Friday, 17 October 2014

Alan Greenspan on the never ending euro failure

There is no end to the ongoing euro crisis. Former Fed Chairman Alan Greenspan explains why the euro is - and will stay - a huge failure:

"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan said. "Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."
Greenspan predicts that as the south's fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe's standard of living will go down.
"The effect of the divergent cultures in the eurozone has been grossly underestimated," he added. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work."

Tim Worstall also has a good piece on the same subject in Forbes:

While these very different economies are locked into the one currency, one interest rate, system there’s really not a lot anyone can do about it. Some talk of fiscal union, which is in essence the rich areas sending money to the poor ones. But absolutely no one at all thinks that those rich areas have the desire nor capacity to ship enough money: we’re not talking about a few billions here or there, but substantial percentages of GDP being necessary.
All of which is what made me conclude long ago that the failure of the euro is inevitable. Please note, I don’t mean that collapse of it is: political finagling can hold it together for decades if people really try. What I mean is failure in an economic sense. Interest rates will always be set for the core economies, meaning that they will always be wrong for the peripheral ones. Which means that those peripheral economies are condemned to a cycle of huge boom and bust as interest rates are either way too low or way too high for their circumstances.
Yes, I do think it fair to say that wild gyrations are a sign of failure in an economic policy or system. And in this sense, I think it inevitable that the euro will fail. For it already has.

Wednesday, 15 October 2014

Obama is ready for another "reset" with Russia´s criminal dictator Putin

This was to be expected: Suddenly Putin´s aggression against Ukraine is (in reality) forgotten. Barack Obama, one of the weakest US presidents ever, is offering the corrupted and criminal dictator another "reset" (even if his administration is not using the word). It will not take long before the former KGB agent is again welcomed and embraced by the "leader of the Free World":

Secretary of State John Kerry said on Tuesday that the United States and Russia had agreed to share more intelligence on the Islamic State, as he sought to lay the basis for improved cooperation with Moscow.
Just six months ago, Obama administration officials suggested that their goal was to isolate President Vladimir V. Putin following Russia’s decision to annex Crimea and provide military support to separatists in eastern Ukraine.
But Mr. Kerry made it clear that he would welcome expanded cooperation with Mr. Putin after a meeting here with Sergey V. Lavrov, the Russian foreign minister.
While nobody on the American side said the United States was undertaking another “reset” — the term the Obama administration used to describe its early attempt to improve ties with Russia — the tenor of Mr. Kerry’s comments suggested that the State Department was pursuing a new tack.
“It is no secret that the United States and Russia have had our differences over Ukraine,” Mr. Kerry told reporters. “We came together today in order to try to focus on those issues where we can find the capacity to be able to make a difference to other countries, to the world in general, and certainly to the relationship between Russia and the United States.”
 
Read the entire article here
 

Wednesday, 8 October 2014

Plummeting oil prices will weaken Putin´s Russia

Oil prices are plummeting. They have gone down as much as 20% since June. This - together with Western sanctions - weaken Vladimir Putin´s chances to continue his policy of aggression in Ukraine and elsewhere:

Lower oil prices could have lots of knock-on effects around the world. Take Russia, which depends on oil sales to bring in foreign currency. The Russian government has set its three-year budget with the expectation that oil prices would stay at $100 per barrel. A sustained fall in prices could cripple the Russian economy and run up deficits.

Indeed, some energy analysts are starting to wonder if an oil crash might even force Russia to pull back in Ukraine and elsewhere. And on Tuesday, the Russian finance minister warned that the country could no longer afford a multibillion-dollar upgrade to its armed forces that had been approved by President Vladimir Putin

Read the entire article here

Tuesday, 30 September 2014

Garri Kasparov on Putin: “the most dangerous man in the world”

Western leaders should listen to what Garry Kasparov has to say about Russian dictator Vladimir Putin:

Garry Kasparov, the world’s most renowned chess master, has branded Vladimir Putin “the most dangerous man in the world” in a passionate interview with Yahoo News, in which he stressed that the Russian President is more dangerous that Islamic State (ISIS) and “all the Al-Qaedas in the world”.
Asked if Islamic State or Putin were a bigger threat to global stability, Kasparov responded with “Of course Putin… Of course Putin!”
“Because Putin cannot be defeated militarily,” he explained. “The war with ISIS can be won on the ground. It is very clear that if America decides to eliminate ISIS, they will turn it into dust in 24 hours!” --
 
Russia’s nuclear arsenal gives Putin an “ability to create instability - a thousand times bigger than all the Al-Qaedas of the world,” Kasparov also said.
“Putin wants to stay in power at any cost and for him to stay in power he needs to create global instability. I would not be surprised if he starts blackmailing the world with nuclear armageddon because for him there is no life if he loses power.”
 
Of course Kasparov is right about Putin, and Obama, Merkel and the rest understand how dangerous the man is. But because unstable Putin is in charge of a large nuclear arsenal, they are too scared to take the action needed ...

Monday, 29 September 2014

Walter Russell Mead on EU: "The price for two decades of policy incompetence is goind to be high"

Walter Russell Mead is right:

Putin is dancing on the face of the West, and in Tehran, Beijing and across the world, the message is clear: Western statesmen are not serious, they don’t think before they act and they don’t mean what they say.
Ukraine continues to pay the penalty for standing up to Russia at the instigation of a ditzy, incoherent and vainglorious EU. History’s contempt for this generation of european leaders—authors of the euro disaster, disarmers of Europe as threats grew to the east and the south, creators of the worst mass unemployment in Europe since the depression—will be harsh and deep. The price for two decades of policy incompetence is going to be high, and the bill is already coming due.

Wednesday, 24 September 2014

The staggering costs of feeding the climate change "monster"

Tom Harris, executive director of the Ottawa-based International Climate Science Coalition gives some interesting facts about the staggering costs of feeding the climate change "monster":

According to the Congressional Research Service, from 2001 to 2014 the US government spent $131 billion on projects meant to combat human-caused climate change, plus $176 billion for breaks for anti-CO2 energy initiatives.
Federal anti-climate-change spending is now running at $11 billion a year, plus tax breaks of $20 billion a year. That adds up to more than double the $14.4 billion worth of wheat produced in the United States in 2013.
Dr. Bjørn Lomborg, director of the Copenhagen Consensus Center, calculates that the European Union’s goal of a 20 percent reduction in CO2 emissions below 1990 levels by 2020, currently the most severe target in the world, will cost almost $100 billion a year by 2020, or more than $7 trillion over the course of this century.
Lomborg, a supporter of the UN’s climate science, notes that this would buy imperceptible improvement: “After spending all that money, we would not even be able to tell the difference.”
Al Gore was right in one respect: Climate change is a moral issue — but that’s because there is nothing quite so immoral as well-fed, well-housed Westerners assuaging their consciences by wasting huge amounts of money on futile anti-global-warming policies, using money that could instead go to improve living standards in developing countries.

Wednesday, 17 September 2014

Congratulations EU!: The man who led Finland to economic catastrophe, will now be in charge of jobs and growth!

The fact that former Finnish PM Jyrki Katainen will be in charge of jobs, growth, investment and competitiveness in Juncker´s new European Commission illustrates what is wrong with the European Union.

Judge yourselves whether the new Vice-President for Jobs, Growth, Investment and Competitiveness is the right man for his job after reading what Björn Wahlroos, former economics professor and probably the most influential Finnish business executive and investor right now, has to say about the government Katainen led:

Finland is in a “catastrophic” and “murderous” economic situation, facing a challenge greater than in the doldrums of 1991, estimates Björn Wahlroos.
The outspoken tycoon refers to a recent interview in which Anders Borg, the Swedish Minister of Finance, suggested that Finland is a cautionary example of how a country can destroy its competitiveness.
“We messed up a couple of labour market agreements and tried to rectify that with measures that further increased labour market rigidity. Costs crept up. The results are evident: jobs keep on disappearing,” states Wahlroos.

A traditional measure of the competitiveness of an economy is to examine its terms of trade – the value of its exports relative to that of its imports. “In Finland, it has deteriorated by 30 per cent, which is unusual. In the meantime, wages have increased by 40 per cent,” lists Wahlroos.
“Wages have crept up by 20 per cent over the past six years alone – during a period when the gross domestic product has failed to grow one bit. In fact, it has dropped. If you're asking whether this is a problem, the answer would be yes!”
Industries, in turn, have refrained from making major investments after the financial crisis swept over Finland in 2008. “A substantial amount of jobs has disappeared. And here's the regrettable part: more will disappear,” predicts Wahlroos. --

In effect, the Government of Stubb continues to carry out the government programme hammered out by the Government of Prime Minister Jyrki Katainen (NCP) in 2011. “It's founded on as bad a premise as possible. What's regrettable in terms of political history is that it was founded on a bad premise partly knowingly,” Wahlroos states.

PS

Katainen resigned as captain of the sinking Finnish ship in June in the knowledge that he would be rewarded for his failure with one of the exorbitantly well-paid EU top jobs. You´ll never walk alone, if you belong to the "club" ....