Pollution: Dirty deeds: The world's biggest polluters by country - by Sarah Wolfe

After years of decline, US carbon dioxide emissions increased slightly last year, according to a new report by the US Energy Information Administration.

That said, America is still a little better than the world's worst polluter: China.

The 2 percent jump in CO2 emissions in the United States was largely the result of higher natural gas prices last year, which prompted some utilities to switch back to a dirtier energy source — coal, according to The Washington Post.

Read more: Dirty deeds: The world's biggest polluters by country | GlobalPost

The Netherlands - culture: How China Conquered the Dutch - by NINA SIEGAL

In 1558, a single Portuguese trading ship returning from Asia carried 1,000 pieces of Chinese porcelain. A Dutch ship making the same journey 50 years later brought 60,000 pieces. And by 1638, about 900,000 pieces of Chinese porcelain were transported via Dutch trading vessels.

In the span of one century, the fine, thin, white ceramics made from a clay called kaolin and fired in blazing hot kilns went from being a unique treasure for a handful of wealthy European connoisseurs to a common household item, especially in the Netherlands.

Today, this porcelain is known in everyday English usage as china, and as early as the 17th century it was already being copied throughout Europe.

How did china and other Asian commodities, such as Japanese lacquer chests, Ceylonese ivory cabinets and Indian silks, first come to the Western world, and what impact did the European appreciation for them have on the kinds of products that were produced? These are the questions raised in “Asia in Amsterdam,” an exhibition that opened at the Amsterdam Rijksmuseum on Oct. 17 and runs until Jan. 17, when it will move to the Peabody Essex Museum in Salem, Mass.

 Read more: How China Conquered the Dutch - The New York Times

The Syrian Refugee Crises can only be solved through bi-lateral negotiations to include the Assad Government

The refugee crises Europe and other countries are facing can be directly attributed to the incapability and unwillingness of the major political powers to go sit around the table without any preset conditions.  

The Russian Foreign Minister called for full-scale negotiations between al-Assad and the "full spectrum" of the opposition, "both domestic and external, and with the active support of outside players."

Russian analysts see the talks as a measure of progress towards finding a solution for the Syrian crisis.

"It was clear that solutions will not be found during one meeting, but the differences are so great that even the fact that a meeting was held is a step forward,” says Yelena Suponina, head of the Center for Asia and Middle East at the Russian Strategic Studies Institute. “International players are indeed testing the waters for a prototype of a possible international coalition."

One of the main sticking points is still the political fate of the Syrian president.The most realistic option is to leave this topic out of the equation and focus on the fight against terrorism, Suponina says, adding that political will is required to solve “the problem of al-Asaad.”

Whether U.S. President Barack Obama has the political will or not, is a big question, especially since the United States has now entered the pre-election season, she added.

EU-Digest

Global Economy: US and Chinese Economies are in "lockstep" and this could spell major trouble for US

Let no one fool you - specially not the Wall Street "news makers.

Both the US and Chinese Economies are in lockstep and the US economy could get  in big trouble because of that.

The investment relationship that has blossomed between China and the U.S., even though it has benefited both countries, has also made both of their economies very dependent on each other, but the US more so than China.

Chinese companies have started  more companies or joint ventures in the U.S., thereby increasing the number of Americans working for Chinese firms.In a sense China has now also become a supplier of secondary capital to the USA, in addition to the regular  US debt they have been buying up..

Another alarming fact is that based on the present (June 2015 figures) US debt to China stands at $1.272 trillion,.

That's roughly one-fifth of the $6.175 trillion held by foreign countries. The rest of the $18 trillion debt is owned by either the American people, or by the U.S. government itself.

The United States has thus allowed China to become one of its biggest bankers, to provide the American people low consumer prices.

This selling of debt to China is mainly used by the US to help the US economy to grow by funding federal government programs. It has also kept  U.S. interests rates artificially low. However, what very people want to talk about, specially the financial world, is that China's increasing ownership of U.S. debt is shifting the economic balance of power in China's favor.

China's position as America's largest banker also gives it considerable political leverage. Consequently every now and then China threatens to sell part of its US debt holdings. It knows that, if it did so, U.S. interest rates would rise, which would slow U.S economic growth to a trickle.

As China grew economically stronger it has also been calling for a new global currency to replace the dollar, which is presently used in most international transactions. China usually makes this call whenever the U.S. lets the value of the US dollar drop, which makes the debt China holds less valuable.

China certainly is not so stupid to call in its US debt all at once. If it did so, the demand for the dollar would plummet like a rock. A dollar collapse would disrupt international markets worse than the 2008 financial crises and China's economy would suffer along with everyone else's.

It's more likely that China will slowly begin selling off its US Treasury holdings.

Bottom line the financial poker game between the two most powerful economic players in the world is certainly not over yet, but China is holding some very powerful cards in its hand.

The financial world better sit up and start smelling the roses.

EU-Digest

EU economy is bigger than the US - by Bob Bryan

As a single country, the US is the biggest economy in the world.

But given its close ties, you could easily argue that the countries of the European Union make for one big economy. Indeed, you would be arguing that it's the world's largest economy.

The adjusted GDP of the 28 EU member nations is bigger than both China and the US, the traditional list of world's economic super powers.

"In nominal U.S. dollar terms, the European Union (plus Norway, Switzerland, Iceland) accounted for 25.4% of world output in 2014 according to data from the International Monetary Fund.  That was greater than America’s share (22.5%) and well in excess of China’s—13.4%," said Quinlan.

The EU consumer is also on top. The EU, plus periphery nations, accounted for 28.5% of all consumer spending in 2014, according to Quinlan, above both the 26.6% spent by US consumers and the 15.6% spent by the emerging economies of the Brazil, Russia, India and China combined. This attracts global companies to the region.

"Gaining access to wealthy consumers is among the primary reasons that US companies venture overseas, and hence the continued attraction of Europe to US firms," wrote Quinlan.

So while Greece has little direct impact on the US, stabilizing the massive EU economy should still be a huge concern for Americans and the rest of the world.

Read more: CHARTS: EU economy is bigger than the US - Business Insid

Iran nuclear deal: UN Security Council endorses Iran nuclear deal- by Sarah Joanne Taylor

The United Nations Security Council has endorsed the Iran nuclear deal, although the country’s Islamic Revolutionary Guards Corps commander has deemed the agreement “unacceptable.”

Iran’s semi-official Tasnim News Agency quoted Commander Mohammed Ali Jafari:
“Some parts of the draft have clearly crossed the Islamic republic’s red lines, especially in Iran’s military capabilities,” he reportedly said ahead of the resolution being passed in New York. 

The fifteen-member body unanimously agreed to adopt the resolution, which will curb Iran’s nuclear programme for the long term in return for the lifting of sanctions.

As the deal was agreed, the Security Council warned sanctions can be reimposed if Tehran breaches the agreement within the next decade.

Read more: UN Security Council endorses Iran nuclear deal | euronews, world news

Europe's Future Is Federal - by Jean Tirole

Numerous Europeans view Europe as a one-way street: they appreciate its advantages but are little inclined to accept common rules. An increasing number throughout the Union are handing their vote to populist parties – Front National, Syriza, Podemos – that surf on this Eurosceptic wave and rise up against “foreign”- imported constraints.

Embroiled with the Greek crisis, European policymakers will soon have to step back and reflect on the broader issue of the Eurozone’s future. Before envisaging an exit or, on the contrary, more sustained integration, it’s right to reflect upon the consequences of each option.

Oversimplifying, there are three strategies for the Eurozone: a minimalist approach that would see a return to national currencies, while keeping Europe perhaps as a free trade area and retaining a few institutions that have made a real difference such as common competition laws; the current approach based on the Maastricht Treaty of 1992 and its fiscal compact update in 2012; and, finally, the more ambitious version of federalism. My own clear preference is for the federalist version but I’m not at all convinced that Europeans are ready to make it work successfully.

Note EU-Digest:  Federalism is probably the only way to go if Europe does not want to become subservient to the presently ruling superpowers, China, the US, and even Russia. Populism and nationalism is not the way to go, as it has always turned sour in Europe's history. True federalism would certainly require finding another historic shining political star like Mustafa Kemal Ataturk, who has the ability to get the EU reorganized, and all the EU member states moving in the same direction. Let's hope we get blessed soon in finding that "needle in the political haystack" to rescue the EU out of the iron grip of the Wall Steet dominated financial community.

Read more: Europe's Future Is Federal » Social Europe

Global Economy: Sluggish U.S. Economy Weakens Global Growth

The International Monetary Fund on Thursday trimmed its forecast for global economic growth for this year to take into account the impact of recent weakness in the United States.

But the global financial institution said growth prospects for next year remain undimmed, despite Greece's debt crisis and recent volatility in Chinese financial markets.

In an update to its World Economic Outlook report, the IMF said the global economy should expand 3.3 percent this year, 0.2 percentage point below what it predicted in April. Growth should speed up to 3.8 percent next year, it said, unchanged from earlier forecasts.

The IMF pinned much of the blame for the lower growth forecast on the United States. The U.S. economy contracted in the first quarter, hurt by unusually heavy snowfalls, a resurgent dollar and disruptions at West Coast ports.

The IMF said it expected the U.S. economy to grow 2.5 percent this year - it lowered the U.S. growth forecast last month from 3.1 percent in April. The IMF also said U.S. economic sluggishness had spilled over to Canada and Mexico.

"(But) the unexpected weakness in North America ... is likely to prove a temporary setback," the IMF wrote in the report.

The IMF also maintained its forecasts for a pickup in growth in the euro zone, despite Greece moving ever closer to the edge of default and an exit from the currency bloc as it races to find a last-minute third bailout.

"Developments in Greece have, so far, not resulted in any significant contagion," the IMF said. "Timely policy action should help manage such risks if they were to materialize."

Read more: Sluggish U.S. Economy Weakens Global Growth | The Fiscal Times

Energy: The Dangerous Energy Poker Game:Between Saudi Arabia, Iran, Syria, Russia and the USA

Geo-Political Poker Game Or Saudi Blackmail?

"After two years of stable prices at around $105 to $110 a barrel, Brent blend, the international benchmark fell from $112 a barrel in June to around $65 on Friday, December 12 . “What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. His answer? “To harm Russia.” - says Mohamad Bazzi in a report he wrote for Reuters

That is partially true, but Saudi Arabia’s gambit is more complex.

The kingdom has two targets in its latest oil war: it is trying to squeeze U.S. shale oil—which requires higher prices to remain competitive with conventional production—out of the market. More broadly, the Saudis are also punishing two rivals, Russia and Iran, for their support of Bashar al-Assad’s regime in the Syrian civil war. Since the Syrian uprising began in 2011, regional and world powers have played out a series of proxy battles there.

While Saudi Arabia and Qatar have been arming many of the Syrian rebels, the Iranian regime—and to a lesser extent, Russia—have provided the weapons and funding to keep Assad in power.

Russia and Iran are highly dependent on stable oil prices. By many estimates, Russia needs prices at around $100 a barrel to meet its budget commitments. Iran, facing Western sanctions and economic isolation, needs even higher prices. Already, Iran has taken an economic hit from Saudi actions.

On Nov. 30, as a result of OPEC’s decision not to increase production, the Iranian rial dropped nearly six percent against the dollar.

The Saudis believe it can protect itself from the impact of the price drops. It can always increase oil production to make up for falling prices, or soften the blow of lower profits by accessing some of its $750 billion stashed in foreign reserves.

Still, Saudi Arabia is playing a dangerous game—there is little evidence that authoritarian regimes like Russia and Iran would change their behavior under economic pressure. Worse, the Saudi policy could backfire, making Russia and especially Iran more intransigent in countering Saudi influence in the Middle East.

In the meantime  OPEC Gulf members and crisis-hit producer Russia held the line on resisting oil output cuts, a message that helped send oil to a fresh five-year low on Tuesday December 16.

A near-$20 drop in prices since OPEC declined to cut output at a Nov. 27 meeting has yet to prompt the Gulf members - who overruled calls for output cuts by poorer members such as Venezuela - to reverse course.

Russia has said it would not cut production even if oil prices fell below $60 per barrel - far below some $100 a barrel it needs to balance its budget - a message reinforced on Tuesday by energy minister Alexander Novak arriving at a gas producers summit in Qatar.

"If we cut, the importer countries will increase their production and this will mean a loss of our niche market," he told reporters, speaking through an interpreter.

"We plan to preserve the plan for 2014 production without any increase or decrease," he said.
His comments came as the rouble fell to a new all-time low despite the central bank's steep rate hike on Monday.

Oil prices dropped to below $59 per barrel on Tuesday for the first time since 2009 and are now down almost by a half since June due to weak demand and growing supply from the United States.

The collapse of the rouble and plunging oil revenue present one of the biggest challenges for President Vladimir Putin during his 15-year rule at a time when the Russian economy is already struggling under Western sanctions over Ukraine.

Novak said Russia, the world's second largest oil exporter after Saudi Arabia, will maintain its output levels even if there was no guarantee prices would not go much lower.

"No one will tell you this," Novak said when asked what was the floor for oil prices.
He also said Russia agreed with the view of Saudi Arabia that the oil market would eventually stabilize itself.

What is certain however is that the oil market and the world economy  faces an uncertain outlook in 2015 as tumbling oil prices resulting from global oversupply stoke geopolitical tensions in key producers of crude, analysts say.

In fact, if no one eventually blinks in this rapidly deteriorating volatile energy based geo-political dispute, it potentially has the ability to escalate on a global scale and turn into a military conflict involving all super powers which, without any doubt, would mean the end of civilization as we know it.

EU-Digest

China - EU: Chinese FM, EU foreign policy chief meet on closer strategic partnership - by Ren Zhongxi

Chinese Foreign Minister Wang Yi met here Friday with EU foreign policy chief Catherine Ashton on the sidelines of the annual high-level debate of the UN General Assembly.

During their talks, Wang said that the China-EU comprehensive strategic partnership, which has laid a solid foundation and opened a bright prospect for the development of bilateral ties, ushers in a second decade this year.

During a trip to Europe in March this year, Chinese President Xi Jinping and European leaders decided to deepen their partnership for peace, growth, reform and civilization, which has charted the course for the future development of China-EU ties, said Wang.

China and the EU need to accumulate mutual trust and strengthen cooperation on the basis of mutual respect so as to further advance their comprehensive strategic partnership, said the Chinese foreign minister.

For her part, Ashton said that the EU-China relationship, which has made rapid progress over the past 10 years, enjoys great potential for further development.

Read more: Chinese FM, EU foreign policy chief meet on closer strategic partnership - CCTV News - CCTV.com English

ISIS "Terrorists and killers will be followed to the gates of hell and punished"

President Obama made his strongest statements yet against the Islamic State of Iraq and Syria (ISIS) on Wednesday, promising that the U.S. will “degrade and destroy” the extremist group after they beheaded a second American journalist.
 
“Our objective is clear and that is to degrade and destroy ISIL so it’s no longer a threat—not just to Iraq but also to the region and to the United States,” Obama said, referring to ISIS by their alternate name.

On Tuesday, ISIS released a video of the beheading of Steven Sotloff, 31, a freelance journalist who worked for Time and Foreign Policy and was seized in Syria last August. His killer appears to be the same masked jihadist who killed James Foley exactly two weeks prior. The video’s authenticity was confirmed by President Obama and American officials early Wednesday.

Note EU-Digest: ISIS better remember what happened to Bin Laden..They will be followed to the gates of hell and will be brought to Justice !

Read more:President Obama: We will ‘degrade and destroy’ ISIS | MSNBC

The Netherlands: "if we don't watch out, we might all soon be working for the Chinese

In an interview, during the European parliamentary elections, with the Dutch daily Volkskrant, Anette Nijs, a retired Dutch politician of the People's Party for Freedom and Democracy (VVD) who also was the State Secretary for Education, Culture and Science in the Dutch Government of  Balkenende I and II  from 22 July 2002 until 9 June 2004, and also Member of the Dutch House of Representatives from 30 January 2003 until 27 May 2003 and again from 7 June 2005 until 30 November 2006, expressed her concern about weakening of EU and US economic power as opposed to that of China.

"I'm not afraid of China, but emerging countries, with China in the lead, have two engines: the market and the state. We can not compete with that. If China is a large contract in India close to the electrical infrastructure, then the command to Chinese companies. I'd rather not see that happen in Europe. We must therefore ensure that Europe remains at the economic summit. I travel a lot and see what the Chinese do. They build new ports, which will hit Rotterdam directly. They build huge airports that goes Schiphol brands. Their technology is very advanced, which Philips will notice. "
 
" At the Shanghai Asia Summit, and I suggested to the Chinese PM that China include research questions to combat air pollution put on the Internet. China needs to develop the best proposals and solutions available to the rest of the world. 

China is still not soing the right things as a developing country. But in the Netherlands and the US, they are already talking about the 'new poor'. Labor costs in the auto industry in Detroit are lower than those in China. As the Netherlands and the other countries in the EU are not careful we will soon be the new low-wage countries and probably working for Chinese companies " 

She also stressed the fact that the political elite within the EU member states should abandon their focus on just their own national interests but instead  focus on broadening and strengthening the unity among EU member states.

EU-Digest

US Foreign Policy-A New Intelligent Approach ? : Obama: "Being The Best Hammer Doesn't Mean Every Problem Is A Nail" - by Mark Lander

Not every Problem is a nail

President Obama on Wednesday May 28 tried to regain his statesman’s mantle, telling graduating cadets here that the nation they were being commissioned to serve would still lead the world and would not stumble into military misadventures overseas.

Speaking under leaden, chilly skies, Mr. Obama delivered the commencement address at the United States Military Academy.

“America must always lead on the world stage,” he said. “But U.S. military action cannot be the only – or even primary – component of our leadership in every instance. Just because we have the best hammer does not mean that every problem is a nail.”

Under pressure from critics who say the United States has been rudderless amid a cascade of crises, the president said that those who “suggest that America is in decline, or has seen its global leadership slip away – are either misreading history or engaged in partisan politics.”

A day after announcing that the last American soldier would leave Afghanistan at the end of 2016, the president told this latest class of Army officers that the United States faced a new, more diffuse threat in an arc of militancy stretching from the Middle East to the African Sahel.

Mr. Obama has been deeply frustrated by the criticism of his foreign policy, which during his first term was generally perceived as his strong suit. He has lashed out at critics, whom he accuses of reflexively calling for military action as the remedy for every crisis.

The overriding objective he said  is to avoid an error on the order of the Iraq war.

He brushed aside as reckless those who say the United States should consider enforcing a no-fly zone in Syria or supplying arms to Ukrainian troops.

In the speech, Mr. Obama described an array of priorities, ranging from the Iran nuclear negotiations to a new global climate change accord, which he said would occupy his final two-and-a-half years in office.

He also spoke of the need for the United States to look eastward to Asia, promoting his long efforts to negotiate a trans-Pacific trade agreement and pledging to defend American allies in the region in their territorial disputes with China in the South and East China Seas.

Note EU-Digest: Kudos to President Obama for at least showing the intention of his Administration to the world, in this major foreign policy speech at West Point, that the "gun-boat diplomacy" of the US is not acceptable anymore and has come to an end.   

Read more: ‘America Must Always Lead,’ Obama Tells West Point Graduates - NYTimes.com

Middle East Chaos: Egypt, Libya, Palestine, Syria, Israel - back to square one

Middle East Chaos

It has not been a pretty picture in the Middle East for some time now after the euphoria of the Arab Spring - better still it is a total mess and certainly not a feather on the cap of any EU, Russian or Chinese diplomat, especially not for the cap of the US's Mr.Kerry. 

In Libya when one might have thought the mess there could not have gotten worse, it has. The latest round in the multidimensional chaos that has prevailed since the overthrow of Muammar Gaddafi was initiated by an ex-general named Khalifa Hiftar, who was trained in the Soviet Union, participated as a junior officer in the coup that brought Gaddafi to power in 1969, later broke with the Libyan dictator, and lived for years in the Northern Virginia suburbs of Washington, DC, where he apparently also became a U.S. citizen.

Hiftar returned to Libya after Gaddafi was ousted. Now he has put together a force he calls the “Libyan National Army” and aims at removing the interim parliament in Tripoli.

So probably also for Libya there is a new dictatorship in the making?

Israel and the Palestinians were back to square one in the peace process last Friday after the Jewish state torpedoed US-sponsored talks in response to a Fatah-Hamas reconciliation deal.

Israeli Prime Minister Benjamin Netanyahu set the tone, telling the BBC that Palestinian president Mahmud Abbas could "have peace with Israel or a pact with Hamas (but) he can't have both".

"As long as I'm prime minister of Israel, I will never negotiate with a Palestinian government that is backed by Hamas terrorists that are calling for our liquidation," he added.

In Syria tyrant Bashar Assad may have to stay temporarily as Syrian president despite the death toll in the country’s civil war heading higher than the number killed in Iraq, Tony Blair said recently.

The former Prime Minister branded the situation in Syria an “unmitigated disaster” and insisted the West should intervene in such conflicts.

“We are now in a position where both Assad staying and the Opposition taking over seem bad options,” he said in a speech at Bloomberg HQ in central London.

“Repugnant though it may seem, the only way forward is to conclude the best agreement possible even if it means in the interim President Assad stays for a period.” 

Egypt : In a statement dripping with cynicism, the White House said that Obama was “deeply troubled” by the recent  mass death sentences in Egypt.

“While judicial independence is a vital part of democracy, this verdict cannot be reconciled with Egypt’s obligations under international human rights law,” the White House statement read. It appealed to Sisi and his fellow military rulers to “take a stand against this illogical action.”

Whom do they think they’re kidding? The niceties of “judicial independence” are hardly an issue in Egypt.

The hanging judge Youssef—popularly known as “the butcher”—was installed in a special court created by the junta to do precisely what he is doing. Moreover, the draconian sentences have a very clear logic: they are an act of state terror designed to intimidate the Egyptian masses.

The statement continued: “Since the January 25 Revolution, the Egyptian people have aspired to be represented by a government that rules justly, respects their dignity, and provides economic opportunities. The United States supports these aspirations and wants Egypt’s transition to succeed.”

It seems hardly a coincidence that these mass death sentence came only days after Washington approved the provision of 10 Apache attack helicopters on top of some $650 million in military aid already approved for the Egyptian junta this fiscal year.

This is half of what the administration wanted to supply to the country’s repressive forces, the other half being held up by laws restricting aid to regimes brought to power through military coups.

Obviously the helicopter deal was correctly interpreted by the Egyptian junta as a green light to escalate its brutal crackdown.

All this disaster unfortunately is only the top of the Iceberg when one looks at the total Middle East picture. Maybe only one word to describe this is: total chaos .

EU-Digest

Economic Indicators: The Zombie Numbers That Rule the U.S. and Global Economy - by Zachary Karabell

Economic Indicators have outlived their time

This Thursday ( February 21) the Conference Board, a global business association, released its monthly index of “leading economic indicators.”

Like the unemployment and inflation, housing starts, G.D.P. changes and other figures, these numbers arrive in metronomic waves. Financial services like Bloomberg, Dow Jones and Reuters blast them out the moment they’re released. Stock markets will often respond within seconds. Commentators and policy makers attribute to them a near-cosmic significance.

We act as if they are markers from time immemorial, but in fact they were invented for modern industrial nations after the Depression and World War II and are now seriously outdated.

Take gross domestic product. Derived from formulas set down by the economist Simon Kuznets and others in the 1930s, its limitations have long been recognized, none more eloquently than by Robert F. Kennedy in a famous speech in 1968 when he declared that it measured everything except that which is worth measuring.

GDP treats all output as a positive. When you buy LED lights that obviate the need to spend on incandescent bulbs and reduce energy consumption, GDP goes down and what should be an unmitigated good becomes a statistical negative. If a coal company pollutes a river, the cleanup costs are positive for GDP, as are any health care costs for those harmed.

What’s more, we have also come to assume that with output comes more spending and employment, but factories today are powered by robotics and software, and robots don’t buy more lattes and shoes.

GDP is a good number for a nation that produces lots of stuff made by lots of workers, but for an information economy grounded in services and intellectual property and awash in apps that cost nothing yet enable commerce, it is not up to the task. Nor are many of our indicators. Our trade figures treat an iPhone made—more accurately, assembled—in China with no reference to the intellectual property created by Apple in California.

Yes, large corporations have economists who attempt to draw correlations between macro-indicators and business trends, and companies decide on how to much to spend based in part on a read of future interest rates, growth trends, and inflation. But even here, the connection between big numbers and business realities has broken down. If national retail sales that measure big stores in malls are weak, that says nothing about how much e-commerce might be up. If consumer spending writ large sags, that says nothing about higher end spending at mass luxury stores like Michael Kors or lower-end retailers such as Dollar Tree. Making decisions based on what the indicators say is almost certainly a recipe for making the wrong decisions.

Weaning ourselves from our obsession with economic indicators is a vital step to grappling with the world as it is and making decisions that yield positive results. Individuals, companies, and governments will find their interests best served by creative approaches that craft indicators that draw on the wealth of big data information rather than cramming all reality into a few simple averages. The indicators of the 20th did yeoman service in taming the worst extremes of economic cycles. We should thank them, and move on.

Read more: The Zombie Numbers That Rule the U.S. Economy - Zachary Karabell - The Atlantic

Corruption - Banking Industry: U.S. banks can match China’s for corruption any day - by David Weidner

Banking Industry, Favoritism and Corruption

"Tian xià wu ya yi yàng hei." I may not have the translation exactly correct, but in Mandarin, loosely, the expression means “in the whole world, all crows are black.”

The proverb isn’t about crows. Crows are a metaphor for bad guys. And the upshot is this: we may judge different cultures for their failings, but we have failings too. We all have our crows. Everywhere they are black. 

This idea of equanimity in how we are all flawed came to mind as the scandal escalates over banks hiring people connected to China’s political and powerful elite. We tend to look at these transgressions — if they can be called that — and pass judgment. Perhaps we say “look at the awful Chinese political system,” or “look at the terrible behavior of U.S. banks.”

In case you missed it, or are a little fuzzy on the details, several foreign banks are being investigated for hiring well-connected Chinese, or “princelings.” They may be the son, daughter cousin of an official or the official him- or herself. 

On Monday, UBS AG  suspended two executives, including its top IPO banker in Asia, in an internal probe into the hiring of an employee related to the head of a Chinese listing hopeful, according to the Wall Street Journal, which cited anonymous sources. UBS declined comment. 

And the same day came revelations that the family friend of an important Chinese regulator — who had say over the bank’s ability to pursue insurance business in the country — was given an audience with J.P. Morgan Chase & Co. CEO Jamie Dimon in June 2012. The friend reportedly received a special internship with the bank and then became a full-time employee. 

“Our CEO played no role in the hiring decision, did not weigh in, and did not follow up,” Joseph Evangelisti, a bank spokesman, said in a statement. “It is his normal practice to pass on referrals without advice to those involved in hiring.” 

The dust-ups at UBS and J.P. Morgan were just the latest in the saga where U.S. financial firms may or may not have used hiring friends or relatives of powerful officials as a way of influencing business decisions in the banks favor. 

OK. Let’s assume they did. So what? This is how business is done in China. And it’s not that different from how it’s done here, even though many of us believe our way is the superior way. 

China is struggling with corruption. It ranks 80th out of 178 countries in Transparency International’s Corruptions Perceptions Index . It is, perhaps, the country’s most pressing problem as it seeks to become the leading global economic power. 

In the same index the U.S. rank is 19th. Maybe it shouldn’t be. After all, this is a perception index. People think the US  is more on the up and up.

In the United States, financial firms use an equally questionable practice of hiring regulators or losing top executives to regulatory roles. 

Consider also that 127 current or former members of the health, education and labor committees in Congress either have worked, or are now working, in the industries they were overseeing as lawmakers, according to OpenSecrets.org. 

The SEC and Congress aren’t the only places where the revolving door swings. Robert Rubin, the former U.S. Treasury Secretary, joined Citigroup Inc.  in 2000 and collected $115 million as the bank took $45 billion in taxpayer-funded bailouts and $300 billion in guarantees on assets. The most recent former Treasury secretary, Timothy Geithner, left to join the private equity firm Warburg Pincus. as new rules were being crafted on the industry. 

At least China and Europe are doing something about their issues. A report in 2010 by the Anti-Corruption and Governance Research Center at Tsinghua University found that in just 11 months of that year the government’s anti-corruption division investigated 119,000 graft cases, resulting in 113,000 people being punished. 

 Recently the EU Commission  came out with an "Anti-Corruption Report", which showed that corruption is widespread in the EU and costs the taxpayer there around 120 billion euros ($160 billion) per year.

Just because US crows are ours, doesn’t mean they’re not black, just as they are all around the world. 

Read more: U.S. banks can match China’s for corruption any day - David Weidner's Writing on the Wall - MarketWatch

Economics: How Mainstream Economics Failed To Grasp The Importance Of Inequality - by Jon Wisman

The magnitude of exploding inequality since the mid-1970s is captured by the following: Between 1979 and 2007, inflation-adjusted income, including capital gains, increased $4.8 trillion — about $16,000 per person.

\Of this, 36 percent was captured by the richest 1 percent of income earners, representing a 232 percent increase in their per capita income. The richest 10 percent captured 64 percent, almost twice the amount collected by the 90 percent below. Between 1983 and 2007, total inflation-adjusted wealth in the U.S. increased by $27 trillion. 

 If divided equally, every man woman and child would be almost $90,000 richer. But of course it wasn’t divided equally. Almost half of the $27 trillion (49 percent) was claimed by the richest one percent — $11.7 million more for each of their households. The top 10 percent grabbed almost $29 trillion, or 106 percent, more than the total because the bottom 90 percent suffered an average decline of just over $16,000 per household as their indebtedness increased.

This soaring inequality generated three dynamics that set the conditions for a financial crisis. The first resulted from limited investment potential in the real economy due to weak consumer demand as those who consume most or all their incomes received proportionately much less. Not being capable of spending all their increased income and wealth, the elite sought profitable investments increasingly in financial markets, fueling first a stock market boom, and then after the high tech bubble burst in 2001, a real estate boom.

As financial markets were flooded with credit, the profits and size of the financial sector exploded, helping keep interest rates low and encouraging the creation of new high-risk credit instruments. This enabled more of the elite’s increased income and wealth to be recycled as loans to workers. Financial institutions were so flush with funds that they undertook ever more risky loans, the most infamous being the predatory subprime mortgages that often were racially targeted. As the elite became ever richer, those below became ever more indebted to them. When this debt burden became unsustainable, the financial system collapsed and was bailed out by taxpayers.

Economists might have stood a better chance of foreseeing the developing financial crisis had they thrown their nets far wider to catch the insights that have been harvested by a wide range of so-called heterodox economists. From the underconsumptionist tradition of Keynes, Kalecki, and Minsky they could have developed an understanding of how inequality affects aggregate demand, investment, and financial stability.

From the institutionalist tradition of Thorstein Veblen they could have learned how consumption preferences are socially formed by humans who are as concerned with social status and respectability as with material well-being. And from the Marxist tradition they could have seen how economic power translates into political power. 

Economists have failed to grasp the wisdom of one of the foremost students of crises: “the economist who resorts to only one model is stunted. Economics is a toolbox from which the economist should select the appropriate tool or model for a particular problem.”

Read more: How Mainstream Economics Failed To Grasp The Importance Of Inequality

Global Economy: DEBT MASQUERADING AS GROWTH!

The market Oracle reports: "The greatest economic, political and societal collapse in recorded history is unfolding and has been doing so ever since the final denouement of partially sound money occurred at Bretton Woods II in August 1971 – thereby allowing governments, the financial systems and elites to substitute money printed out of thin air and politically correct/corrupt legislation for sound economic policies.  This process has been unfolding for 40 years and is nearing its demise.  

Growth now is a function of expanding credit, financing government and consumer consumption and calling it GDP.  The developed world has become Something for nothing societies are like locusts they eat everything right down to its roots, including next year’s seed corn.  They will issue debt until it no longer can be sold. 

They will print money until it is no longer accepted.  This process is well established and underway (think Venezuela, Greece, Argentina, this is the future).  To illustrate the LACK of GROWTH, look at this chart of GDP from Chris Wood at CLSA and subtract the deficit:

Most economists are PREDICTING accelerating GDP growth in 2014; you sure wouldn’t come to that conclusion based upon median family incomes since 2008;  

Or the crash in PERSONAL incomes over the last year  

As you can see, the only period that compares to this CURRENT CRASH in disposable income in the last 20 years was the crash of 2007-2009.  Do you think this reflects a robust economy in 2014 as predicted by the MSM and Keynesians?  To grow the economy, we must borrow money to finance spending and report it as GDP.  DEBT MASQUERADING as GROWTH! 

Now, the developed world’s economies have been hollowed out (by runaway regulation, taxes and crony capitalism) and much of the wealth creation occurs in the emerging world.  Crony capitalists and their minions in government just attack the private sector where future growth and productivity must come from. 
 
They carve it up and destroy the future creative destruction (aka “Capitalism”) which must occur for growing middle classes and economies.  The powers that be are MINTING fire hoses of NEW money, creating at least 8000 million dollars/yen a DAY (2 million million a year or 2+ trillion per year) to support the global economy, bankrupt sovereigns and financial systems.   

Very little BAD can happen when they are printing and injecting this amount of money into the financial system and government coffers on a daily/yearly basis. “Currencies don’t float they just SINK at different rates”

Asset-backed economies provide the ILLUSION of growth in the developed world driven by currency depreciation (ASSET prices rise/reprice as the purchasing power of the currency they are denominated in sinks) and never-ending leverage to fund consumption and HIGHER ASSET prices.  This is insane behavior, but now is the last refuge of the powers that be.
 
Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule." 

EU-Digest

Global Economy Turmoil: Nervous Markets Rattle in China, Turkey, USA, Mexico, Europe and Argentina - by Richard Barley

A trouble shared is a trouble halved, or so the saying goes. But the troubles are piling up quickly for emerging markets.

Jitters about China, the meltdown in the Turkish lira, violent protests in Ukraine and the plummeting Argentine peso—underlaid with continuing nerves about the withdrawal of U.S. monetary stimulus—have all combined to hit risk appetite. The problems aren't particularly new and don't have much in common, but the combination is proving toxic.

The biggest repercussions have been in the foreign-exchange markets, where even currencies of countries with relative fundamental strengths, such as the Polish zloty and the Mexican peso, have started to show signs of strain. Pressures have also emerged in asset classes that have so far remained resilient, such as U.S.-dollar-denominated emerging-market bonds. That will understandably make investors nervous.

But some of the concerns may ease. China is seeking to shift from an economy led by investment to one driven by consumption. This is such a vast and complex process that worries about how it is progressing will be with us for a long time yet. The small dip in China's manufacturing purchasing managers index that some cite as a key reason for the market turmoil seems just a pretext.

Ukraine and Argentina both look worrying, but their impact on global financial markets should be limited. If other Latin American or Eastern European currencies get hit, but are supported by relatively strong economies, that could make them look good value in time.

Turkey bears watching closely. The solution to the continuing selloff in the Turkish lira—which Friday hit a fresh record low of 2.33 to the dollar—seems clear: the Central Bank of Turkey needs to raise interest rates. But political turmoil means it is unwilling to do so; its interventions in support of the lira are inadequate in the meantime.

This could cause larger problems. Turkish companies have large foreign-debt exposures, and the lira's slide could cause balance-sheet strains. That suggests that the central bank will ultimately have to hike rates to avoid a bigger crisis. But the situation could get much more uncomfortable before that happens.

Meanwhile, the risk aversion in developed markets smacks of using the situation to exit some very popular and profitable bets. Southern European government bonds and stocks, hybrid securities that blend features of equity and debt and subordinated bank bonds have all had a strong start to the year; but they are also volatile. No wonder investors might take the chance to step back.

Read more: Heard on the Street: Emerging Mix Rattles Nervous Markets - WSJ.com

EU: We want a United States of Europe says top EU official - by Bruno Waterfield

EU-United we stand Divided we fall

A campaign for the European Union to become a "United States of Europe" will be the "best weapon against the Eurosceptics", one of Brussels' most senior officials has said.

Viviane Reding, vice president of the European Commission and the longest serving Brussels commissioner, has called for "a true political union" to be put on the agenda for EU elections this spring.

"We need to build a United States of Europe with the Commission as government and two chambers – the European Parliament and a "Senate" of Member States," she said last night.

Mrs Reding's vision, which is shared by many in the European institutions, would transform the EU into superstate relegating national governments and parliaments to a minor political role equivalent to that played by local councils in Britain.

Under her plan, the commission would have supremacy over governments and MEPs in the European Parliament would supersede the sovereignty of MPs in the House of Commons.

Note EU-Digest: Stronger unity is the only way for the EU to get true leverage on the overall state of World Affairs, regardless if Eurosceptics like the idea or not. United Europe will stand and divided it will fall. Anyone who believes any one country in the EU can go at it alone, while surrounded by world super powers like Chia, Russia and the US is dreaming.


Almere-Digest