Is China's Shocking Behaviour as a Totalitarian State Condoned by the European Union?

European Investment Bank, Bâtiment Est. Luxemb...European Invetment Bank   Image via Wikipedia
We tend to forget that China today is the largest communist power on this planet. That means it is still, to a large extent, both a centrally planned economy and a totalitarian state.

This week end, some very interesting news about China got buried under the boring deluge of Wikileaks so-called revelations  (most of them old hat and hardly worth a comment). They reveal how little China has changed...

Let me tell you about China's shocking behaviour and how the European Union is indirectly condoning it. "Indirectly" only in the sense that Brussels may not have thought the consequences through.

The New York Times reported that one of the European Union's major and most highly respected institutions, the European Investment Bank, will provide China with a  €500 million ($669 million) loan to finance some 15 projects intended to mitigate climate change, from onshore wind power to biomass and solar power. Perhaps not much by international financial standards, but quite a lot if you consider that the Bank has already lent China €500 million for climate change in 2007 and a total of €1.76 billion for various other development projects, including €500 million for building Terminal 3 at the Beijing International Airport. One must wonder what the European Bank's real goals are.

China, as everybody knows, is awash with dollars and Euros as a result of flooding the world with cheap goods, and all this thanks to, inter alia, the ruthless manipulation of its currency, keeping it artificially low. And also thanks to a policy of export subsidies, but I'll get to that in a minute. Surely, China has enough funds of its own to deal with climate change issues or to build its international airport!

Okay, China is the world's biggest emitter of greenhouse gases, and the European-funded projects will help reduce China's carbon emissions by three million tons annually. Insofar as it does that, it can't be all bad. And sure enough, the loan agreement was signed in Cancun, Mexico, in the course of the latest round of the United Nations sponsored conferences on climate change in which 194 countries participate. Progress in these talks has been hindered by China (now joined by India) taking on the lead role in demanding that rich countries give technological and financial assistance to developing countries to combat climate change. Fair enough. Developing nations need the help and huge amounts of money are bandied about as if they were peanuts. Like US$ 100 billion a year by 2020 (that's what the previous conference in Copenhage called for) to help the poorest nations to adapt to climate change....but China?

On top of that, as if it wasn't already enough, another couple of incredible news surfaced this week-end.

One has to do with the subsidies China extends to its manufacturers, in total disregard to World Trade Organization rules, thus further distorting international trade. China has adopted a policy of promoting solar and wind power to reduce reliance on imported natural gas and oil. Fine and good. The problem is that once it has developed its own clean power technologies, it will be able to sell them at cut rates thanks to the subsidies and thus make a huge profit, taking advantage of the growing worldwide demand for green technologies. The Chinese Finance Ministry announced last week that it would fund up to half the price of equipment for solar power projects in 13 industrial zones and that other costs would be covered by a subsidy of 4 to 6 yuan (60 to 90US cents) per watt of generating capacity.

The other  news that came up in the International Herald Tribune (Dec 4)  has to do with stopping two Chinese celebrities at Beijing International Airport:  contemporary artist Ai Weiwei, an outspoken critic of the Chinese Communist party, and Mao Yushi, an 80-year-old economist. They reportedly meant to fly to other cities in Asia this week, but the authorities were afraid they might instead join the Nobel Peace Prize ceremony to be held in Norway this coming Friday. You will recall the Prize was awarded to dissident Liu Xiaobo still in prison and that his wife is also prevented from leaving China to collect the prize. Ai Weiwei and Mao Yshi were told they could not travel abroad because "they might endanger state security". It would be laughable if it weren't so sad...

Why ever do the Chinese need European taxpayers' money? It is no longer a poor developing country! How can European citizens accept that European institutions misbehave in this way, supporting a country that has nothing but the deepest disregard and disdain for human rights? And flouts fair trade practices and has done so for decades? Every once in while there's a cry about Chinese subsidizing their exports and flooding our markets (see article below) but then the cry quickly dies down. Why?

What is the European Parliament doing? Why isn't anybody saying anything anywhere, particularly in Cancun?  If there is protest over this somewhere, please let me know!
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Who's Going to Save the Euro?

Model of the ECB's new headquarters.Model of the ECB new headquaretersImage via Wikipedia
Is the Euro dying? After the Irish debacle, ideas are floating around on how to save the Euro.The media is full of suggestions:

1. Transforming Europe's financial rescue fund, the 750 billion-euro ($975 billion) European Financial Stability Facility, into a European equivalent of the International Monetary Fund. This was first proposed by Mr. de Grauwe, a professor at the Catholic University of Leuven, in a paper comparing the current Euro crisis to the collapse in the early 1990s of the precursor to the euro, the European Exchange Rate Mechanism. At the time, it was investors betting on devaluations, today it's bondholders taking aim at the weakest economies, Greece first, now Ireland and Spain next.  But the European treaty revisions required to bring to life a European IMF would be hard to carry through in the current political climate, as most European governments fear having to go the referendum route and face European voter discontent. A related proposal is to expand the rescue fund by at least another €100 billion to meet other challenges. The fiscal emergency in Spain is on everybody's mind. As Spain is the Euro's fourth largest economy, its problems are twice the size of Ireland and Greece combined. A hair-raising prospect! But one hundred billion more would simply not be enough.

2. Asking bondholders to take a "haircut". That means forcing them to accept a share of the losses so that they are not all weighing down on taxpayers, who are, let's not forget it, the ones financing bailouts - so far some €200 billion to save Greece and Ireland. Daniel Gros, the head of the Center for European Policy Studies in Brussels, recalled how investors of Dubai World accepted to share the pain in return for a rescue by Abu Dhabi. Will European bondholders do the same? That's what Germany would like to see happen and Ms. Merkel talked about including "liability clauses" in new bonds to force bondholders to accept cuts as soon as next year. That proposal instantly sent the Euro down to a ten-week low, killing that idea.

3. Another idea is the Brady plan for indebted European economies. It was recently put forward by a former Treasury secretary, Nicholas F. Brady, who led an effort in 1989 to help Mexico and other Latin American economies restructure debt. The plan, criticized at the time — it required bondholders to take a loss of 30 percent in exchange for new, longer dated debt with lower rates backed by the United States -,  is now seen as the first step in Latin America’s recovery. The New York Times touts it but the trouble is that it's really nothing more than a subtle variation on the above "haircut" proposal. And remember, the US backed the Brady plan. Who is going to back a European version of it? Germany? You bet! One constant of German policy is that they don't want to pay for their Euro-partners' faults. Ask Merkel and she'll tell you: forget Europe!

4. Yet another idea is to float bonds issued jointly by Euro-zone countries. It seems that the European Central Bank would like that, but European governments are reluctant - particularly the Germans who fear that interest rates on such bonds would automatically rise to accomodate the weaker Euro countries - and of course, they're right: it's only logical. Thus Trichet is leary of pushing it too soon. So far, the only thing Euro-zone governments can agree on is to "follow the IMF model", whatever that might mean. And it might mean providing flexible credit lines to countries in trouble (like the IMF recently did for Poland) but so far it hasn't happened.

5. Flooding the economy with cash from the European Central Bank. That's the "quantitative easing" route followed by the American Federal Reserve. That lovely, somewhat obscure term just refers to  printing money: that's the one fundamental sovereign right of a country and a major tool to support (or depress) the value of its currency. The European Bank so far has done a "fair amount" of bond buying but unless it is given free access to the printing press, that is not going to be a route it can follow far, the way the Fed has. And indeed, up to now, its bond-buying has had modest results:  it hasn't prevented the growing difference in yields between German bonds and the others, the so-called countries in the "Euro periphery"  - Greece, Ireland, Portugal, Spain and more recently Italy and Belgium - Who would ever have believed that Belgium one day would become part of the periphery?

What is certain is that the European rescue fund would need  "twice the firepower," as de Grauwe said, pointing out that Ireland’s average interest rate on the bailout of 5.8 percent is “punitive.” That's not too surprising.  Ireland was viewed by Germany as a "sinner" and had to be made to pay for its sins. Fine and good. Ireland's political class had certainly acted in a stupid, irresponsible way when it guaranteed bank deposits 100 percent - something no one else has ever done anywhere in Europe or America. A crazy move that has had awful consequences when the real estate bubble burst American-style and banks began to fail because of their reckless investments.

The trouble is that such an interest rate on the Irish bailout, as Bloomberg points out, "jolts confidence by showing that European governments aren’t sure they’ll get their money back". Of course, they're not sure! If austerity programmes and measures to control budget deficits will cause further recession - and everyone is almost certain they will - there doesn't seem to be much of a way out, does it?

Any ideas? I believe we need to go back to the fundamentals and consider how the Euro was built. Remember it has only ONE leg to hobble on (provided by the Central Bank) and it's missing its SECOND LEG (a treasury - like the dollar has). In other words, it is missing a harmonized fiscal system.

The case of Ireland is illuminating: Ireland got us into all this trouble - and as one of my followers wrote in a recent comment, the Celtic Tiger turned into a miserable cat - because of several stupid decisions by its political class. Not only did the government guarantee bank deposits without any coordination with the rest of its Euro partners, but it had applied for a long time a whole series of taxes at much lower rates than the rest of Europe. Most notably the famous 12.5% rate on corporations that has turned Ireland into a tax haven and a Trojan Horse into Europe: major American corporations are headquarted in Dublin (eg. Google) and others are thinking of coming provided Ireland keeps its corporation tax untouched (eg. Microsoft). So in its proposed austerity package, Ireland has raised taxes but, bowing to the demands of multinationals, it has been careful not to touch that particular tax.  Euro partners in the bailout haven't even reacted. Or if they have, it didn't show up in the press. Amazing! Yet, the austerity package proposed might have been more contained if that particular tax rate had been tweaked upwards, by say one percent. Surely that would not have discouraged Microsoft from moving to Dublin!

I am totally convinced that without fiscal harmonization the Euro will not survive. And Europe will have missed out the opportunity of a lifetime to bring about the ideal of a United Europe. I know that's a tough road to go, particularly in the current climate with a meek political class afraid of taking any risks, but there really isn't any other...

What do you think? What are your bets that the Euro will survive? Who's going to save the Euro? Is there somebody out there with the guts to do it?

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The True Nature of the Wikileaks Scandal: Gossip Galore!

Logo used by WikileaksLogo used by Wikileaks Image via Wikipedia
Wikileaks is having a field day with American foreign policy! And the media along with Wikileaks.  People who love gossip have never had it so good.

Here in Italy every newspaper put the news of the latest humongous "leak" on their first page. And humongous it is: the daily communications of American diplomatic posts, over 250,000 secret messages sent by American diplomats to the State Department

For two days before the release of the leaks, Hillary Clinton  did some damage control on a grand scale, contacting every country concerned, from India to Italy. I wonder whether she contacted Lybia too...Because the leaks on Ghedafi were pretty strong stuff, calling him a hypochondriac and worse.

The White House upon the release of the leaks immediately stated:“We condemn in the strongest terms the unauthorized disclosure of classified documents and sensitive national security information.”

Of course, one would expect the White House to do so. All this is hugely embarrassing for American diplomacy, but in truth, the leaks have NOT revealed much of anything that is new or earth-shaking (see the Daily Beast analyses attached below). Just a few amusing things, like Berlusconi's romance with Putin and perhaps a few surprising things, like the US resisting its Arab partners wishes to attack Iran.

Once the dust has settled, expect little change in international politics.

There are however two problems for American foreign policy: one, is a probable breakdown in trust. In future, foreigners - at least until they start forgetting the wikileaks scandal - are likely to avoid confiding anything to American diplomats from fear that one day all will be revealed. Many have always maintained that Americans can't keep a secret and now they surely feel vindicated. But a word of warning is in order: leaks from other countries are also possible. Who knows whether Wikileaks won't come out with Chinese, German or Russian diplomatic dispatches one of these days?

The other problem is harder to disregard. While whatever American diplomats wrote is not equivalent to American foreign policy, the trouble is that it presumably helped to shape it. And a lot of those cables betray an extraordinary low level of analysis, an ingenuity in believing anything one is told, a lack of control over data, a disregard for trying to ensure that the information is correct.

If American foreign policy is based on this kind of dispatches, God help us all!

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Austerity = Less Income = Lower Tax Revenues = Fewer Social Benefits = More Poverty

ATHENS - FEBRUARY 10: A public servant wears a...Protest in Greece Image by Getty Images@daylife
Austerity programmes have become all the rage - in Ireland, Greece, Portugal, Spain, the UK, and next in the US -  yet...they can only lead to more poverty.

The equation is ironclad:
austerity = less income = lower tax revenues = fewer social benefits = more poverty.

Why? Because austerity programmes mean cutting back on government expenses, including  slashing employment in the public sector. That means fewer people with jobs, less income, less consumption throughout the economy. Remember that the income multiplier works both ways: with a stimulus policy, it expands the additional funds. With an austerity programme, it expands the cutback. And that means less revenues from taxes. And if taxes are also raised to reign in government budget deficits, the effect is even worse.

With less revenues, fewer social benefits can be paid for, and the most vulnerable areas are health, education and research. Health, education and research! Yes, it means jeopardizing the future! So far, military expenditures, while also cut back, have managed to defend themselves better, but that's thanks to the military-industrial lobbies that, as everyone knows, are politically powerful in every developed country.

The question is, once you've depressed the level of national consumption and created more poverty, is that the kind of environment in which business can thrive?  Sure, sovereign debt bondholders are happy that politicians are at last "acting responsible" and tackling the problem of deficits. But since when are bondholders good businessmen and entrepreneurs?

Now, if austerity programmes were meant to re-direct the role of government away from useless expenditures and damaging clientelism, then it would be okay. It would help build a beneficial climate for business. Some have suggested "investing responsibly in social and ecological assets" as "the key design criterion. Creating robust vehicles to direct public and private savings toward long-term investment in low carbon technologies and infrastructures, in resource productivity, in social goods and public spaces, in land and water and ecosystem services -- here is the cornerstone for economic renewal." (see article below: "Frugal living is road to new prosperity").

If that's what austerity policies were all about, I would subscribe to them whole-heartedly. Unfortunately, that's not the case...Except for France, but we'll see how ably they will devise an austerity programme that does no damage to social benefits. I doubt that they'll manage it.

In the meantime, expect more and more people going on strike, descending in the streets and protesting the manifest unfairness of auterity policies...
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Is India in Financial Trouble? When Dreams turn into Nightmares...

SKS Microfinance ClientImage by kalyan3 via FlickrSKS Microfinance client

Sorry, this post is late: I'm just back from Vienna (what a wonderful town and the Viennese are sooo hospitable! Do make sure you put Vienna on the map on your next tour of Europe!)

Watching the Irish debacle this week and the threat to the Euro, which in turn could jeaopardize recovery in Europe, and perhaps in the rest of the developed world, I was reminded once again how much we depend on the emerging markets.

Now that their GDPs have grown to about half of world GDP, trade with them has become the key to recovery. China and India have become preferred trade partners.

But how solid are they? 

We all know that China suffers from debilitating social tensions that could potentially become devastating. What about India? It  has been one of the great success stories of the Great Recession. It has grown at a fast pace and produced hordes of millionaires while the Western World was teetering on the brink of disaster. But there is a chink in the armour, a small one that could grow into a big chasm...This week, when Andimuthu Raja, the Indian government minister for telecommunications had to step down in the midts of a corruption scandal, possibly the biggest in India's history, we were all reminded how corruption in India's governing elite is a constant threat to the country's stability. As reported by the New York Times (see article below), "he is accused of using his post to sell off valuable mobile telephone spectrum licenses in 2008 at rock-bottom prices. His decisions may have cost the Indian treasury as much as $40 billion, according to a government investigative report released last week."  Yip, $40 billion!

But is corruption limited to the political classes? Hardly. Lending to the poor - otherwise known as microfinance - is another area where serious problems have recently surfaced. Here, it's not exactly corruption, but a determined pursuit of one's own personal profit and a general disregard for the common good. The problem came to the attention of the media  when the poor began to default en masse, particularly in the State of Andhra Pradesh. Suicides, especially among  poor indebted women, suddenly rose. So State authorities have moved in, capping interest rates and clamping down on lending practices. This has had the immediate effect of slashing revenues of SKS Microfinance, the largest microlender in India, backed by big investors like George Soros and Vinod Khosla, and the first to be quoted on the Mumbai market. Its shares have fallen and will probably keep falling as long as people worry about knock-on effects on other borrowers.

Why would that be important in India's financial world, famously known for the stability and conservatism of its banking system?   Because microfinance  which started small some twenty years ago in Bangladesh has turned into a tsunami in India over the last five years. The trouble is that this vertiginous growth has much in common with  the sub-prime mortgage phenomenon in the US. The pattern is strikingly the same: loans are showered on small borrowers without any checks on whether they can pay back their debt. Multiple loans are allowed, and a borrower starting with 8 or 9,000 rupees soon finds herself (because it's usually a woman) owing multiples of that sum, simply because she has borrowed to pay off the first loan and then borrowed and borrowed again.

In short, microlenders are out to build their own institution - they would all like to end on the stock market like SKS and be able to rake in lots of additional funds - and so they just  pile up loans and couldn't care less whether borrowers have any sort of viable business plan.

Business plan? Not quite the right word. Here is how it all started. Microlending was the brain child of Mohammad Yunus who worked with rural women's groups back in the 1990s. He worked with poor women who needed seed money to get started in small, artisanal enterprises, and while they had no collateral to put up, they had formed groups that could back them up and pay in case of default. Group pressure was exercised, which ensured that microlending was extraordinarily successful in keeping defaut down and allowing small businesses to be born in the poorest sections of the rural world - in this case, Bangladesh. Yunus earned a Nobel Prize for this. It was a beautiful dream and for a while it really seemed to work. And it was eagerly copied around the developing world, not only in Asia but elsewhere. I saw it in Nicaragua. It really was a great idea, it stimulated women to work, it opened doors on a bright new world.

But the idea was founded on the group. Without a solid group of women backing it - women who know each other and trust each other - and with a clear, realistic development plan, it has no chance of working. Ever. Indeed, in India, microlending has fast turned into a sophisticated form of shark lending. In other words, good old-fashioned usury. Except the ones doing it are urban-based savvy, modern companies that drop in on the villages once a week to collect money.

One may assume that the Indian financial community will know how to defend itself: there is talk of setting up an emergency fund. But microfinance will never be the same again: it had started as such a beautiful dream and has ended a nightmare - like so many human endeavours.

I worry that this seemingly small financial hiccup is taking place in a political environment threatened by corruption. India is obviously going through growing pains and I can only hope that she will come out of them, stronger and a healthier trading partner for all of us...

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French Food, the latest UNESCO World Heritage ? Ouiiiiiii!

french cousins eating french friesImage by bubbo-tubbo via Flickr         French Cousins eating French Fries
You've all heard about the UNESCO listing as World Heritage famous monuments like the Egyptian Pyramids with the objective of assisting in their preservation for humanity. Now, for the first time ever, gastronomy has been added to the list, under the wonderfully fexible category delicately called "intangible heritage".

No, it's not a joke!

A very serious UNESCO committee - called the Intergovernmental Committee for the Safeguarding of the Intangible Cultural Heritage - meeting in Nairobi, Kenya, in the afternoon of Tuesday 16 November 2010,  has broken new ground. It has declared that the "French traditional gastronomic meal" to celebrate festive events is accepted in the list of Intangible Cultural Heritage of Humanity. Along with Mexican Food, Spanish Flamenco, Chinese Acupuncture, falconry and the Mediterranean Diet, bringing the list up to 229 protected cultural practices.

No kidding! So, as of now, your Sunday meal is a UNESCO Heritage feature provided you're French and eating it in France. You're allowed to do all that heavy eating and drinking as long as it is done in the name of celebrating some culturally important event, such as a birth, a marriage...what about death? UNESCO says nothing about that - what a pity. But then, that's good, it leaves the door open to the famous Irish wake, all that traditional eating and drinking that the Irish engage in all night long as soon as someone in the family dies. Quick, better tell the Irish diplomats at UNESCO to get moving and register their candidature for listing the Irish wake!

But wait a minute - this listing of a "French gastronomic meal", what is it supposed to achieve? Oh yes, the UNESCO language is clear on this point: it's meant to help preserve the "bien manger" and "bien boire" - good food and drink -.  But...How about the "bien parler", the art of conversation? Isn't that also part of a gastronomic meal - if not, if it's just about eating and drinking, what kind of celebration are we talking about? Rolling around on the floor, dead drunk? Vomiting in the bathroom ?

Last and not least, how is the French Government going to preserve this heritage? Will it set up a special department in the Ministry of Culture to inspect Frenchmen's Sunday and festive meals to make sure they are gastronomic? A French-form of "Big Brothers is Watching You" (over your meals)?

Don't laugh! This is no laughing matter. I think this is wonderful news, it opens the door to all sorts of good things. I'm going tomorrow to Vienna and I'm going to tell my Viennese friends to make sure to candidate the Wiener Schnitzel to UNESCO...And I'm sure there are many more candidates to the Intangible Heritage Listing. Hey, what about you, the Chinese? Bird's nests? And you, the Japanese, how about raw fish? To get it into the list, all you have to do is wrap it up in the framework of  a feast, sorry, I meant a cultural celebration. 

Please join in, everyone from all over the world,  the good word should be spread everywhere! You are  urged to provide UNESCO with worthwhile Heritage candidates for the food, sorry, I mean the good of humanity...
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The Roots of the Great Recession? Dead Peasants!

Cover of "Capitalism: A Love Story"Cover of Capitalism: A Love Story
What is the cause of the Great Recession? Yes, we all know, it's the sub-prime mortage collapse, it's derivatives, credit default swaps and other fancy financial instruments - those that Warren Buffett famously described as "financial weapons of  mass destruction".  In one word: it's Wall Street.

But, bottom line, what's behind all this financial hubris? Dead peasants!

No, I'm not joking, I'm dead serious. Dead peasants, I tell you!

Let me explain. I just saw Michael Moore's latest effort, Capitalism: A Love Story, a brilliant documentary that seeks to explain how we ever got into the Great Recession in the first place. Of course, as he points out, it all started much before  the collapse of Lehman Brothers on 15 September 2008. Moore takes us all the way back to the 1970s when President Jimmy Carter tried to tell America that it was fast becoming a society that had lost its values. The middle-class was in trouble, its values were being perverted, but who ever wanted to listen to that message? "What a bummer!" is Moore's comically terse comment about Carter's bungled attemtp to set the country back on a (more moral) course.

Whereupon, with the backing of Wall Street, a minor politician (a second-rate actor who looked like a cowboy, a politically desirable physique), I mean  Ronald Reagan, was elected president and saved the day. As I've said in an earlier post, and here I agree with Moore (even if everything he does is not always in the best taste or even effective), the  destructive game of deregulation started with Reagan (and with Thatcher in the UK). The dismantling of the Glass-Steagall Act was probably the turning point: it opened the door to unbridled high finances. From that moment, capitalism in its worst form - unregulated, iniquitous - had won the day. And it was a bi-partisan effort:  Clinton's Democrats were as much at fault as the Republicans.

True, Obama was elected on a platform of change - "Yes We Can" - which tried to empower the American middle class. Did it mark a change in direction in America? For a while, with the reform of national health, it looked like it might. But it didn't last long. Barely  two years, judging on the results of the last mid-term elections in America, where the Tea Party won on the improbable platform of "let's have a tax holiday for the rich and let's balance the budget! Out with Social Security!". Contradictory messages have never killed anybody, on the contrary. That's democracy in action.  To close the door now on all this nonsense is probably next to impossible.

If you have any doubts, consider the "dead peasants" scandal. It is symptomatic of the disease affecting America. And exemplary. Do you know what "dead peasants" are? I didn't know until I watched Michael Moore's film. I was horrified. "Dead peasants" is the disparaging term used to refer to life insurance on a corporation's employees. The problem is that this life insurance is not owned by the employee but by the employer corporation, with benefits payable to the corporation. Moore interviewed a woman whose husband had died from cancer and whose employer benefited from a $1.5 million payment from the life insurer, while she, the widow with two children, got nothing. Yes, she got nothing, not even a small percentage of this sum!  It's like taking life insurance on your neighbour's house: you would benefit if it burned down, therefore you'd be sorely tempted to become an arsonist, wouldn't you?

You could argue that at first, such insurance policies did make some kind of sense: a corporation would take it out on "key employees" to protect itself in case of death, since such key employees are relatively difficult and costly to replace. The trouble is that the usage of such policies was expanded over the years and came to cover minor employees, particularly women, for whom such protection was hardly needed. Why women more than men? Because they live longer, so if they die young, the life insurance premium is much juicier...And the beauty of all this (I mean from a capitalist's point of view) is that the practice is entirely legal.

That's what happens if you don't regulate capitalism...Dead peasants galore! 
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A piece of Street Art expressing opinion of U....Image via Wikipedia

Bush has just come out with the much-awaited memoir of his presidency, Decision Points, and is now doing the grand tour of media interviews starting with the NBC Today Show and going onto Oprah Winfrey and others. It was an occasion for him to settle some personal scores (like his relation with Cheney or his handling of Hurricane Katrina). As might be expected, he has provoked on the way, all sorts of reactions, most of them positives, which should come as no surprise given the results of the mid-term elections. I bet his book is going to be a run-away best-seller!

Indeed, a rumour has been started that this is the moment to reassess (positively) Bush's presidency and I'd like to add my (small) voice to the chorus: thank you, Mr. Bush!

Thank you for the War in Iraq and the War in Afghanistan!Without the war in Iraq, we could never have outdone Saddam Hussein in the number of Iraqi killed: Saddam with the help of his trusted Chemical Ali managed to massacre some 8,000 Kurds, not to mention the several thousands civilian lives lost in his war with Iran. But since the Americans and Coalition partners have invaded Iraq, over 100,000 civilians have been killed and some sources speak of five or six times that number (but I'll stick on the conservative side: in any case, that's more than Saddam managed to do...) And of course, who's ever going to say that Saddam Hussein could outdo Americans on the subject of torture? We didn't need Wikileaks to know that he hasn't!     As to the war in Afghanistan we've just discovered the wonders that corruption can achieve: thanks to generous flows of ready cash from Iran to Karzai's government, Iran has helped maintain America's ally in power. Who'd ever believe that Iran would support American foreign policy? And in both places, we've seen how profitable the privatization of security has been for private companies. The army has given up one its essential functions - maintaining security in war zones - to the private sector. What an achievement!
But wars are not the only blessings you have brought us, Mr. Bush. Thank you for the Great Recession too! One of my readers rightly reminded me (see his comment in my previous post on America folding up) that the single event that started the hubris on Wall Street was the repeal of an obscure piece of legislation which had kept separate the bank's investment and lending functions (this had been one of the great lessons of the Depression: that banks who lend to businesses shouldn't be allowed to play with money on Wall Street).  That fateful event took place not under Bush but under Clinton's stewardship. True enough, but the philosophy of deregulation started much earlier - in fact, back in the 1980s with Thatcher and Nixon, and it was gleefully continued under Bush and the then head of the Fed, Greenspan. And it got its final boost when the Soviet Union collapsed, bringing confirmation that there was only one way to organize the economy: let the market have a full and free reign. So down with regulation!
Some people however are having second thought about deregulation: the President of the World Bank for one. He's recently suggested we go back to some form of the gold standard. Economists howled, particularly those on the right. How will the G-20 react now in Seoul? Will re-regulation be on the agenda? Not likely. Obama already has a problem: a currency war with China is looming, and the Fed's "quantitative easing" (read: $600 billion added via the printing press) hasn't helped matters. It has (and will) send the value of the dollar down and there's no telling where all this will land us. Not to mention all those deficit control policies raging in Europe (and about to enter the American scene) that will dampen recovery and heighten social tensions. Why this sudden emphasis on deficit control? Because it is needed to keep those big sovereign debt investors happy. Wait a minute! What the Fed has just done with its $600 billion shows that those investors should beware of governments: the printing press is always a way out of deficit. And has been for centuries (with catastrophic results, but that's another story...)
Actually, surveying the situation, I'm beginning to think that everybody's got it wrong: the politicians, the central bankers, the people protesting in the street. Do politicians (Bush and others) really understand anything or are they just reacting to winds of change and fashions they scent out in their electorate? Is this mess just the result of democracy in action? Churchill used to say that democracy was the "least bad" of all possible systems of government. Least bad ? Perhaps, but, let me tell you, it's pretty bad indeed...
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What's in a Pizza? A Calorie Bomb!

Picture of an authentic Neapolitan Pizza Margh...
How many calories in a pizza? The New York Times recently reported that in a quarter of a pizza, there could be as much as 430 calories...that's about one quarter of the number of calories allowed per day, assuming your are not aiming to become obese in the shortest possible time!

Of course, we're talking here about American pizza, which is vastly different from the stuff we eat in Italy. American pizza is chockful of cheese, even up to six different kinds of cheese and yet more cheese worked into the crust (!). I'm not sure who makes them, whether Dominos Pizza or Pizza Hut, but they're definitely not Italian. Pizza in Italy - the birthplace of pizza - can even be entirely devoid of any cheese and generally has only small quantities of mozzarella and never, NEVER, does one add cheese to the bread dough. A cheesy crust? Pouah! What you want is a nice contrast between the filling and the crust, not something that is entirely cheesy from top to bottom!

This said, Neapolitans are also the authors of an unbelievably caloric pizza: they make fried pizza. Imagine, a pizza filled with cheese and sausage (!), then neatly folded on itself, and deep-fried! Deeelicious! But no one's ever bothered to count the calories, nor eat the stuff on a regular basis. In fact, my advice is: don't!
American cheese consumption has reportedly tripled since the 1970s, and today, American nutritionists consider that cheese is the major culprit in the wave of obesity engulfing the country. And, of course, the obesity wave is fast coming to Europe too, and no doubt for the same reasons (is there anybody around who doesn't like French and Italian cheese? Not to mention the Swiss, the Dutch etc).  The problem is that an ounce of cheese (not all but most varieties) contains as much saturated fat as a glass of whole milk. And cheese is a major source of sodium, another no-no. All of this is bad for your figure and bad for your heart.
As you can observe from the many articles and blogs I've listed below, this is fast becoming a subject of national debate in the US: pizza as the main source of obesity - or rather, cheese.

The real scandal uncovered by the American press is that the US Department of Agriculture - or rather a branch of it called Dairy Management -  is actually the one behind several campaigns to promote milk and especially cheese consumption, as a way to help dairy farmers that produce far more milk than they can sell on the market. Because too much milk is produced as a result of technological advances that have made American dairy farms among the most productive and efficient in the world. Until some years ago, the excess milk was shipped abroad in the form of aid to developing countries but now, the law has changed and the excess milk has to somehow be absorbed in the American market. As everybody knows, the best way to consume vast quantities of milk is through cheese consumption (after all, cheese is nothing but a condensed form of milk). Hence the US Government's efforts at promoting cheese consumption in response to the economic needs of one section of its electorate (the farmers) at the expense of  the health of consumers (everybody else - actually farmers included...)

Here we have the private market at its best and in full action: unbridled competition leading to increased productivity (in milk) leading straight into an obesity epidemic on a national scale, and all thanks to savvy marketing! Of course, the savvy marketing is the doing of the Government...Go tell the Republicans! I would love to know whether they want to defend milk farmers and the government intervention on their behalf, or whether they believe in letting the market work it out freely, letting the demand for milk drop and the dairy farmers be damned...

Another way to look at this is to consider American milk production in the face one one billion people going hungry worldwide. Why not reverse the law and allow for milk to be processed in food aid - not powdered milk that requires the addition of water, which is a problem in many developing countries where the water is polluted or insufficient...but cheese, perhaps of the mozarella type that can withstand tropical temperatures and is more acceptable to local consumers. Or one could consider it as a food additive to complement children nutrition. I was at a World Food Programme meeting this morning, and they were talking about the importance of correct nutrition in the first thousand days in a child's life. It is absolutely essential to ensure a healthy life as an adult yet in developing countries, children under the age of two are the first victims of malnutrition.

So, instead of eating a lot of cheesy pizza, what if we started to work on preventing stunted childhood in developing countries and at the same time fought obesity in the developed world? 
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