address climate change.

The by far greatest future payer, the US, has chosen Assistant Secretary for International Markets and Development, Marisa Lago as its representative in the Green Fund planning group. She will have the pleasant duty to locate the billions annually to be paid from the Treasury´s empty coffers.

The good news:
It is almost certain that the developing countries are in for a great disappointment. It is higly unlikely that they will receive the annual 100 billions from 2020 on; even the UN press release talks about the "goal" of 100 billion per year. As we all know, a "goal" is not a firm commitment. But even 10 billions would be a waste of taxpayers´ money!

Daniel Hannan: Europe can never be democratic

British tory MEP Daniel Hannan has again in a speech pointed out, why the European Union is not - and will not be - democratic:

EU´s Rehn bullish about the euro

Olli Rehn, EU commissioner in charge of Economic and Monetary Affairs, speaking at the Brookings Institute in Washington DC, was very upbeat about the euro:

While I cannot yet say "mission accomplished", I am increasingly confident that we are entering into the endgame of the crisis management phase.

The European financial stability mechanism and facility are in force until mid-2013. After that they will be replaced by a permanent European Stability Mechanism (ESM), which will safeguard financial stability in the euro area. It will contain three elements: financial assistance, an adjustment programme and a possibility for private sector involvement, based on an analysis of debt sustainability.

What has been achieved with these arrangements? By providing conditional financial assistance to soon three EU Member States, we have prevented financial chaos in Europe, which could have had potentially serious global repercussions. Preventing a European Lehman has not been a simple task, with 27 fiscal authorities and 11 central banks – we never had the genius of Alexander Hamilton to draw on, like you did, unless you count Jacques Delors for this too – but the task has nevertheless been accomplished.
But let me be clear, the euro is not on the list of problems. Instead, it is an essential part of the solution. It contributes to growth by enhancing cross-border economic activity and competition, and is essential for macro-economic stability.
Lastly, let me recall that the euro is not just a technical monetary arrangement, but rather the core political project of the European Union.  As such, it is a symbol of our political will and determination to work together for our common good.
That is a further reason why it is worth taking Europe seriously when we say that we are ready to do whatever it takes to defend the euro and financial stability in Europe.

Read the entire speech here

Rehn´s bullishness is not shared by everybody:

Also speaking in the US capital at the annual spring joint meeting of the IMF and the World Bank, the president of the international lender, Dominique Strauss-Kahn said that the world should not be complacent and that the European response to the crisis is insufficient.
"We are arguing here in the IMF for at least six months that there is a need for a more comprehensive plan on the European side. The piecemeal approach, dealing with interest rates one day and something else another day, is not working well," he said.
He warned that bailed out countries needed to stick to their agreed austerity plans and that European banks still require recapitalisation.

Read the entire article here

The Wall Street Journal reports:

The majority of euro-zone countries believe a restructuring of Greek debt is inevitable and could happen next year, two senior euro-zone government officials familiar with the matter said Thursday

"There is widespread belief inside the euro zone that a Greek debt restructuring will happen some time next year. The European Central Bank and the International Monetary Fund believe the same," said one of the officials, who is directly involved in talks with the European Union and the IMF.

The markets did not either share Mr. Rehn´s bullishness:

The euro fell the most since November against the yen and dropped from a 15-month high versus the dollar on concern a bailout for Greece may fail to prevent the first default by a country in the 17-nation currency region.

Germany’s Zeit newspaper reported April 14 that a restructuring of Greek sovereign debt may involve imposing losses of 50 to 70 percent on investors. Ireland’s credit rating was cut two levels by Moody’s Investors Service to the lowest investment grade as the government struggles to lower the budget deficit and restore economic growth.

Read the entire article here

It is, of course, part of Mr. Rehn´s job to try to prop up the euro, but he does not increase his own - and the euro´s - credibility by painting a much too rosy picture. To boast that the mission (task) "has  nevertheless been accomplished" was not very wise. He may have to eat his words in the not too distant future.

Friday, 15 April 2011

Russians welcome a second term for Obama

Already in July 2009 Obama showed why the the representatives of the corrupted regime of Russian ruler Vladimir Putin have reason to support him.

Russian politicians and commentators would welcome a second term for Obama, the Moscow Times reports. Sergej Markov, a deputy for Putin´s ruling party, United Russia explains why:

"We should support Obama because he softened support for anti-Russian regimes in our neighborhood, like that of [Georgian President Mikheil] Saakashvili,"

Not very much to be proud of for Obama!

Another mass grave found in Iraq

Christopher Hitchens about another of the mass graves in Iraq

The BBC reports about another mass grave found in Iraq:

Iraqi officials have found a mass grave containing the bodies of more than 800 people thought to have been executed during Saddam Hussein's rule.
"There were shots to the head, there were men, women and children," said Human Rights Minister Mohammed Sudani.
The grave was found in Iraq's western Anbar province. The remains are thought to be from the 1980-88 Iraq-Iran war.
Rights groups say there are hundreds of graves in Iraq with the bodies of up to 300,000 people killed under Saddam.
"This mass grave represents one of the ugliest crimes of the former regime and a huge violation of human rights," said Mr Sudani of the latest find in Anbar.

Saddam Hussein was, if possible, an even more bloodthirsty dictator than Libya´s Gaddafi. President George W. Bush was right when he decided to get rid of Hussein, in spite of the fact that the war was not sanctioned by the UN Security Council, mainly because of French and German opposition for (opportunistic) reasons of  domestic policy and trade. Nobody denies that serious mistakes were made after first succesful operations, but still Bush was right to intervene, even if no weapons of mass destruction were not found (later). With the active support and participation of France and Germany, the task in Iraq would have been much easier.

William Jefferson "Bill" Clinton in denial of reality

Bill Clinton, April 13, 2011 (The New York Oberserver):

"Now, there is almost nobody in denial about the reality of climate change,"

Gallup,  March 11, 2011:

"In a sharp turnaround from what Gallup found as recently as three years ago, Americans are now almost evenly split in their views of the cause of increases in the Earth's temperature over the last century."

PRINCETON, NJ -- Gallup's annual update on Americans' attitudes toward the environment shows a public that over the last two years has become less worried about the threat of global warming, less convinced that its effects are already happening, and more likely to believe that scientists themselves are uncertain about its occurrence. In response to one key question, 48% of Americans now believe that the seriousness of global warming is generally exaggerated, up from 41% in 2009 and 31% in 1997, when Gallup first asked the question.

How is it possible that the former president is so ill-informed? Does he not read newspapers ? Does he not have any advisers, who keep him informed?  Or has his economic situation become so bad, that he cannot afford to buy newspapers and keep advisers?

Or could this be another case for Steve Van Aperen?

Thursday, 14 April 2011

Persecution of Christians increasing in China and many other countries

Pastor Wang Zhanhu was hit by a police baton and went into a coma. (Photo by Wang family, published by ChinaAid)

The persecution of Christians continues in China. ChinaAid reports about the latest cases:
Two house church leaders in Huaxian, Shaanxi Province and Fanxian, Henan Province were harassed by police. When the former attempted to prevent the police from disturbing an assembly,  the police hit him with an electric baton and the brother went into a coma on the spot. He is currently still under treatment in the hospital. And police blocked up the haentrance to the latter’s home with bricks again, so he and his family could not enter or exit their home.

Read the entire article here

ChinaAid has recently published a report which makes it clear that China´s communist government, despite its promises to improve its human rights record, allows the persecution of Christians to escalate:

For the fifth straight year, the government’s persecution of the Church in China has continued to escalate, according to an annual report by ChinaAid Association, one of VOM’s partners. The March 31 report was based on 90 known cases of persecution against Christians in China throughout 2010. As ChinaAid President Bob Fu noted, the Chinese government’s stranglehold on information makes it impossible for all of the instances of Christian persecution to be documented and taken into consideration. This report is helpful, however, in revealing the widespread extent of opposition facing believers, as the incidences came from throughout China and involved people from all levels of society. It also highlighted three new alarming trends: the full-scale suppression of Christian human rights lawyers groups; use of abuse, torture and mafia tactics; and a severe crackdown on official Three-Self Patriotic Movement churches that do not accept government control. “China still has a long way to go toward true religious freedom and rule of law,” said Fu.

Read the entire article in the Canada Free Press here

You can download the entire report here

Christians are also persecuted in the neighbouring India:

Reports of violence against believers, village churches being destroyed and church leaders being threatened by local Hindus continue to be a daily reality in India. Other persecution faced by Christians is more subtle, as converts to Christianity are often cast out of their families, denied inheritance rights and face poverty and ostracism.

Read the entire India country report

As a matter of fact, Christians are persecuted in a great number of countries - particularly in many muslim countries -  but this is often ignored by mainstream media in Western countries. This CBN report explains why:

Wednesday, 13 April 2011

Oxfam uses people in need to spread false climate change propaganda

Oxfam Australia has also used Ursula Rakova in spreading its climate change propaganda

Yesterday Oxfam Ireland and the Mary Robinson Foundation - Climate Justice hosted a discussion in which two "women leaders from the developing world bring their experience of climate change to Dublin, the first city on their Climate Wise Women European Tour". Former President Mary Robinson participated in the discussion which included presentions by Constance Okollet from Uganda and Ursula Rakova from the South Pacific Carteret Islands.
Following on from global climate talks in Copenhagen in 2009 and Cancun in 2010 the world will address these issues in Durban, South Africa at the end of 2011. Voices like those of Constance Okollet and Ursula Rakova bear witness to the impacts of extreme drought, flooding and rising sea levels on their respective communities.
Mary Robinson explained “When we focus on the human dimension of climate change, we see the effects of the problem differently and we then approach the solutions differently. Giving voice to the experiences of these women, allowing them to bear witness to their experiences can influence policy outcomes and instruments of adaptation”.
Ursula Rakova Executive Director of Tuele Peisa of the Cartaret Island of the South Pacific, will describe the urgent situation facing the Carteret Islanders that has required the community to relocate to Bougainville, a larger island that is part of Papua New Guinea.  Climate change has played a major role in the destruction of the Carteret atoll, with unprecedented king tides destroying the soil for food production and rapidly covering the land mass forcing the community to move.  Ursula will explain the how the community has been pro-active in meeting the challenge, the delicate process of negotiating with the communities on Bougainville for land and home construction for the Carteret Islanders and, just as essential, the acceptance of her people within the new community. 
The case of the Carteret Islands is another blatant example of how alarmist NGO´s actively spread false information in order to promote their alarmist cause. The truth is that global warming (climate change) does not have anything to do with "the urgent situation" facing Carteret islanders. The latest research by University of Auckland professor Paul Kench, shows - as most people probably know by now - shows that Pacific islands are not sinking due to global warming.
Australien blogger Brian Darcey already in 2009 explained what has been happening in the Carteret Islands:
The Carteret Islands, also known as Kilinailau Atoll are a low lying group of islands north east of Bougainville Island. The sea is slowly invading them as they sit perched on the encircling reef, just a few feet above the surrounding sea, and the global warming Industry has used the plight of the people there as an example of the ill effects of climate change.
There is no question that the Carterets are being flooded by ever increasing erosion from the invading sea, or that this will continue until they disappear, and that rest of the world, including Australia is morally obliged ensure that the Carteret Islanders are relocated in a new homeland. Some have already left for Bougainville, and the rest will follow once the painfully slow task of confirming ownership of new communal land is completed.Attermpts to portray the islander's plight as an illustration of the fate awaiting us all unless we heed apocalyptic warnings on rising sea levels continue unabated and should be shown up and resisted.
But despite all this, the sea is not rising at the Carterets any more than it is rising on nearby Bougainville or, for that matter on Bondi Beach as a visit to either will demonstrate. Tide levels worldwide are much as has been predicted and continue to show no appreciable increase overall, nor are they expected to do so: published tide tables for anywhere on the planet will confirm that this is so.

The inconvenient truth is that the sea is not rising: Kilinailau Atoll is sinking, and will almost certainly continue to do so because it is on the wrong side of the junction between two opposing tectonic plates on the sea bottom.
The Carteret's fate has nothing to do with surface weather or global temperatures, rising or otherwise. The under sea fault alongside this island group follows the Ring of Fire which runs from New Zealand through PNG and The Phillipines up to Japan and then over to Alaska and down the Americas to Antartica with active volcanoes at irregular intervals along its entire length.
The fault is visible evidence of the result of vertical movements both up and down in the earth's crust. The huge slow-moving plates collide along it in tectonically induced conflict producing constant instability and this is what is drowning the Carterets. The earth under them is sinking and taking them with it.

Wikipedia gives us some additional information:

Another likely primary cause, is damage inflicted over decades by the indigenous fishing industry. Ammonium Nitrate bomblets, used to stun fish for harvesting, had the effect of breaking up the surrounding Coral beds which form the foundation of the islands. The effect was unintended, but devastating. The Coral is destroyed and is unable to recover for decades, once it is blasted. The foundation of remaining land is impaired, and the islands begin to sink. Exhaustion of the fresh water aquifer may also have exacerbated the sinking.
Additionally, the area is tectonically active, and subsidence is highly likely. NASA's Jason satellite data demonstrates a zero sea level change between January 2004 and present, +/- 20 mm.
The Carteret islands likely consist of a base of coral that sits atop an extinct volcanic mount. In the usual geological course of events first proposed by Charles Darwin, such islands eventually subside due to weathering and erosion, as well as isostatic adjustments of the sea floor. It has also been speculated that dynamite fishing [5] in the Carterets such as occurred in the island during the prolonged Bougainvilleconflict may be contributing to the increased inundation. Coral reefs buffer against wave and tidal action, and so their degradation may increase an island's level of exposure to those forces. Another suggestion is that tectonic movement may be causing the gradual subsidence of the atoll. [7]

Historically other populated islands, for example Tuanaki in the Cook Islands (last seen in 1842), are known to have sunk entirely and relatively suddenly for causes unrelated to rising sea levels.[8]

The other lady, Constance Okollet, is touring Europe to tell her story, which does not sound any more convincing as proof of human induced global warming:

Constance Okollet, Chairperson of the Osukura United Women Network in Eastern Uganda will speak of the dramatic changes in climate that have been occurring in her region of Uganda since 2006. Extreme cycles of drought and rain make it impossible to grow traditional crops, threatening the food security of the community and limiting their ability to earn a modest living. Death by drowning, starvation or disease and disruption to children’s education are some of the other impacts of climate change experienced.
Constance will tell of her own awakening to the causes and effects of climate change at a community meeting organised by Oxfam that led her to understand that the climatic changes her people experienced were not an expression in her words of God’s displeasure with them but were, in fact, caused by mankind

It is quite clear that people in need - both in Uganda and the Claretet Islands - should get help, but to use their plight in order to promote false global warming/climate change propaganda is immoral, to say the least.

Obama´s strange Libya policy

This is difficult to understand:

WASHINGTON (AP) -- Despite rebel setbacks and an increasingly public rift with NATO allies, the U.S. will stick to its plan to remain in the back seat of the Libya air campaign, the Obama administration insisted Tuesday after three weeks of air missions that have failed to turn the tide against Moammar Gadhafi.
France's defense minister declared that without full American participation, the West probably would not be able to stop attacks by Gadhafi loyalists on besieged rebel cities.
U.S. officials said they were comfortable with their role and had no plans to step up involvement, even as British and French officials said Washington's military might was needed to ensure the mission's success. The Americans said NATO could carry out the operation without a resumption of the heavy U.S. efforts that kicked it off last month.
"The president and this administration believes that NATO, and the coalition of which we remain a partner, is capable of fulfilling that mission of enforcing the no-fly zone, enforcing the arms embargo and providing civilian protection," White House spokesman Jay Carney told reporters.

Read the entire article here

If this remains the policy of the Obama administration, then one might ask, why did they decide to join the operation at all?

Let there be dark - "play God, it's very tempting to a scientist"

This the "geoengineers" want to achieve with balloons and sulfates

"Four dozen thinkers pondered the planet´s fate as it grows warmer" in "the quiet green solitude of an English country estate" in three "intense days", tells us the Huffpost Green. What did these "thinkers" come up with?

Only one idea emerged with a potential, according to Huffpost:

"By most accounts, the leading contender is stratospheric aerosol particles," said climatologist John Shepherd of Britain's Southampton University.
The particles would be sun-reflecting sulfates spewed into the lower stratosphere from aircraft, balloons or other devices – much like the sulfur dioxide emitted by the eruption of the Philippines' Mount Pinatubo in 1991, estimated to have cooled the world by 0.5 degrees C (0.9 degrees F) for a year or so.
Engineers from the University of Bristol, England, plan to test the feasibility of feeding sulfates into the atmosphere via a kilometers-long (miles-long) hose attached to a tethered balloon.
Shepherd and others stressed that any sun-blocking "SRM" technique – for solar radiation management – would have to be accompanied by sharp reductions in carbon dioxide emissions on the ground and some form of carbon dioxide removal, preferably via a chemical-mechanical process not yet perfected, to suck the gas out of the air and neutralize it.
"If we could experiment with the atmosphere and literally play God, it's very tempting to a scientist," said Kenyan earth scientist Richard Odingo. "But I worry"

Read the entire article here.

Well, Richard Odingo should worry. Sometimes one wonders whether some scientists live in a virtual dream world without any connections with the real world. Otherwise it is difficult to understand how any sensible person could come up with the crazy idea of putting (probably thousands of) "aircraft, balloons and other devices" in the air to "spew sun-reflecting sulfates" in order to save us from "global warming".  And who is sponsoring the Bristol University´s plan to "feed sulfates into the athmosphere via a kilometers-long hose attached to a tethered balloon"? David Camerons alarmist government? Presumably the Bristol University scientists already have estimated the total length of hoses needed to cool the globe? One thing is certain, it is going to be a bonanza for all the world´s hose manufacturers!

Tuesday, 12 April 2011

China - a world leader in fake mobile phones

Most people do not have any idea of how huge the world counterfeit mobile phone market is. The truth is that one of every five phones is counterfeit, and the vast majority come from China. This ten minute video is worth watching as a reminder of one side of the Chinese "success story":

Shale gas: Don´t do it the French way!

The new EIA (US Energy Information Administration) shale gas report is still - and rightly so - reverbarating in the media. According to the Energy Tribune the report "makes clear, we need to ditch the alarmism of the doom and gloom-mongers once and for all. While talk of energy crises sell books and make eye catching headlines, the fact is that current circulating maps of global energy reserves have been rendered meaningless."

The Energy Tribune cites the EIA estimate that shale gas adds 40% to the world gas resources:

To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of January 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40 percent to 22,600 trillion cubic feet.

From a European point of view, there is good news:
One particularly fascinating thing is that, as it turns out, Europe does have significant energy resources apart from coal and these are liberally spread at that. The list runs from around 8 trillion cubic feet in Germany right up to France (180 trillion cubic feet) and Poland with an enormous 187 trillion cubic feet. But even for heavy gas consumers like the UK with around 20 trillion cubic feet projected, it will mean more than doubling what is currently still available from North Sea resources.

The EIA table shows recoverable resources on a mind-boggling scale around the globe. China, at a staggering 1,275 trillion cubic feet, Argentina at 774 trillion cubic feet, Mexico at 681 trillion cubic feet, South Africa at 485 trillion cubic feet, Canada at 388 trillion cubic feet. Algeria...well, you get the message. And who knows just how much shale gas or oil lies beneath the still un-assessed Middle East?

One thing is clear. Pretty soon we are going to have to stop referring to shale deposits as ‘unconventional’ as they are soon set to become highly conventional indeed. Equally, we need to understand that this EIA assessment is just an initial survey and, given the scant nature of some of the information, is a wholly conservative estimate, as the report itself makes clear. It should also be understood that the EIA’s assessment excludes potential international shale oil deposits, such as Canada’s massive Athabasca Sands and Israel’s just announced onshore developments, as well as offshore shale gas basins, coal-bed methane, tight gas and other deposits.

Above all, what the report confirms is that hundreds of years of fossil fuels still remain to be tapped. Just as significantly, much of it is in own ‘backyards’ – and away from the control of dictatorial regimes who use current reserves as geopolitical leverage.

Now we could do it the French way. That would be: ignore it, leave it in the ground and desperately cast around for alternatives to Russian gas. Or we could do it the sensible way – understanding that ‘le fracking’ and SAGD (for oil sands) processes are tried and trusted, no matter what the eco-media likes to assert – start drilling and save billions of dollars on unnecessary oil and gas imports.

Tough call, wouldn’t you say?

Read the entire article here
We have said it before, shale gas is a game changer that will end Europe´s dependence on Russian gas, provided that the European countries seize the opportunity. But the "the French way" is no solution, although Gazprom would like to see it that way.

Monday, 11 April 2011

Václav Klaus on the European Union

Czech President Václav Klaus, the most original thinker among today´s European leaders, last week gave a speech at Institute “Libertad y Desarrollo” in  Santiago de Chile, which deserves to be cited almost in its entirety:

In the 1950s, the leading idea behind the European integration was to liberalize, to open-up, to remove all kinds of barriers which existed at the borders of individual countries, to enable free movement of not only goods and services but also of people and ideas across the European continent. It was a positive concept and helped Europe significantly, even though it is difficult to express it quantitatively.

It changed during the 1980s and the decisive breakthrough came with the Maastricht Treaty in December 1991. Political interests to unify Europe and to create a new superpower started to dominate. Integration had turned into unification, liberalization into centralization of decision making, into harmonization of rules and legislation, into the strengthening of European institutions at the expense of institutions in the member states, into the enormous growth of democratic deficit, into post-democracy. Europe’s constituting elements, the states, have been consistently, systematically and “successfully” undermined. It was forgotten that “the state” is the only institution where real democracy is possible.

The Czech Republic, an EU-member since May 2004, wanted to reassume its place among European democracies and the EU membership was the only way to show that it was accepted. There is no other method to do it in Europe these days. Nothing else legitimizes a country. We did not want to stay aside, as we were forced to throughout the communist era. However, for those of us who spent most of their lives in the very authoritative, oppressive and non-functioning communist regime, the undergoing weakening of democracy and of free markets on the European continent represents something we did not expect and did not wish for in the moment of the fall of communism[1].

We witness a gradual shift from liberalizing and removing all kinds of barriers towards a massive introduction of regulation and harmonization from above, towards the ever-expanding, overgenerous welfare system, towards new and more sophisticated forms of protectionism, towards the continuously growing legal and regulatory burdens on business, etc. All that weakens and restrains freedom, democracy and democratic accountability, not to speak about economic efficiency, entrepreneurship and competitiveness.

The most visible European problem of the current era is the fate of the European monetary union. The eurozone project has not succeeded in delivering the positive effects that had been – rightly or wrongly – expected from it. It should help to accelerate economic growth and reduce inflation and, in particular, protect the member states against all kinds of external economic disruptions (the so-called exogenous shocks). This has not materialized. After the establishment of the eurozone, the economic growth of its member states had slowed down compared to the previous decades, thus increasing the gap between the rate of growth in the eurozone countries and that in other major economies, including Latin America. The internal disequilibria – such as trade imbalances or state budget imbalances – became bigger, not smaller.
People like me understood very early that the idea of the European single currency is very problematic, that it will create huge economic problems and will lead to undemocratic centralization of Europe. To my great regret, it did happen.

The eurozone, which comprises 17 European countries, is not an “optimum currency area” as defined by the economic theory. During its first 10 years of existence, it has not led to any measurable homogenization of its member states’ economies. In such a situation, it is inevitable that the costs of establishing and maintaining it exceed its benefits.
My choice of the words “establishing” and “maintaining” is not accidental. Most economic commentators were satisfied by the ease and apparent inexpensiveness of the first step (the establishment of the common monetary area). This helped to form the impression that everything was fine with this project.
Over the last decade, the negative effects of the “straight-jacket” of the single currency have become more and more visible. When “good weather” (in the economic sense of the word) prevailed, no visible problems arose. Once the crisis (or “bad weather”) arrived, the lack of homogeneity manifested itself very clearly. However, the Euro will not collapse, because huge amount of political capital had been invested in its existence. It will continue to exist, but at a very high price which will be seen in large-scale fiscal transfers and in low rates of economic growth in the future.

The second reason for the European economic problem is the quality, productiveness and efficiency of its economic and social system. A seemingly friendly and non-demanding, excessively paternalistic and, as a consequence, not sufficiently productive economic and social system, called “die soziale Markwirtschaft” (or social-democratism), dominates in Europe. This system with its generous social benefits weakened motivation, shortened working hours and life employment, prolonged years of studying, diminished the supply of labour (both at macrolevel and structurally), created bottlenecks and shortages.
Europeans prefer leisure to performance, security to risk-taking, paternalism to free markets, collectivism (group entitlements) to individualism. They have always been more risk-averse than Americans but the difference continues to grow. Also freedom seems to have a very low priority there. It seems that Europeans are not interested in capitalism and free markets and that they do not understand that their today’s behavior undermines the very institutions that made their past success possible. They are eager to very intensively defend their non-economic freedoms, or better to say the easiness, looseness, laxity and permissiveness of modern, or perhaps post-modern European society, but when it comes to their economic freedoms, they are quite indifferent.

The inefficiency and unsustainability of this system was later “reinforced” by the gradual acceptance of green ideology, of environmentalism. This process started in the 1970s, but reached its peak, and its economic devastating effects now, in the era of global warming (or climate change) alarmism. I will not go into detail, but I want at least to mention my book Planeta Azul (No Verde)” which has been published already in 17 foreign languages, and is available also in  Spanish.
I am confident that you, in Latin America, will not repeat our mistakes. I hope you will aim at creating maximum openness inside the continent, but will keep respecting national sovereignty of individual countries and will – in my terminology – promote economic liberalization, not political unification. I wish you every success in this endeavour.

Read the entire speech here.

There is little to disagree with, except that I think that the collapse of the euro is a real possiblity. In spite of the enormous amount of political capital invested in it, there is a limit - which is coming closer - when the politicians must bow to reality, if they want to survive politically.

Sunday, 10 April 2011

Russian FSB (former KGB) wants to close Skype, Gmail and Hotmail

The Russian security service FSB (former KGB) wants to close down Skype, Gmail, Hotmail and other similar popular internet services:

The comments from the head of the service`s information and special communication centre Alexander Andreyechkin were disowned by the Kremlin but come amid mounting concern over state meddling in the Internet in Russia.

Control of Internet traffic through these services is done from servers outside Russia, and so they are often used by extremist organizations, Andreyechkin was reported as saying before the meeting continued without the press.
Deputy communications minister Ilya Massukh later said that recommendations on regulating the mass usage of encryption technology would be given to the government by October 1.
The FSB would like to ban these services in Russia because "security authorities cannot access them," Massukh was reported as saying.
Russian agencies quoted a Kremlin source later Friday as saying that Andreyechkin`s statements were "his own opinion and don`t reflect the government`s policy regarding development of the Internet."
"Andreyechkin overstepped his authority and made hasty remarks about these popular services," the source said, RIA Novosti reported.
"State policy in the sphere of Internet technology is not set by security services."

Communications Minister Igor Shchegolev affirmed later that there were "no plans to cut off Skype, Gmail, Hotmail or any other foreign services working in Russia," the Interfax news agency reported.
Prime Minister Vladimir Putin`s spokesman Dmitry Peskov on the other hand defended Andreyechkin`s view, calling it "based on the (FSB) service`s duties" and "well-reasoned", Interfax reported.
All points of view will be discussed before any further recommendations are made, Peskov added.

The FSB warning came the same week that the LiveJournal blogging site, hugely popular in Russia, fell victim to repeated cyber-attacks that bloggers blamed on the Russian security services and the authorities` desire to disrupt internet communication ahead of parliamentary and presidential elections.
President Dmitry Medvedev, who prides himself on his use of Twitter and also maintains a LiveJournal weblog, called the attack "outrageous and illegal".
A spokeswoman for LiveJournal Russia told AFP on Friday that the company was preparing to file an official complaint on the attacks so the interior ministry could launch a criminal investigation.
Oppositional newspaper Novaya Gazeta on Friday reported a similar attack on its website, which was down most of the day. The paper claimed in its blog that the attack was carried out by the same hackers who crashed LiveJournal.
The secretive FSB, which is a successor to the Soviet KGB, has denounced popular non-Russian Internet services in the past.
But this is the first time the FSB appears to propose restrictions on a national level, said security analyst Andrei Soldatov.
"This is definitely alarming," he told AFP, saying the FSB`s goal may be not to close access to the public, but to improve its own access to encrypted information.
"The goal may be to bargain with these services to disclose at least partially their encryption technology," he said.
Internet usage in Russia grew rapidly in the last decade, from less than two percent of residents in 2000 to 29 percent in 2009. Internet penetration now stands at 42.8 percent, according to the International Telecommunication Union.

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It is easy to agree with analyst Andrei Soldatov. This is a very alarming development. There must be a lot of frustrated former KGB officers (now in the FSB) who nostalgically yearn for the good old days, when closing the mouths of dissidents was so easy. Now they want to stop free speech in the internet. And in spite of what Medvedev and his assistants in the Kremlin say, the old KGB-men may very well succeed, because they have a powerful friend - their former colleague, Vladimir Putin, the real ruler of Russsia.