Saturday, December 17, 2011

Swamped by demonstrations: Keeping up the pressure on Putin

The meeting by Russian liberal party 'Yabloko' (apple) took place yesterday, December 16th, as scheduled on the Swamp Square. The Swamp Square has been the venue last weekend, and the next major demonstration is schedule to take place there again on December 24th. This smaller meeting was attended by several thousand people, and meant to keep up the pressure on Putin ('swamping').
Other groups present yesterday included the 'White Ribbon' (which Putin likened to condoms), Parnas , 'Solidarity', 'Memorial', the Helsinki group, and 'For people's rights'.

The speakers have essential repeated the demands from the big demonstrations that took place last weekend; new and fail elections, and investigation of ballot stuffing. The party 'Yabloko' won 3.43% of national vote, when it needed 5% to send representatives to the Duma (lower house of the Parliament). According to exit polls, they actually earned > 4%. In Moscow, their losses due to fraud might have been particularly large, they officially earned 9% of the vote, but polls indicate the reality was closer to 15%.

Former Russian PM,  Mikhail Kasyanov, who served as prime minister under Mr Putin from 2000-2004, said of Vladimir Putin 'would lose an honest presidential election'. Referring in part to Putin's recent angry responses during the televised 'Direct Line' program, Kasyanov said that Putin is "angry and frightened and has lost his self-control" in an interview with The Sunday Telegraph."Putin understands that social pressure on him is growing all the time. He is nervous.”

Kasyanov's assessment of freedom Russia is honest, and unflattering:“There was never full democracy in Russia but there were at least some attempts to build it. But now there is nothing left.” Kasyano's party was prevented from running in the recent elections by Kremlin based on a technicality. "The elections are not free,” he said. “The collection of signatures rule is a mechanism to prevent independent candidates from running in elections without the Kremlin’s approval." Apparently, this mechanism of control is working well, because it stymied Kasyanov, and Putin recently proposed applying it to elections of governors (whom he currently appoints by executive fiat).

Kasyanov is considering lending his support to Yabloko, whose liberal views are closest to his own. Kasyanov and rejected analogies with Arab spring: "There will be no revolution - as we are committed to only using peaceful methods", but that kicking Putin out of Kremlin will involve a protracted political fight. “If Putin wins an obviously falsified election in March the wave of protests against him will be enormous... and the authorities will no longer be able to rule.”

Stop being so intolerant, you cracker!

I can't believe I just saw this sickening propaganda by SnagFilgs about Muslim opinion worldwide titled 'Inside Islam: What a billion Muslims really think'. I have seen polls from the Arab world, and they are very negative towards both Europe and the US, although the extreme element that wholeheartedly supported attacks of 9/11 is not that great.

A little over half of all the Muslims, majority of whom are Asian not Arab think 9/11 attacks were wholly unjustified (55%). Then the narrators says 'there was some gray area', without discussing the various slices. Seriously, they don't even have anything written on the slices, it's too embarrassing to discuss shades of gray about Muslim opinions on such horrific action as 9/11.
Behold, only 7% percent world-wide think these attacks were wholly justified. That means there are no fewer that over 70,000,000 Muslims who support wholesale slaughter. Another 400 million who feel they were somewhat justified. What percentage thinks the numbers killed too many, or that killing is too harsh, and prefer a milder corporeal punishment is for the infidels?

We're told that not a single one of the 7% cited verses from Koran to support their view. Did others? Do we care? We know that plenty of examples when imams in Egypt or other Muslim countries use Koranic verses (sura) to justify their hatred of the West. This observation proves only one thing - the authors of the documentary are at paints to paint these as 'politically radicallized' elements, well outside the main-stream. Unfortunately, this is entirely a reflection of the bias of this so-called study. The views expressed by many imams ('leaders of prayer') and similar to those of Osama bin Laden,  and these clerics are certainly not ostracized. They are the grass-root Osamas this study pretends do no exist.

The authors of this shameless propaganda play on emotion from the start. They begin not with 1000 + year history of relations between the West and Islam, but with fear felt by Muslims after 9/11 attacks.
The presentation attempts to shame the listener for Western bigotry for a religion with over a billion followers . So, rather than to believe the action of the 19 homicidal hijackers about Islam, we should take the world of these 4 peaceful individuals, who tells us Osama bin Laden puller a web of deceit over our eyes. Remove the web and behold the religion of peace.
The propaganda begins to proclaiming itself the result of a 10-year Gallup polling, etc. but after all the build-up they discuss only the question of 9/11. All they meant to do was to say West ignorant and intolerant, but they decided to make it pseudo-scientific. Interviews with 4-5 people with the same viewpoint to represent what a 'billion Muslims think'.

If they asked questions such such: "Do you believe the West is taking advantage of Muslim nations? Stealing their resources? Denigrating their faith?" You'd see 60-80% agreement in the Arab world, at least.

Note the names of these producers and never watch anything by these liars again. What a colossal embarrassment for all involved, including the companies that produced this insolent crap!
Among those who should be deeply embarrassed by this blatant propaganda insolently masquerading as a study SnagFilms, John Epositio of an Islamic scholar at Georgetown University, and Kenneth Pollack, Director of Research, Saban Center for Middle East Policy at the Brookings Institute, disturbed me the most, because he was the least unperturbed as he peddled obvious lies.

Moderation over extremes of idealism

Triumph of extremism over moderation is a danger for social structures which are based on lies or misconceptions, and hence inherently unstable. When the jig is up, as the saying goes, and the contract is revealed to be a fraud, moderation loses to expediency. Compromise about existential matters is not possible, and then disappears altogether under the rule of victorious new order.

One such area has to do with immigration into Europe. The simmering discontent is a pressure cooker, which builds up steam slowly, bur irreversibly. I believe there is a clear majority in most of Western European countries for strongly curtailing immigration, but the leadership prefers to ignore this or to dismiss it as unmitigated bigotry. This is a very dangerous tactic, which is accelerated by the economic crisis.

According to studies, such as those by the social scientist Wilhelm Heitmeyer who has been publishing studies on German attitudes for a decade, where more than 50 percent say that they would have a big problem moving into an area where many Muslims live. About 10 percent of society has thoroughly right-wing views, defined as antipathy to non-natives; immigrants, Muslims and Jews. The resentment for the generous welfare system, including the payments for the long-term unemployed (Hartz IV) to a disproportionate number of immigrates has contributed to the misanthropic mood in Germany under the strains of the economic crisis.

There are some intellectuals, such as Thilo Sarrazin,  who raise concerns about immigrations, particularly Muslims in his controversial book, "Deutschland schafft sich ab" ("Germany Does Itself In"). Sarrazin was recently chased out of a Turkish restaurant in Germany by angry patrons. Even the manager asked him to leave, saying "We Turks are usually very hospitable, but I don't think I can serve you." "A rational discussion was impossible," Sarrazin wrote; he and the television crew left the restaurant "like beaten dogs".

Sarrazin lamented when a "former Berlin senator, guilty of nothing more than writing a book with unwelcome numbers and analysis, is literally mobbed out of a central Berlin district that calls itself the spearhead of German integration. Woe betide us if, as many hope, the conditions in Kreuzberg are the workshop for future Germany".

This is the type of uncomprehending tension can only be addressed by government action, because tensions will not resolve themselves. The current trajectory leads into trouble, and this slide is accelerated by the economic difficulties.

The EU leadership needs to wake up, and fast, but they are fully preoccupied by integration concerns rather than each minding their own business. According to Heitmeyer, it is very late in the game: "Our democracy is a functioning shell, as evidenced by low voter turnout. Our numbers show that many people have already given up. They no longer have any expectations of politics.  Some 64 percent of society believes that striving for justice is pointless. Solidarity and fairness, values that are vital to the cohesion of a society, are being eroded." This is a recipe for xenophobic demagogues to take power in the heart of Europe. Protests, similar to American 'occupy X' movement are not normal expressions in of opinion in a democracy, because the seek for impose themselves. It's an extreme form of speaking out, that destroys foundations for moderation.

Heitmeyer suggests that on the bright side: "I do not recognize a potential for unrest in Germany at the moment. Instead, I suspect that apathy and disorientation are on the rise." Apathy may be preferable to unrest, but it is neither a stable nor comfortable situation.

The situation found in many countries, such as Netherlands, and France are much more grave than those of Germany, discussed above. In another articles, I would like to talk about Geert Wilders, and some others to illustrate the continent-wide nature of these problems. Unfortunately, just as these problems are becoming more acute, the leadership is busy working on closer economic integration, which will make it more difficult to exercise national sovereignty and effect immigration. Echoing that sentiment signs at a recent demonstration in Warsaw read: "Keep the euro, we want our nation back".

Friday, December 16, 2011

Suicide EU: blogging ahead of the curve

I'm still looking for this site to be indexed; and came across an article by a financial market analyst Charlie Fell, who writes the column 'Serious Money' for Irish Times.

Charlie Fell wrote an article today entitled Europe's suicide pact pointing out that "The summit’s proposals reveal that the EU’s political leaders remain in denial or are blind to the true nature of the crisis that afflicts the euro-zone."

Charlie mentions the incongruity between the problem and proposed solution:

"The EU’s leadership continues to believe that profligate government spending among the euro-zone’s periphery is the central problem and, insist that fiscal austerity is the only path to future stability. With this in mind, the summit proposed that euro-zone members adopt constitutionally-binding debt brakes requiring states to maintain balanced budgets, defined as structural deficits of no more than half a percentage point of GDP."

I have been writing about the same idea, and even took the same name for the blog to make my point inescapable. I have no special knowledge or training in finances. What I do have is sufficient boldness to use common sense to analyze the proposed solutions, and to suggest that they will exacerbate the disease.

This is not merely a figure of speech, but a reference to the restrictive bonds of common monetary policy that are supposed to be tightened by mutual promises in the smaller core EU.
To add something new to my prior analysis, I'd like to comment on the idea of austerity. It is a involuntary reduction in government (over) spending, imposed upon profligate members of the EU by the collective. This has the possible benefit to greatly shrink government expenditures on the periphery, but therein lies the difficulty, also. Greece, for example, would need to reduce its government expenditures by 21% to eliminate annual deficit while keeping the euro. Italy and Portugal would need to cut government expenses by at least 10% and 14%, respectively. These are average, 'across the board' cuts, targeting some cuts would require others to be even deeper. Think about the scope: these cuts affect everything from education and research to transportation and health services. Ten percent or more may not sound like so much until you think about your own occupation and its budget.

I do not believe that vague promises in the name of EU unity will conjure up the political will to cut that much. It will be really healthy, if they do. In the meantime, Germany, the Netherlands are among a few not obligated to undergo austerity. Bringing down the question of austerity to the level of an individual, I would ask you, gentle reader: "Would you go on a (lengthy) diet, if you neighbor told you to, as he continues to live large?"

Land down under is coming up

The country's government debt to GDP is the lowest among Organisation for Economic Co-operation and Development (OECD) countries. While US continues to look attractive for investment compared Europe, it as comparison between bad and worse.

Australian government is one of the most frugal among the OECD:

These revenues and expenditures above by Australia are from 2005. The balance sheet looks similar in 2011. Australian government consumes a smaller portion of GDP than majority of OECD countries, and operate with a small surplus.

Two additional factors help Australia, location near hot Asian markets, and a relatively light regulatory burden.

Europe and US are suffering from a number of ills of being rich and lazy: excessive regulation, high taxes, relatively inflexible labor markets in EU, and prohibitive social spending.

Australia, on the contrary, does not even have a social security tax. They have not had the time to accumulate all the warts of a old democracy, including tax code, which is too cumbersome even for the IRS, activist EPA, not to mention about $100 trillion of unfunded liabilities in the US alone.

Australia has a bright future, and is benefiting from the implosion in Europe by acting as a magnet to young, mobile professionals. This trend will only accelerate as fiscal crisis continues, and also with the ageing of population in Europe ages. Traditionally, this used to be America's role, but it is no longer the top destination for your professionals. That title belongs to Australia now.

The Australian stock market has a lot of potential also. The average Price/Earnings of Australian stocks is about 15, close to half of that in US, which became relatively expensive in the mid-80's as shown below.

First rule of Suicide Pact: lie early and often

Nicolas Sarkozy, French President, said: "We want, in essence, that the malfunctioning that led to the situation of the Eurozone today can never happen again. This is what Germany and France want: that what happened can never happen again."

Angela Merkel, German Chancellor, said: "I've always said that the 17 Eurozone countries must restore their credibility. And I think with these new measures we can and will do just that. "
So there are 17, 26 and 27 members in different layers of the union. In addition, the latest grand bargain, lauded by Merkel and Sarkozy, may take until March to negotiate. Then all the new members (26) have to ratify.

This fiscal outcome of this confusion of laws seems to be going the way of sub-prime mortgage lending, when banks admitted inability to price their sliced up piece of mortgages. This time it is (former) nations of Europe, rather than banks that may go bankrupt, with the additional inter-national acrimony resulting from basic inability to establish facts, such as who owes who. For example, are the Germans going to be repaid for bailing out Greece, through ECB or any other mechanism? Will Greeks 20 years from now consider that a legitimate debt, or will the (rightly) state: We didn't ask for it, we didn't want it, we reject responsibility for this debt.

On the bright side, even if things go smoothly between nations, the interaction and conciliation of different laws is going to keep a generation of lawyers employed in each nation.

The real travesty of this situation is the Lie I mentioned in the beginning, namely that there is a strategy in place. All there is, are words. An agreement, to reach an agreement. To adjusting rules on the fly, during a crisis. To top if off, what Merkel's old insistence that EU members promise to maintain fiscal discipline, is market as a 'strategy' and a 'solution'.  As I described previously, latest debts have resulted primarily from import-export disbalances of countries with a single currency so to pretend that a mere promise can address this fundamental problem is to Lie.

It is anyone's guess to what extent these lies result from ignorance or malice. In other words, are they fooling us, or do they really don't know any better? As bad as lying is, the alternative explanation of economic illiteracy at the very top of European leadership, which is shaping a common future, may be worse. When dealing with an idiot and a cheat, pick the cheat, who's at least predictable.

The further things go EU goes down this road, the more entangled the financial mess will become. The one innovation proposed in the new treating is the creation of a centralized, EU-wide taxation.

This caused two of the more sceptical nations amoung the core 26, Hungary and the Czech Republic, to say in a recent joint conference in Budapest they were ready to reject the planned treaty, with the Czech prime minister Petr Necas saying, they are “convinced that tax harmonisation would not mean anything good for us."

EU will become the Gordian knot holding the Suicide Pact together. UK will be seen as fortunate for its early escape form the impending mess. Those who delay the inevitable because of wishful thinking increase the cost to their nations.

Economic weakening of UK: look who's talking

The French are more vocal in their expressing dislike of UK for snubbing the EU, than the Germans.

Yesterday the governor of the Bank of France, Christian Noyer, said: 
"Great Britain is in a very difficult economic situation, a deficit close to the level of Greece, debt equivalent to our own, much higher inflation prospects and growth forecasts well under the eurozone average. It’s an audacious choice the British government has made," referring to rejection of updated EU treaty.

French policymakers were angered last week when Standard and Poor’s, a ratings agency, threatened to downgrade eurozone nations — including France — if leaders did not act urgently to address the single currency crisis. In an interview with Le Télégramme, a French regional newspaper, Mr. Noyer said the downgrade did not appear “justified in regard to the economic fundamentals”.

“Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and whose credit is collapsing,” he added.

I trust the three ratings agencies to judge the financial situation more than politicians interested in preserving appearances. And the ratings agencies are suggesting that it is France, and other continental nations that need to be reviewed. Today Fitch Ratings lowered France's outlook, and is reviewing ratings for Italy and Spain, citing failure of EU leadership to find a “comprehensive solution” to the debt crisis.

The last part is the part that amuses a cynic like me the most. The agreement reached by 26 European nations (EU minus UK) is all about promises to maintain fiscal discipline, which is nothing but wishful thinking that ignores that underlying problems that lead to the deficits in the first place. The truth about EU as a suicide pact is revealed by the shady behavior of it's leaders. You may think, despite my statement of the emptiness of new EU agreement, that it there is merit in the fact that 26 nations reached agreement. Actually, three of them are uncommitted, and only promised to try to ratify the new treaty. Here's the real kicker, and why statement about lack of 'comprehensive solution' is mild: there is no agreement, there's only an agreement to agree. The 'new EU' rules are still being put together, and should be worked out by ... March. After that, all EU member states will bring the new rules up for a ratification in national assemblies.

This is just great. These EU bureaucrats think they after they surpassed the legal boundaries of past agreements, by directly bailing out Greece among others, they can come up with new and and more extensive regulations on the fly. The real absurdity is that these 'means justify ends' are destroying the last vestiges of faith in all EU agreements by over-reaching their mandate and trampling on national sovereignty. What is to stop EU from changing rules again in another couple years, while financially stronger 'core' nations dictate to the weaker ones?

Agreements at the heart of EU necessarily are win-lose for different member states. That is why the union is unstable economically, and political disharmony is likely to get significantly worse during the breakup of EU with layers of rules, debts and obligations. This entanglement of money through an unnavigable web or rules makes the slicing up of sub-prime home loans that precipitated the mortgage crisis in the US look like an orderly and well-thought out process.

SEC charges ex-Fannie and Freddie chiefs, with a curious exception

The great mortgage securities crisis in late 2008 was in large part the responsibility of Freddie Mac and Fannie Mae, which helped politicians push banks towards risky lending by providing a guaranteed secondary market for home loans.

The loans were bundled, and sliced like salami, ensuring that the risk an evaluation of these slices would defy understanding in the future. George W. Bush, to his credit, tried to push through a reform in 2005-2006, but was stymied by Barney Franks who repeatedly claimed these 'government sponsored enterprises' were sound. Moreover, anyone questioning them was on a political witch hunt.

Several years later, the old chiefs of Fannie and Freddie are being held responsible responsible for misleading investors, the public and Congress.

Robert Khuzami, SEC enforcement director, said Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was.” The misrepresentations allegedly misled the market about the risk held on the company’s books “during a time of acute investor interest in financial institutions’ exposure to subprime loans”.

Franklin Raines was Chairman and CEO of Fannie for several years, but was forced to retire uner investigations for irregular accounting discovered by audits. Rains got a golden parachute valued at about $240 million. The Bush government did sue Raines, and in 2006 a court ordered him to return $50 million from bonuses for mis-stated deals.

In 2008 McCain campaign tried to cast Raines as an advisor to the Obama campaign based on a Washington Post article from July 16 of that year where Rains said he had "taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters".
The connection is flimsy. Still, I would expect Franklin Raines to head the list of convicted heads of Fannie and Freddy. Could his relationship with Obama have anything to do with Raines getting away scott free, while smaller fish are made to fry?

The Russian bear speaks, but doesn't listen

Vladimir Putin periodically has recently had another question-answer session on Russian TV, called "Direct Line" (to the Kremlin, presumably). In this tenth installment of presidential grace to the great unwashed, he answered a total of 88 questions during 4.5 hours Marathon.

Putin did not elude a key question about protests, however, in his answer he did not manage to maintain an even tone until the end. He suggested installing web-cams throughout the polling places in Russia, only to observe that it would "removing grounds for those who want to delegitimize power in Russian Federation".
This session was unique in that a large number of tough questions from the viewers were allowed to be asked of the president. The present answered all of them although the responded with unexpected harshness to some inquiries.

Semi-elections of governors. During Putin's presidency governors of various regions of Russia started being appointed by Putin, rather than directly elected by local voters. The results are predictable - these governors owe allegiance not to the people in their regions by to the tsar Putin. Corruption is inevitable. There is a lot of discontent with these appointees, especially in the more remote regions.

As a concession to his subjects Putin offered semi-elections of governors. Rather than directly appointing governors, Putin would restrict himself merely to approving the list of candidates for these elections. The people will pick governors from a government-approved list. How will they behave in office? I think this is a terrific idea: semi-elected governors will be semi-corrupt semi-representatives of people and constitute great progress for a country so poor, it cannot afford luxuries of morality.

The journalist asking the questions forwarded people's frustration with corruptions of governors: "Excuse me, Vladimir Vladimirovich', he said respectfully referring to Putin by his patronymic, tell us please, by names, will we see new people [in positions of governors], and will there be 'jailing' [of corrupt officials]? Of course, in our country fighting corruption is a form national amusement and depends on who's asking this question."
"So, we may begin with you," said Putin without thinking. "Not from you personally, but in general."
Clearly, asking about corruption is Russia, especially if you're a journalist is like asking "For whom the bell tolls?" - it's a bad idea.
In fact, another prominent journalist has been shot dead yesterday in the volatile Dagestan republic in the latest in a series of killings of Russian journalists. A masked assailant fired 14 shots as the journalist left the office on an independent newspaper renown for fighting corruptions, and facing down treats. A number of European leaders spoke about about the persecution of journalists in Russia.

Journalists in the capital are murdered less often in Moscow that in the previous two decades, and have been replaced by non-lethal repression. Three days ago, after journal "Power" published a photograph of a election bulletin with an indecent message for Putin from an anonymous citizen, it's main editor, Maksim Kovalsky, was fired. This was also asked of Putin, but he laughed off the infamous bulletin and did not comment to the price paid by the specific journal or journalism in Russia as a whole. The published picture was not edited by the journal, it went viral because it revealed the thoughts of millions. Published after the unprecedented protests on December 10th the reality of those sentiments has been revealed, providing amply justification for publication of that picture.
Here's the cover for which editors of Kommersant journal "Power" have been fired:

The small text on the left say: Victory of/by single-party-ballot-stuffing. The second word in white is a whimsical construction from several roots, for which Russian is well known. The made up words contains roots 'single', and 'stuffing' in place of 'voting' as play on similarity of these two Russian words.

According to Putin, the this phrase was written on a ballot "in London, where people came to the embassy to cast their ballots," Putin said during his annual Q&A session broadcast live on Thursday.

Read more on this in a Kiev paper.

Another question to Putin was: "Does Russia have any allies?" launched Putin into a diatribe about selfish Americans: "don't need allies, but vassals". America relies on 'so-called allies' Putin preached, while Russia has friends (Syria, Lybia, Venezuela, presumably). To nail the coffin of America's evils, Putin told his audience that John McCain participated in slaughtering innocent civilians in Vietnam.

The the other side of preaching his virtue is denouncing and belittling the demonstrators. In a high class joke Putin said the white ribbons (similar to the support-the-troops American ribbons) on the demonstrator as initially looked "sorry, like condoms" to him and he thought they were promoting an anti-AIDS initiative.
This disrespect to legitimacy of their grievances will only stoke fires of public discontent. The lies are too blatant, and are failing as a result. To hold onto power Putin is going to have to use increasing amounts of force - an eventually for which he reserves the rights, which is one of the reasons Russia has provided so much political cover for repression in Syria - they're concerned the day is nearing when they may have to resort to similar tools.

Thursday, December 15, 2011

Interesting trend in popularity of articles on Russia and US

The website is four days old, although it's growth is full of spits and spurts.
What really caught my attention was the popularity of the story about the Russian spring and US election. The latter, I thought was rather timely, because the next day after I wrote a blog Center is the new Right arguing for GOP nomination of Romney by the GOP, Ann Coulter came out for Romney as well as Washington Examiner. The next day I wrote an article about Putin's low regard for demonstrators of Russian spring, and various methods of suppression of dissent.
The later article about Russia, had a shorter life, but managed to accumulate more that double the number of page views for the Romney blog. I wonder why this is? Is it my unique knowledge of Russia and ability to offers interesting insights outweighing the interest in local politics. I thought the two articles were roughly comparable, and wonder why the one about Russia proved so popular with American (where majority of the readers are from, see second picture).  Was the 'smiling bear' smiling bear more unique content, or simple better written?

If you're one of the readers who saw both articles, I would be interested in your impression and preferences.

I have written another pair of articles (earlier) about the Russian spring, a shorter one about a new demonstration scheduled for Saturday (tomorrow, 12/17/11) as well as a longer one, Russian spring in the swamp, which  more in depth, and the funniest of the three. If you enjoyed the 'smiling bear' story
  try the longs story about the Bolotnaya (Swamp Square).

Russian bear has a sense of humor

After the largest protests in Russian since the collapse of USSR took place on December 10th, the nation held its breath to see the response of Putin and his ruling party, United Russia.

The initial response was similar to Assad's to protests in Syria: the protesters might have legitimate grievances, but are cautioned not to cross over the line. That quickly proves inadequate; the next step is to blame the West. That is happening in Russia now.

To those who care about Politics in Russia, I can tell that the vast majority of Russians, at least those outside of the major cities are still scarcely aware of the protests which got scant attention on the national news. The biggest news item was a mistake by Fox news, which in place of a peaceful protein in Moscow showed a violent scuffle in Athens.

Masses never had much to do with guiding the revolution, so this ignorance may not prove decisive; however, many opinions can still be shaped by government propaganda. Those who are aware are annoyed by being belittled in this way. There's no way to keep a lid on the truth, and that leaves the only recourse to the unscrupulous - Force. Putin is still hoping that Lies might suffice to clam up the popular discontent. The Russians tolerated a lot, but the cynical exchange of jobs between Putin and Medvedev is too much for many to accept. People know they are facing 12 additional years of Putin's rule. The 'blame the West' strategy worked poorly during the Soviet times, now it is widely seen as a crude ploy by Putin and the United Russia to avoid scrutiny.

It's worth describing the tortured logic. "There is a well-organized pattern of destabilizing society," Putin said in a call-in TV show, referring in part to Hillary Clinton's call for new and fair elections.
What pattern are they talking about?
In their alternative universe Quaddafi was a victim of Western aggression, a legitimate leader whose 'assassination' Russians protested in the UN. When Quaddafi was on the ropes and out of friends, he could count on political cover from Russia. Another example is Syria.

Why would the West do this? "They still fear our nuclear potential," Putin said. "We also carry an independent foreign policy, and, of course, it's an impediment for some." An impediment! Russian policy since before WWII has been nothing but a continual series of impediments to peace and justice.
Fortunately, I can say with certainty (at least for large metropolises) that Putin's words are counter-productive, because they do not pass the laugh test.

Suspending the Bill of Rights of American Citizens

Abandon all hope ye, who enter here. Where's here? In terms of the space-time continuous, United States, "Bill of Rights" day in Decemeber 2011. Here is also a major red line in terms in the balance between protection of rights and life.
The reason for the quote and the puns is that yesterday the House approved the rule for the 2012 National Defense Authorization Act (NDAA). That means today, the 'Bill of Rights' day could see Obama sign the 'Indefinite Detention' bill into law that will allow nothing less than suspension of the Bill of Rights for Americans deemed to be 'terrorists'.
I am quite hawkish about fighting terrorism, but we're about to cross a major line here. Where are the brakes that will stop the government from declaring terrorists of tomorrow? How about enablers of terrorists, surely they could be a dangerous fifth column? Do conservative bloggers who use harsh language against liberals qualify? Well, that depends on who sets the rules. Now, I'm willing to forego demands to push for jailing of people like Arianna Huffington, for the sake of ensuring the freedom of speech for everybody.
What is very odd about this law is that while the law, sponsored by Senators Levin and McCain, did not originally cover American citizens, but the Obama administration insisted and the broader law was approved by the House yesterday.
Senator Grahm provided a clear example of the new law, as applicable to a terrorist. However, the same message would receive by an innocent person persecuted by an over-empowered government:
“And when they say, ‘I want my lawyer,’ you tell them, ‘Shut up. You don’t get a lawyer."

Weren’t these the same people who cried that Bush took away our civil liberties? I'm worried about the medium and longer-term implications of this. This is one of those rules that can only be safeguarded by never making exceptions.

Unassimilated minorities in EU: a poisoned well

One of several major challenges that faces the Western nations, especially those within the EU, is the changing demographic. Western nations everywhere are aging, this combines adversely with the increasing number of foreigners, who are much less assimilated than those who come to the US. The tention results from fundemental cultural differences, but I see economics being the spark, as dwingling money is divided among the retired and those leaving off wealfare, including a disproportiane number of immigrats, or their unassimilated descendants.

According to this logic, as EU runs into financial trouble due to disparaties between consumption and exports of individual countries, we should expect to see less tolerance, including towards culturally segregated communities, such as the Banlieues in France, where neither the police nor ambulances dare to go.

Angela Mekel has said earlier this year that 'Multi-culti' (multiculturalism) has failed. Nicolas Sarcozy made a similar statement even earlier. Both of these leaders are (belatedly) stating the obvious.

The timing of this piece was motivated by the release of a 10-year long study study of prevaling attitudes in Germany and a recent shooting in Florence that both support my regrettable conclusion above.

Social scientist Wilhelm Heitmeyer has been publishing studies on German attitudes for a decade. In a SPIEGEL interview, he discusses his latest results, which show that says 'German society is poisioned''German society is poisioned': relationship of natives has become increasingly hostile to immigrants.

Heitmeyer says that status-based thinking is particularly widespread in utilitarian Germany.

An Italian gunman with fascist sympathies went on a Rampage in Florence on Tuesday, killing two African street vendors and wounding three others in broad day light before shooting himself dead. To make the racist, anti-immigrant nature of his hatred clear the gunman shot several Senegalese vendors in one town in an open-air market, got in his car drove to another town in Florence and shot several more Senegalese, before taking his own life.

Wednesday, December 14, 2011

The shrinking EU core and PIIGS (US)

Bloomberg news recently commented on convergence of Netherlands and Germany. Curiously, Netherlands has almost three times as much trade (90 billion euro) with Germany than with France (32 billion euro).

Dutch Finance Minister Jan Kees de Jage said: "Trade between Germany and the Netherlands isn’t only extensive, it is enormous. It is flourishing today thanks to the internal market and the euro. If there are two EMU countries that should logically stand together, they are Germany and the Netherlands.”

A breakup of the euro bloc would cut exports of Dutch products by 25 percent next year, ING Groep NV (INGA) economists Teunis Brosens and Dimitry Fleming said in a Dec. 6 note to clients. “As a trading nation with large pension funds and an international financial sector, we’re closely tied to the euro zone” and may be the country with the biggest interest in maintaining the currency, they wrote.
Is this a counter-example of the badness of EU, which I describe as a suicide pact?

No, it supports that unfortunate thesis. I wanted to find out why Netherlands in particular stands to lose so much from breakup. Netherlands is the 6th largest exporter worldwide, and the 3rd in Europe, just a hair behind a much more populous France. I put together a little table from publically available data to illustrate what I'm always referring to in writing.
Country Exports (M) Population (M) Per capita Imports (M) Exp - Imp (M) (E-I)/capita
Germany 1337 81.729 16.4 1099 238 2.9
Netherlands 485.9 16.847 28.8 429 56.9 3.4
France 517.3 65.027 8 590.5 -73.2 -1.1
Portugal 46.27 10.561 4.4 68.22 -21.95 -2.1
Italy 448.4 60.706 7.4 473.1 -24.7 -0.4
Ireland 115.7 4.581 25.3 70.36 45.34 9.9
Greece 21.14 10.787 2 44.9 -23.76 -2.2
China 1506 1339.7 1.1 1327 179 0.1
US 1289 312.7 4.1 1936 -647 -2.1
2010 est. 2011 est. 2010 est. 2011 est.

The imports, exports and 2010 estimates, while populations are estimates from 2011, but the newborns will not seriously jeopardize this argument. I grouped PIIGS in red. Clearly, Irelands' fiscal difficulties are of temporary nature, while for Portugal and Greece problem are more fundamental. Of course, the per capita annual deficits do not show outstanding debt, which makes even Italy's relatively modest deficits unsustainable. Italy's bond rates about 7-7.5% while comparable German bonds are about 2-2.5%.

My initial purpose was to show similarity between Netherlands and Germany: they are both major net exporters, with a huge market in the EU. The net trade deficits in the rightmost column mean that net importers would need to subsidize their imports through debt, because allowing currencies to adjust to market conditions would make exports very expensive. What benefits the Northern Europe hurts the South, when they are tied by a common monetary policy. Not surprisingly the northerners would like to simply ignore this difficulty, or to overcome it by speaking about fiscal responsibility. There has been vast overspending by the politicians; however, there is a bigger fundamental issue.

The suicide pact is what happens when the desperate North and South try to band together for short-term gains despite the likelihood of long-term pain. The alternative proposed by the North: severe cuts in social services and government jobs, called 'austerity' to address accumulated deficits together with a cultural and economic revolution that puts the entire union on par with the core, such as Germany and the Netherlands.

The leaders in Brussels will be the last to admit the reality of differences between the North and South of Europe. Economically weaker nations are likely to be pushed off the new band-wagon, until the entire periphery (South) is stripped from the core (North). The pressure for this separation will be great. After this separation, the benefit of common currency will no longer benefit the Germans and the Dutch by making their exports more affordable in Greece and Portugal. I was very impressed by the 25% reduction in trade mentioned in the article above, because it appeared to contradict my point about the detrimental economic consequences of the euro. Following up on this revealed that the benefit occurs at someone else's expense. The win-lose is a fundamental characteristic of a common currency: it helps some and hurts others making the system unsustainable.

One last point, the PIIGs are us(US). Look at the plot of the per capita trade deficit (E-I)/capita in the table:
The numbers above reflect the amount of borrowing, per capita, in dollars. US is bleeding far more red ink that Italy, for example. Is US trying to replicate Greece? How do you explain US following down the same path, but expecting a different result - Insanity or Arrogance? Because it cannot be Ignorance.

Democrats for Newt Gingrich

Still hoping for my blog to be properly indexed by Google, I came across an article on Tampa Bay website  that echoes my blog about Gingrich's suitability for the VP, but not the presidency.

The author of the article described the potential nomination of Gingrich for the presidency by the GOP as a 'suicide pact':

"Democrats laugh, as if the GOP has lost its collective mind and entered a political suicide pact. The GOP establishment is having a conniption."

The same article quoted the former Florida congressman Joe Scarborough from last week on his Morning Joe when he said of Gingrich: "He will destroy our party. He will re-elect Barack Obama and we'll be ruined." I agree. What makes it difficult, is that I like Newt Gingrich a lot, but not for a GOP nominee in 2012. Liking Newt Gingrich is not inconsistent with rejecting him for the top of the GOP ticket - that's why I wrote the blog 'Center is the new Right' - to analyze and ultimately to reject emotional response to the coming decisive election.

The euro plunges faster than its support in EU

Below are comments from three analysts indicating the outlook for the Euro is totally negative:

“It’s hard to see a positive scenario for the euro,” said Kumiko Gervaise, an analyst in Tokyo at Research Institute Ltd., a unit of Japan’s largest online currency margin-trading company.
"Absent any commitment from the European Central Bank to buy more sovereign debt, I think the outlook remains weak for the euro," said Brian Dolan, chief strategist at in Bedminster, New Jersey.

"The euro is unlikely to rebound in a clear manner unless the European Central Bank lowers its interest rate further and takes quantitative easing measures," said Yuji Kameoka, managing director of the investment strategy and research department at Daiwa Securities Co.

Don Surber cites the following averages for the support of euro:

41% want are content the way things are
42% want ideas behind the euro reviewed
12 % want to get out immediately
5% don't know

That means only 1 in 8 Europeans on average are in favor of action to get out from under a falling brick. The rest, minus the totally ignorant ones (5%), are evenly split between being content with status quo despite the warning signs, and another half want to think about it. Do they seriously think the bureaucrats in Brussels are going to review the raison d'etre in an honest way, which may result in conclusion that ideas behind the euro are fundamentally flawed? That the experiment is in danger unless underlying agreements can be re-negotiated? The only answer they can produce is the solution of doubling down on all the initial bets, and hoping that the magic of public ceremonies of commitment to fiscal discipline will by themselves cure unrelated, fundamental problems resulting from trade imbalances?

It's a sad spectacle there, across the pond from the US, but for me realizing the motivations of the players makes it more of a farce than a tragedy. After all what can be a more reliable than bad consequence from continuous self-delusion?

British benefit from selfishness

The British are beginning to break with EU. The benefits of their leaving what is increasingly becoming a suicide pact should not be long in coming. Europe's financial future looks bleak. There British are explicitly modeling themselves after the independent Swiss, rather than partaking in the common problems of EU.
A suicide pact is like Jamestown at the end its road; you drink the poisoned cool-aid willingly, or you're helped to overcome the weakness. Attempts to leave the club at such a time are resented.
Predictably, many European commentators took out their frustration on David Cameroon, after he vetoed changes to EU regulations last week. As I mentioned in an earlier post, the British were seeking unique protections for the financial activities in London, and can be legitimately criticized for that, however, that's not the main issue take up by critics like the German magazine 'Der Spiegel' sugguests that Cameroon's decision would backfire at home and abroad.
Indeed, EU is moving to sideline and even to punish UK for its independence, and in UK there is strong polarization between Euro-philes and Euro-spectics/Euro-phobes. However, a poll taken in UK after the veto shows conservatives have benefited from standing up to EU, despite taking their stance over selfish financial reasons.
The prediction for domestic unpopularity resulting from Cameroon's distancing UK from EU appears to have been wishful thinking on the continent. What about the reality in EU? EU ratified a new union, based on stronger set of rules by 26 nations; everyone besides the UK.

Below: Mercozy (Angela Merkel + Nicolas Sarkozy) were all smiles about their tighter union last week.
'Der Spiegel' hurried to proclaim the formation of a 2-speed Europe, implying no doubt that the new, stronger union would move at a faster speed, and outdistance UK. The rest of the article seems to belie this hope; it admits political costs of the fracture, as well as the fact that additional regulations don't help the immediate problem - dramatic escalation of borrowing costs in the EU. There have already been wealth transfers to Ireland, Portugal and Greece that were never imagined by the Germans and the French when they ratified EU treaties. That's the point - the rules needed to be amended, on the fly. The initial rules, in fact, the union itself, were not very well thought out. Who has the confidence that European leaders came up with a sound resolution under this time pressure, one that will not backfire?
According to the reasoning that I've been laying out on this blog, the European Union is deeply, fundamentally flawed, and should be abandoned. The loss of face for the bureaucrats is one of the reasons preventing that from consideration until all other options are explored, including running the risk of a messy joint bankruptcy.

Leadership of a cult that has lost a member, directs full fury on the traitor, but also tightens the bonds that bind its remaining members. It both ways the response of EU to individualistic, selfish concerns of UK mirrors the attitude found in Jamestown, after several members escaped.

Not only is new regulation not dealing with the immediate underlying financial crisis, it seeks to resolve imbalances in trade between members of EU through the most unlikely method of expecting the Italians and Greeks to produce like the Germans, they present the newly-forged chains that bind the collective more tightly together as evidence of its impending success.
The markets appear to know better, than the delusional EU leaders, and the euro has plunged again today to multi-month lows.

Suicide Pact Blogs

I hoped that by this point searching Google, which hosts this blog for 'suicide pact blog' would bring up my blog. Maybe on page 20?

I came across a couple individual articles which lament some examples of a union can turn from a boon into a suicide pact:

Outpost-of-freedom article and the blog on the weekly standard.
I've tried doing basic promotion of this website on and other forums, but one can't over-do this. So, if you are familiar with promoting online content, such as this blog, I would appreciate your suggestions.

Tuesday, December 13, 2011

David Axelrod reveals his quality once again

At briefing for reporters, Axelrod said regarding Gingrich: "The higher a monkey climbs on the pole the more you can see his butt."

Read more:

This reinforces several characteristics of my image of Axelrod: he is vulgar and hateful deep down, as well as a man who has bought into his own hubris. Axelrod is known for being 'on message', a political disciplinarian, but he should have held his tongue.

Can you imagine the outcry if somebody has said those exact words about Obama?!

No amount of evidence of Obama's failures or misrepresentations would suffice to choke off the liberal outcry of indignation. Reversing this criticism reveals the hypocrisy of Axelrod, who doesn't seem to realize he is casting stones from inside a glass house. The main-stream media is to blame; it has not challenged these double-standards.

Center is the new Right: GOP should nominate Romney

The ideological and radical Obama administration has become a common nightmare, sadly, in line with my expectations. The evidence was there before the election, but I couldn't even convince my retired parents that in addition to economic malaise Obama would impose while Congress is controlled entirely by the Democrats, but social programs, such as Medicare, on which they rely, would actually get cut not strengthened. Enlarging the nanny state Obama administration would certainly mean 'more' social entitlements, but for those who had difficulty imagining why 'more means worse' for social programs the administration spent two years pushing through Obamacare to demonstrate.  
It is time for Americans to stop being dupes, and question leadership that pulls bait-and-switch tactics. Obama decried in one TV interview that it is easy to be cynical about the government, suggesting we should elevate ourselves above such prejudice to succeed. It is difficult to imagine administration more cynical than Obama's with its 'subversive' leadership style.

Obama got a huge surge of popularity during the 2008 bank crisis in US, was seen as a better steward of the economy than McCain. Obama promised to make the economy a priority, then pushed through Obamacare, and sold it a key structural reform for the economy, although major implementation of occurs only during 2013-14. And over 2000 organizations that supported Obama have received waivers from Obamacare. 

There are only two explanations for the disparity between immediacy of economic pain and its tenuous long-term solution through reform of health-care - 15% of annual GPD of US. Either the brilliant salesman Obama assembled a team to equal his inexperience and incompetence, and failed to comprehend that healthcare reform could not have any positive effect - economically or politically during his first term. Or did the Obama administration decide to cash in during two years of total controlled of the administrative and executive branches and pulled a bait-and-switch to push through a pipe-dream from the top of the radical liberal agenda? During this time the British government-sponsored universal that was finally admitted as failure (no mean feat, which took a long time and cost a lot of live) and was being abandoned the only explanation for this behavior is radical ideology.
Charles Krauthammer, a talented syndicated columnist who writes for Washington Post and is known for his insightful, if mildly phrased descriptions, characterzed Obama's administrative style as 'subversive'. Subversive, is an apt description, but it is also a euphemism for 'based on lies and misrepresentations', although it has the benefit of brevity.
I remember watching the town-hall meeting with candidate McCain in 2008 when a middle-aged black man got a microphone and pleaded with McCain to challenge Obama's vague, collectivist program of reform: "Take it to him", the man said impassionedly.

We are in need of someone who can take Obama to task for his assumptions, actions and results. I felt obliged to provide a strong example of Obama's duplicity before asserting the obvious truth - that the administration it is a travesty and needs to be challenged most strongly. The corruption of government and society under this administration will take a long time to repair, and many of the people who perpetrated this 'social experiment' on the American people need to be questioned. Recently, Eric Holder has been shown to have misled Congress about his knowledge of the infamous ATF's 'Fast and Furious' gun-running operation, but is getting away with it.

Corruption flourishes it it is not prosecuted.
On Bill Clinton's last day in office assistant attorney general, Eric Holder, issued over 150 pardons including one for a convicted financier Mark Rich, whose wife made a very generous donation to Clinton's reelection campaign in 1996. George W. Bush clearly had great regard for the office of the presidency, and possibly because of that respect he did not investigate Eric Holder. Clearly, that was a mistake, because of Holder's amorality thinly disguised by boring legalese.
Despite merits of holding the Obama administration to account to the full extent of the law, the way of confrontation may not be in the best interest of US. The economic problems are more pressing, than those of political corruption. Both short- and long-term goals can be fulfilled by an administration that restores the economy and faith in public officials through honest governance. The exposure and trial of perpetrators should not be neglected, but should remain secondary goals.
Excessive zeal in repealing Obamacare, and reversing all the policies of the Obama administration, could contribute to an ideological divide separating the country. By unilaterally implementing a reckless, radical agenda and seeking to redistribute ('spreading') the wealth the Obama administration opened up deep divisions. Reversing these policies could exacerbate the political polarization, and make compromise less, not more likely.
Newt Gingrich has a lot of positive traits and accomplishments, which I respect, however tempting he is as a counterweight to Obama, and he could well become a very polarizing influence. 'Contract with America' is a fine example of transparent, accountable government that we need and want. In addition to Newt's accomplishments as a conservative politician he is thoughtful man - a historian - who learns from past experience, rather than gambling that he can overcome historical precedents through sheer power of personal charisma, as the Obama administration has done. Nevertheless, Newt is not well suited for the top of the GOP ticket. For all his brilliance, he can be erratic, and undisciplined. Historically, he reminds me of Erich Ludendorff, whose brilliant tactics drove back the demoralized Russians in 1917, but was known to be temperamental and cracked under the pressure of the last German offensives on the Western front in 1918. That was why it was good he had a stable, if unimaginative superior, von Hindenburg. Ludendorff’s breakdown was the reason his unimaginably dull superior was elected chancellor.

Newt Gingrich is an 'idea' mean, and would make a fine VP. Nominating him for the top of the GOP ticket could result in an erratic, polarizing presidency that spends too much time on rectification of old wrongs, or simply on politics, and neglects to fix the economy, which requires short-term measures, in addition to long-term reduction of regulatory burden, abolishing Obamacare, etc.

The alternative is to nominate a centrist, and an outsider with financial acumen - Mitt Romney.

Romney was the last person I wanted to see nominated before the alternatives were clear. In light of the remaining contenders for GOP nomination, he is the best way forward. Mitt Romney has flimsy conservative credentials, but Obama's radical left-wing policies can be effectively countered by a centrist. After the pendulum of government swung so far to the left, it is natural for it to rebound with equal force in the opposite direction; however it is neither necessary nor desirable to push so violently for a reversal. If GOP could demonstrate itself capable of competent centrist governance, it would entrench its political prominence by bringing the center under the big tent, and benefit the party more than more a more radical change of direction.
Despite Gingrich's success in working with Democrats in the past, dismantling Obamacare without emotional prejudice may be beyond him, after over 30 years in Washington, D.C. Romney appears to stand a chance of bringing the two sides together.
While Romney was the governor of Massachusetts he installed a state-wide program that is very similar in spirit to Obamacare. There are cogent distinctions to be made between mandatory imposition of healthcare coverage at the Federal and State levels, however, the opposition appears to be more interested in 'total war' on the Obama administration and its radical ideology. I sympathize; vengeance is a joy to the soul, and jailing some of officials who doled out the 'Stimulus' cash to their buddies would really help to discourage corruption in the future. We need long prison sentences though, because the Chicago apparatchiks that are running the show are notoriously bold, and it takes a lot to discourage their corruption. The 6.5-year prison sentence of George Ryan, the governor of Illinois who preceded Blagojevich, did not discourage the latter from trying to sell his executive power to appoint a successor for Senate seat vacated by Obama. After denying any wrong-doing, and claiming to be a victim of political witch-hunt for years, Blago pleaded mercy at the sentencing after being convicted on 18 counts. The judge gave Blago 14 years - let us hope would-be governors of Illinois are impressed by that number.
Outcomes such as sentencing of Blago are very healthy for a democracy, however, the president must focus on the economy first, and justice second. Romney is likely to focus the economy and be less polarizing than Newt while still dismantling Obamacare.