Friday, June 27, 2008
The US, UK and it's NATO allies have been conducting a war in Afghanistan for getting on seven years now. The stated intentions were to capture Osama bin Laden, destroy al-Qaeda and remove the Taliban from power. In this world of "internet time" and instant gratification, it feels like this war is moving in quicksand, or worse yet, maybe in reverse. The first two goals are probably further away from being accomplished than 2001, with Osama harder to find than Waldo and al-Qaeda stronger than ever. It did feel like the third goal was accomplished for good since Dec. 9, 2001 when the Taliban reportedly lost their final territory, but the last year or so has seen a resurgence in their power.
So, what's gone wrong? Well, in a nutshell, the US was too busy in Iraq and the rest of the world was too busy being pissed off with the US to realize how desperate the situation was becoming. I guess they forgot that this is Afghanistan, a country that hasn't been kind to foreign imperialism for a good 2500 years since Darius the Great extended his influence over the region. Ok, maybe the US could be forgiven for forgetting this, but the British? The first Anglo-Afghan war (they've had a few now) from 1838 to 1842 was a disaster for them with the low-light coming in the form of a massacre of about 16,000 retreating British military personnel and civilians. And really, the Americans should remember that it was them who helped supply Mujahidin fighters in their struggle that saw the defeat of the USSR in Afghanistan. The list of military debacles within it's borders is truly impressive, but the binding factor that binds them together is the intense tribalism that is constantly pushing the country apart.
No, it's not going to change. The same forces that have been driving Afghanistan up the failed state charts the past few years (8th in 2007, up from 10th in 2006 and 11th in 2005) will be around a lot longer than the NATO troops. The latest call for help is from a German NATO general who said that 6,000 additional troops are urgently required to control the situation. The funny part is that without these troops, he claimed the war would be prolonged. This follows the similar request for more troops from the outgoing commander of NATO's International Security Assistance Force (Isaf) Gen Dan McNeill as he passed the baton to another American, Gen David McKiernan. The "success" of the surge in Iraq has led them to believe that more troops will help restore order in Afghanistan. The Soviets couldn't do it with 150,000 troops, today the Afghan army has about 58,000 and the ISAF number about 52,000, so even with 50,000 more soldiers on the ground they are doomed to failure just as the Russians almost 30 years ago.
Recent events only highlight the inability to bring the country under control. In Kandahar, home to the second largest air force base in the country, a prison break was orchestrated that freed over a thousand prisoners, with maybe 400 of them being Taliban fighters. Cross border fighting into Pakistan, with US air strikes killing Pakistani soldiers adds another dimension. The resurgence of the neo-Taliban threat is real as the hearts and minds of moderate Muslims are won over to the extremist elements, pushed by the ever growing war on terror. McBush claimed he'd stay in Iraq for 100 years, no when seems to notice they'll have to be in Afghanistan even longer.
Sunday, June 22, 2008
Just a quick note. Morgan Tsvangirai has declared that he is pulling out of the presidential election. The announcement came the day after one of his party's (DMC) rallies was reportedly broken up by a pro-Mugabe youth militia. The full Reuter's story is here. It's disappointing, but I can't say I blame them for the decision. The violence would only have escalated in the next week culminating on election day, when Tsvangirai supporters would most likely have been massacred. And the world sits idly by.
Saturday, June 21, 2008
Yes, I'm talking to you. Well, maybe not you particularly, but us. Perhaps because I use the internet as much as I do, my intelligence has fallen to the point where I can no longer spell. There's been a steady stream of research released over the past year or so that suggests that all the fancy gadgets we've all come to rely on are actually lowering our intelligence. Unfortunately for you and I according to an article appearing in the Atlantic Monthly, the author Nicholas Carr wonders if maybe the internet is draining our intelligence as well.
Now wait a sec. We all know that TV turns our brain to soup, but the internet? The world's knowledge at our fingertips could only increase our brain power one would think. While the article only seems to present anecdotal evidence, the theory could be backed up by a couple of other studies. Dr. Glenn Wilson conducted a survey of 1,100 people over 80 clinical trials respondents that showed that email users suffered an IQ drop of 10%. The lack of discipline in doing tasks leads to a compulsive need to answer each mail, which leads to a constant changing of direction of thinking which then tires the brain. The addictiveness of the behaviour and the loss of the powers of concentration was compared to a drug, specifically, it was worse for our brain than smoking marijuana.
That's more like it, of course smoking weed makes you dumb, or... According to a study done a few years back, the IQ of people who smoked more than five joints a week were shown to have fallen by 4.1 points. However, the same study pointed out that light users, under five spliffs a week, showed gains of 5.8 points. Hmmm. What else can make us dumb you ask? Well, being a racist apparently leads to an IQ score of about 4 points lower. If you want to be smart, don't be poor, avoid any kind of lead exposure, don't drink the water in most American cities, or for that matter, anywhere that adds fluoride to the water system. Lower cognition has also been linked to eating foods containing additives as this could shave about five points off your IQ. Cognitive decline has also been shown for those with higher BFI's (body fat indexes), as those who were a bit chunkier could recall less vocabulary than their thinner brethren (finally, an explanation for the Dubya re-election in 2004!). Studies have also linked pollution with lower IQ's among children as well as crying too much when you're a baby.
"The medium is the message" - Marshall McLuhan
So, it seems that most everything will slow our brains down, but we must ask ourselves, are these causal relationships or are they simply correlative? About a year ago, a similar article came out claiming that Blackberries were causing its users IQ's to drop about 10%. The same article lead me to the idea of "continuous partial attention". The idea being that being constantly turned on, not wanting to miss anything, doesn't allow us to focus on any one thing. But how much do we miss in this state? Try this:
Part of what is happening is that we are outsourcing much of our brains to google, our phones and pen drives, which could be a good thing, opening our minds up to other things, or bad, as we allow our brains to be shut down bit by bit like the computer HAL in 2001. As Mr. Carr points out Socrates feared the invention of the written word would cause people to stop using their heads and “cease to exercise their memory and become forgetful.” The Italian humanist Hieronimo Squarciafico worried that Gutenberg's printing press and the easy availability of books would lead to intellectual laziness, making men "less studious" and weakening their minds. Regardless of whether we think our reliance on modern tools is good or bad, they are definitely changing the way we think.
Try this one (watch it to the end):
Thursday, June 19, 2008
With a little over a week to go until the run-off election for president in Zimbabwe, the news that does manage to come out of the country seems to get worse and worse by the day. It feels like forever and a day since I last wrote about Zimbabwe. It was only April 20th, three weeks after the first round of the election and no results had yet been announced. Of course we now know the result was a slim margin of victory for Morgan Tsvangirai of the MDC, but without an absolute majority, thus the necessity of a run-off election between him and Robert Mugabe. It's hard to imagine how things could be worse than those dark days, but somehow Mr. Mugabe and his thugs have managed to make it so.
Since April 20th a short recap:
May 2 - Electoral body says Tsvangirai won most votes in the presidential election, but not enough to avoid a run-off against Mugabe. Opposition rejects the result.
May 10 - Tsvangirai says he will contest the run-off even though he believes he won outright.
May 16 - Run-off is set for June 27.
May 19 - Opposition accuses military intelligence agents of a plot to kill Tsvangirai, forcing him to postpone his return to the country. The government dismisses the plot as a propaganda stunt.
May 24 - Tsvangirai returns to Zimbabwe and says Mugabe wants to decimate opposition structures before the run-off.
May 29 - Mugabe says his government has bought 600,000 tonnes of maize to ease food shortages.
June 3 - Zimbabwe orders Care International to suspend its operations after accusing it of political interference.
June 4 - Police release Tsvangirai after holding him for more than eight hours while he was campaigning for the June 27 run-off.
June 5 - Zimbabwean government bans all work by foreign aid agencies
The last couple of weeks are seeing an even quicker pace to the craziness going down as Tsvangirai has been arrested and released numerous times. Almost all the opposition officials have been arrested, killed, forced into hiding or worse. It is a surreal game to see how far he can go it seems. I am definitely convinced of the syphilis story now, Mugabe is mad. When a leader of a nation says things like "We shed a lot of blood for this country. We are not going to give up our country for a mere X on a ballot. How can a ballpoint pen fight with a gun?" why even hold the election? Even if without any effective campaign by the opposition due to the campaign of intimidation being conducted by Mugabe's Xanu-PF party Tsvangai somehow manages to get enough people to actually vote for him, on ballots that won't even be counted properly, it won't matter because Mugabe will stay in power by force if need be. Long sentence, but it has passed the ludicrous point as the UN promises to send observers for the election and Zimbabwe's neighbours sit idly by. Ban Ki-Moon tells the generally assembly of the UN that "Should these conditions continue to prevail, the legitimacy of the election outcomes would be in question," and these are referred to as harsh words as hundreds die and a war has been threatened on the people if they don't vote the right way.
But wait, Condoleeza Rice is going to sit down with the foreign minister of Burkina Faso, together chairing a round table discussion on Zimbabwe. Being that this month's security council president is the US, I'm sure a lot will be done. US+UN=ummm. What we must need is a League of Democracies. The aid the UN is sending is being stolen from hungry people dealing with inflation in the millions of percentages by the men in power, making it even more ironic that this used to be the breadbasket of Africa. That's the point I guess, it's Africa. At the same time a bit north Chad and Sudan try to add full scale war to the little genocide problem happening; Simon Mann's trial gets under way in Equatorial Guinea (high on the where's that factor, here). Oh yeah, that's the one Margaret Thatcher's son, Sir Mark Thatcher had to pay what amounted to a 265,000 pound fine for his role in the whole coup thing. There is a lot going on there to fix. Let's not mention the whole sure to have a pretty large scale famine as food prices skyrocket, which effects the poor first, and this is one continent that has gotten a whole lot poorer while the rest have gotten richer thing.
When Tsvangirai was touring Africa last month while his life was threatened by murder plots, his last stop was South Africa (read this link to see what president Mbeki is doing). A country whose leadership I expect to do something, maybe it's the whole Mandela effect. But the best plan anyone seems to come up with is for them to cut the electricity off if Mugabe steals the election. My dream was that on his return to the country, Tsvangirai would have walked across the border into Zimbabwe with the millions of displaced compatriots that have fled there in recent years. The timing coincided with the xenophobic violence at the time in South Africa, he would lead them to the ballot boxes as one unstoppable force. Most of my students here in Poland like most of the world don't even know there is trouble in Zimbabwe, let alone the difference between it, Zaire or Zambia. Despite the intimidation campaigns that have been conducted here in the past, it's more important to buy a new God Car or head down to the mall. If only Zimbabwe was in the Middle East and had oil. Even little things could help, such as national teams boycotting the Zimbabwe cricket team. However, it's not broad coalitions of words that will help end the bloodshed.
Tuesday, June 17, 2008
While sports fans in North America are glued to the NBA Finals, those of us across the Atlantic are in the middle of Euro2008, the European equivalent of the World Cup. Living here in Poland, the attention of the fans is sure to wane as the Polish squad was officially eliminated from the competition last night in an uninspirational 1-0 loss to the Croatians. At the same time, the German team assured their place in the next round with a win over the Austrian host team by an equally thrilling 1-0 score. Surfing around for interesting news this morning I came upon a much more titillating story of another match played between the Germans and Austrians, one that might even interest male sports fan back in North America.
Organized through a chat room, two women teams from Austria and Germany lined up Sunday hoping to inspire their male national counterparts before yesterday's match. However, their uniforms, or should I say lack there of, had a twist; instead of jerseys they were only covered in body paint and g-strings for the beach football confrontation. The match, made in man heaven, was played on the banks of the Danube river just outside the Austrian capital featuring women from both countries playing topless for national, um, pride. While reports I've read claim the technical side of the play was lacking, the game was tailor-made for press cover-age and post-game comments such as these:
"I was supposed to hold the balls but I really have no idea how to do that," said German keeper Jana Bach.
"I hope our men will take heart from that tomorrow. We played pretty hard, we even had some injuries, like I for example broke my toe nail," claimed 29-year-old bank employee Doris Fastenmeir.
"Maybe it is because I am not all that much into soccer. I am more into shoes to be honest."
As reported by Reuters, the German side took defeat in stride and joined the winners for alcopops and dancing at a beach club after the match.
Oh yeah, by the way, the Austrian defeated the Germans 10-5.
The real Euro continues tonight with Group C matches. What was labelled as the group of death as Italy, France and Holland were all grouped together along with Romania, has proven to be just that, with every possibility that both Italy and France could be eliminated. The two teams, who played each other in the finals of the World Cup, will both be knocked out if Romania beats Holland or a few other possible scenarios play out.
Monday, June 16, 2008
Push play and read...
Farmers protest in Argentina, truckers block the roads of Spain, South Koreans flood the streets of Seoul, riots break out in more than 15 countries. What are they so angry about? While the reasons may vary from taxes to fuel costs to imported US beef or simply the cost of rice, they all have their roots in globalization. No, globalization itself isn't a bad thing. It makes perfect sense that lower trade barriers help make the flow of goods move smoother and thereby reduces costs for the benefit of people. What is a bad thing is the system that is in place today, ruled over by the financial powers through the World Bank, International Monetary Fund (IMF) and the World Trade Organization (WTO), formerly GATT (General Agreement on Trade and Tariffs). However, the past few months have seen some dramatic events in the world markets that may point to the end of the imperialist system that the rich need us all to believe in so badly.
As Jose Louis Jamarillo, the former Columbian Ambassador to GATT and President of the Group of 77, declared after the birth of the WTO, what we have created is "an institutional trinity which will dominate all economic relations across the world in the interests of the strongest". The World Bank lends money to poor nations to develop their resources, the IMF ensures they budget correctly to pay back the loans, and the WTO ensures they keep their markets open to imports. The rule of the market, cutting public expenditure for social services, deregulation, privatization are the mantras of neo-liberalism. Structural adjustment demanded by the IMF can best be summed up with the idea of earn more and spend less, thus ensuring that debtor nations will scramble to sell what resources they can, driving down the price, while paying workers the minimum, in wages and benefits. This combination of low wages, low commodity prices and debt is the perfect system to guarantee the world's resources flow to the rich nations.
Meanwhile, the wealthy world prescribes exactly the opposite medicine for their own economies. The European community agreed that West Germany had to put $1.5-trillion into the former East Germany to simultaneously build industry, social infrastructure, and buying power. When Greece, Portugal, and Spain, relatively poorer than the rest of Europe, wanted to join the Common Market, massive transfers of direct aid flowed into these "poorer" nations to accelerate development, raise wages, regularize safety and environmental standards and improve living conditions. All wealthy nations provide enormous subsidies to their industries and agriculture, they all placed, and some still place, high tariffs on manufactured imports and low or no tariffs on raw material imports. They all provided, and still provide, subsidies to exports. There are also land donations, tax breaks, and below cost services in bidding wars to gain or retain industry as well as wage subsidies, and outright cash incentives. Between 1995 and 2005, $165bn of American taxpayers' money was used to support US agricultural commodities. Soya, corn, rice, wheat and cotton accounted for 90% of that money. Sugar was also heavily subsidised. The real beneficiaries of this system of government support have not been US farmers, who have gone out of business in their thousands, but the mainly US-based trading giants. For subsidies have allowed them to export grains at less than the cost of production, making it impossible for other countries to compete, while bringing the money from added-value markets back home. In this they mirror the patterns of trade established between previous empires and their colonies. The European Union gives out about $41 billion a year in agricultural subsidies, about $8.2 billion to France alone.
If people don't have enough food to put in their mouths, what's the use of an economic boom in exports. Countries are scrambling to come to terms with the new economics of food. India scrapped all import duties on cooking oils and banned exports of non-basmati rice. Japan is importing genetically modified grains for the first time. China has tried to calm its people by announcing reserve grain holdings, once a state secret. Meanwhile, the truly poor, the billion living on less than a dollar a day are trying to survive by cutting out bread and switching to different grains such as sorghum, eliminating meals and drinking tea for lunch. What can you do when wheat prices have leapt 80% from 2005 to early 2008? Much of the root of this problem can be linked to "free trade" and agricultural subsidies. Annual subsidies paid to farmers in "rich" countries total about $280 billion while total annual development assistance to the "poor" nations totals about $60 billion. The aforementioned agricultural subsidies flow mainly to a few commodity crops, wheat, cotton, corn, soybeans and rice (about 90% of US subsidies). This not only makes it more difficult for farmers in the "poor" nations to compete, but also makes other fresh fruit and veggies relatively more expensive. A Japanese cow gets a $3000 subsidy, one in the EU $1000 while the average income in sub-Saharan Africa is $500. So, what happens to the farmers in poor nations? They stop farming as they can't compete with the cheaper imports. World food prices spike and now you have a crisis of unimaginable proportions.
An interesting case in point is the effect that the price bubbles in oil and food are having on the have and have-not nations of the Middle East. While Egypt has banned exports and raised taxes to pay for the 88% in food subsidies it has been forced to give it's people following rioting, Saudi Arabia simply lowers tariffs and the UAE buys farms abroad. The rich and the poor, within and among nations behave in different ways towards crisis. The end result of neo-liberalism, or globalization has been an ever intensifying concentration of wealth. The rich get richer and the poor get poorer, a global game of winners and losers. Perhaps if the winners weren't faceless corporations or greedy money managers the looming food crisis wouldn't now be upon us. The ease with which capital flows has contributed to the recent price surge. As investors fleeing Wall Street's mortgage strife noticed the price spike early last summer as reports of weak wheat harvest in the US and Europe along with a prolonged drought in Australia, they poured money into grain futures. Of course their actions can't be seen in isolation, as many other factors such as government subsidized biofuel programs and national governments reactions from the barring of exports in producing nations, to increased purchasing by importing nations such as China also came into play. Food became the new gold for hedge fund investors last year and they're looking for the next disaster play. “every debt crisis in history since Solon of Athens has ended in inflation, bankruptcy or war” - George, Fate Worse Than Debt, p. 196
So, what happens when someone doesn't want to play by the rules set by the world's elite? That's easy, embargo, destabilization, attack or an engineered change of government. Most of the world's resources are found in the developing world, this is why we see the race for free trade agreements and feel the ever growing threats implied towards other nations who don't toe the line. If these less developed nations were to form alliances and barter for a better deal for their natural resources, they would be able to develop. Unfortunately, what we have is a true vicious circle: the world economy is dependent on growth in the U.S. economy but the U.S. domestic economy is [now] skewed more towards consumption than production and investment, and this consumption is in turn sustained by borrowing—at home and abroad.... The deal with surplus countries essentially has been as follows: you can run a big trade surplus with us provided that you put the money back into our capital markets. One of the major points free traders point to for the reason that poor nations are poor is corruption. While it's hard to argue against the fact that corruption is a huge drain on wealth, how can the World Bank and IMF criticise recipient governments for their lack of transparency, widespread corruption and undemocratic regimes, insisting on the reform of these aspects as a pre-condition to granting loans and debt relief? These same issues haunt the World Bank and IMF which are widely regarded as not transparent, undemocratic and unaccountable. Corruption within these organisations is rife, and millions of dollars unaccounted. Remember Paul Wolfowitz?
Finally, labour from two angles, one lie for the poor, another for the rich. If the "rich" nations of the world want free trade with free movement of capital and resources, the third component in the wealth creation equation should also be able to move freely; labour and people should be allowed to move across borders as easily as goods, services and money. In today's Guardian, Evo Morales, president of Bolivia, wrote an open letter to the leaders of the EU in which he pleas for them not to punish illegal immigrants too harshly. The US fights with it's own immigration policies, while millions around the world seek to escape poverty and war only to find the door closed. Meanwhile, in developed countries, labour faces it's own challenges. Corporations are able to combine labour and equipment from anywhere in the world, making it easier for them to use lower priced labour overseas. Businesses can use the threat of relocating as a lever to get what they want in the form of tax policy, regulations and subsidies, with the costs being borne by labour itself. South Korea will be losing jobs to cheap labor in Thailand and even China may someday lose factories to Bangladesh. Industries can be built quickly. But the markets of an efficiently functioning economic infrastructure (roads, schools, universities, businesses, homes, postal system, trucking companies, and airlines) can be built only slowly.
Over my last three posts I've tried to point out some of the most common lies that the public are fed daily. I understand that it is part of a politician's job to portray a state of calm in the face of growing turbulence. It may seem a little paradoxical to claim in a blog that part of the problem lies in the narrow range of views the public is fed daily. You might be reading this, we all may have access to different sources of information, but the fact is that the majority of people get their news from one of six sources: GE, Time Warner, Walt Disney, News Corp, CBS or Viacom. Forget the WTO or even the G8, the power of who gets traded with in in fact in the hands of only 4, the Quadrilateral Group of trade ministers. While there's no denying that the global economy has grown, the real questions are who benefits and what are the costs. The growth model that everything is built on seems inherently flawed, especially of late with the surge in oil prices. And what of the effects on the environment, a subject not even touched upon here.
If you like the film at the beginning, you can download it in it's entirety and legally, here.
Sunday, June 15, 2008
Everything has to be paid for though in the end. Or does it? If there were only something that could keep investors interested in buying dollars... Of course it's oil, having replaced gold and completed the transition of the dollar, a fiat currency, into a quasi-backed currency. Of course you need people to trust that this will continue and that dollars will always be needed. Thus the boom and bust cycle of the past century, with the battle for oil at it's centre and war as it's engine.
Who controls the food supply controls the people; who controls the energy can control continents; who controls money can control the world - Henry Kissinger
Gallipoli was an early British loss in WWI trying to secure access to the oil fields of Baku (1/5 of the world supply at the time). I know that most textbooks claim that war was ignited by the assassination of Archduke Ferdinand, but in reality it was due to British fear of a German Berlin to Baghdad railway giving them land access to the oil of the region. Things haven't changed much for the past 100 years of the reign of oil as the lies leading up to the Iraq invasion have been exposed, the objective clear. Things aren't looking so good for the plan as the price per barrel of crude rockets to weekly new highs with talk of 'peak oil' which could cause a greater disaster than war; people getting out of their car...
The British may have deviously beat the rest to most of the Arabian peninsula after WWI, but it was America that grabbed the then unknown gem of the region, Saudi Arabia. The Brits, and by default much of the world they controlled, also put themselves immensely into debt with Wall Street to pay for the war. JP Morgan and the rest got rich on the spoils, with onerous demands on not only the vanquished Germans, helping ensure WWII, but the Brits too. While the British managed to maintain control over much of the Middle East until the next war could be fought, such conglomerates as Royal Dutch Shell and the Anglo-Persian Oil Company that became the Anglo-Iranian Oil Company and is now British Petroleum(BP) rose to power. Of course WWII had many causes, but not the least of which was the oil embargo imposed by the US on Japan, at the time it was reliant on the Americans for 80% of their oil. The end of the war brought us the Bretton Woods accords which sealed American hegemony for the next 30 years by linking the U$ to gold, and creating the IMF, World Bank and "managed" free trade through GATT. At the time the US held most of the world's gold reserves, so all was good with big business on Wall Street. The Marshall Plan to rebuild western Europe also gave a huge boost to the oil companies as it ensured growing demand for crude.
The American relationship with Saudi Arabia has proven crucial ever since the government of Ibn Saud was recognized by the US in 1931. Standard Oil began searching for oil in the 30's and by 1938, the Arabian American Oil Company, later to become Aramco, first struck the black gold in commercial quantities. The relationship has had a long and winding path, but both countries have played each other for their own interests; the Saudi's needing protection, and the American's needing cheap oil. Thanks to Bretton Woods, the dollar was as good as gold, and people bought it for almost 30 years. Predictably however, America printed more dollars than there was gold to back it, which worked until the French and a few others began demanding the US pay back gold for dollars it brought to the US Treasury. Of course they couldn't pay and on August 15th, 1971 Nixon ended the repayment of gold, in essence declaring insolvency. Needing to do something, the US along with money managers struck a deal with OPEC, of which Saudi Arabia was a founding member, to exclusively price oil in US dollars in return for American guarantees to protect the kingdoms of the Persian Gulf against the threat of invasion or domestic coup. At the same time, the price of oil was allowed to increase from about $3.50 to $39.50 so the oil producing nations could buy American debt. source - The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets (Cornell Studies in Political Economy)
Like kids in a candy store the US government had been on a spending spree, particularly under LBJ. Claiming that America could afford both guns and butter, he escalated the war in South-East Asia and launched the Great Society movement. By 1979, gold had skyrocketed to over $800/ounce and interest rates reached 21% to fight inflation. The only way to safeguard dollar hegemony is military threat, and the 80's brought us rapid growth in military spending under Reagan. The petrodollar-recycling system allows the Federal Reserve to effortlessly expand global credit to enforce US financial control and continue massive debt-financing to pay for US military control. If petrodollar-recycling begins to break down, then financial and military control will also begin to decline. When Saddam Hussein began demanding payment for oil in euros in 2000, the US had him removed. To pay for it, the US simply has to print more money, which can continue as long as people are willing to buy dollars, which is why the fashionable lie of the past few weeks is that the US is committed to a strong dollar and will fight inflation. As long as people buy it, the cycle will be allowed to continue, and, if McBush is elected in the fall, US troops can take out the next threat, Tehran. But will it stop there, the axis of oil includes Iran, Venezuela and Russia. Could Caracas be next, or how about Moscow? When great powers begin to decline, they almost invevitably resort to war and beligerency, thereby accelerating their demise. Source - The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000
Of course oil politics has had it's obvious fallout. The radical Islamic movement was born out of resentment of American influence in the Middle and Near East, while at the same time returning immense financial benefits to big business. However, these benefits have also given rise to a thirst for ever greater returns, greed. We are witnessing what can only be called a commodity shock as oil and other resources, most importantly the food we eat, are seeing prices rise out of control and the main culprit is price speculation. As the G8 meeting wrapped up in Osaka yesterday, news of an Italian plan for regulation of this market leaked out. Of course the US and British opposed it as this would be seen as putting constraints on the free market system, the main pillar that globalization is built on. Sounds like part III of lies will have to wait until the next post.
Saturday, June 14, 2008
They stand in front of the cameras and microphones with crooked smiles plastered to their faces as they tell the people what it's thought they want to hear. No, the sky isn't falling, yes, there will be a better tomorrow. The past 30 years or so has brought with it a new world order, one that promises a better future for everyone, but the reality is in sharp contrast. The facts seem to tell me that not only is the sky falling, the earth is also about to open up and swallow us, due in no small part to the fact that people seem to accept the lies that they are told. I don't have the slightest idea why we seem to keep buying the lies, but I do know that now that Hillary is out of the picture, the real campaign for the presidency will start in earnest, which will bring with it a whole new level of BS.
Let's start with the economy stupid. The biggest lie, and the one that is almost universally accepted, is that the Republicans and their candidate represent fiscal responsibility, an idea somehow pulled from their "belief" in small government. Or maybe it's still belief in Alan Greenspan who had to be pulled out of the closet to get the public ready for increasing interest rates during an "economic slowdown". Stagflation fears. The "spiral" in prices feared needs to come as we've, America in particular, spent ourselves too far into debt. Us, as individuals, and them as the government can't continue the borrow and spend ways of the past century or so. The red ink has been picking up pace since the 80's when Reagan spent the reds into the ground. But he also pumped up the monster that is the military complex to unsustainable levels while ordering the people to spend as recklessly to keep the economy ticking. The man who invented "Reagonomics", David Stockman, has been indicted for stealing people's money, but that is what the American government, most pronouncedly during Republican reigns, has done. Stockman later repented, decrying the policies he helped create, but we'll get more of the same if McBush gets elected.
The past 3 decades have brought us so much. Taxes on the rich have fallen, while taxes on the rest have risen with predictable results. Measured in 2005 dollars the net worth of the top 2% of American families more than doubled from just over $1 million to over $2 million from 1984 to 2005 while the bottom quarter saw their worth actually fall. In fact, the poorest 10% have a negative net worth. The US national debt has increased from $930 billion in 1980 to $9.5 trillion today. Consumer credit in the US has risen to over $2.5 trillion, adding around $10 billion a month. All for what? A better life? A new TV, or better yet, a new God Car. The neo-cons have completed their transformation of McCain into McBush and he is now a die-hard tax cutter for the rich, doling out the odd stimulus cheques so we can at least go to the mall once a month. Leaving the rest of us to work more to pay for the extravagances. The phenomenon isn't confined the the US, Europe is in similar straits, and the powers that be have decided that people simply have to work more, and have therefore raised the maximum number of working hours to 65 from 48. Of course, this only matters if you're lucky enough to have a job. Well, you need enough money to put gas in the car and food on the table. Oh yeah, those costs are rising too ... which brings us to part 2 of lies tomorrow.
Friday, June 13, 2008
A quarter century ago these words would have struck fear into the heart of any westerner. Ten years later, those same westerners would have laughed at the possibility. Today, they're coming for real, but it's not the Red Army that's advancing, it's the financial oligarchs who are coming to buy out western institutions, beating the west at their own game, capitalism. A friend of mine was telling me the other day of his difficulties trying to find someone who spoke English when he first visited my current home of Poland nearly a decade ago. Today, nearly everyone here speaks some English, many nearly fluently, but then it was far more likely that your request for English would be met with "nyet, Ruskij?" Maybe it's time we all took a crash course in Russian if we want to talk to our future boss.
The latest flexing of the new-found Russian financial muscle has come via the person of billionaire Suleiman Kerimov. Financial reports on Wednesday indicated that Kerimov was selling many of his Russian investments, including $15 billion in Gazprom, and looking to increase his holdings in western financial institutions such as UBS, Morgan Stanley and particularly Deutsche Bank. At the end of 2007, he owned 3% of the bank; sources said he was looking to up that to 9%, which would easily make him the biggest investor in the bank, well ahead of such financial heavyweights as French insurer AXA and British bank Barclays. On it's own this may not seem important, however, taken together with Kerimov's call for other Russian tycoons to join him and the emergence of Russia's first Sovereign Wealth Fund, we could be witnessing the start of a large-scale financial invasion. Kerimov is estimated to be only the 8th richest man in Russia, if the others were to join him along with the state fund (the orders of the Kremlin are usually followed by all, unless you want to wind up like Mikhail Khodorkovsky or worse yet, Alexander Litvinenko)they could end up controlling some of the west's crown financial jewels.
On the other hand, this move can be seen as a tiny drop in the bucket when compared to the financial power that is wielded by other Sovereign Wealth Funds. SWF's are state owned investment funds, the first of which was the Kuwait Investment Authority born in 1953 and the largest being the Abu Dhabi Investment Authority, with assets approaching $1 trillion. Many of the funds are the result of commodity wealth, mainly oil, but there are non-commodity based funds such as the Chinese Investment Corporation that are also growing quickly. Rapid economic growth in some developing markets, huge trade surpluses with the US and rising oil prices are the main engines of these funds' growth. A Morgan Stanley report issued last year estimated that the value of these funds will grow from around $3 trillion today to over $12 trillion by 2015. Their influence on markets have become so pronounced that the US held a joint subcommittee hearing into the impact on the US. Ron Paul's comments can be found here.
As is often the case these days, it's the Chinese that people in the west are most afraid of. In all probability they will have the largest SWF by 2009 to go along with the largest corporation in the world (PetroChina), the most people and eventually the largest economy (yes, I know, it still has a long way to go). There was a lot of attention given to the threat of the nuclear option by the Chinese last year in reference to their ability to bring down the dollar through the mass sale of their over $1 trillion in US debt if the US applied trade sanctions on Beijing for not allowing the yuan to appreciate. Funny how every time I start writing about Russia I end up in China. Without doubt the financial centre of the world has shifted dramatically east. Maybe it's Mandarin that we should all be studying?
Monday, June 9, 2008
Maybe we just won't notice. Easy to miss, what with everything else always going on. If it's not natural disasters in China or Myanmar, it's economic ones, or Hillary Clinton, or tennis in Paris or football in Switzerland and Austria. On Saturday Canada's government slyly announced that a Free Trade Agreement (FTA) has been concluded with Colombia. Hoping it would slide by on the weekend, even if we're interested in the finance section, what with oil rising almost 10% the same day the NY markets suffered their biggest loss in 15 months and the U$ continued it's slide into the abyss. While US Secretary of the the Treasury Henry Paulsen talks up the US dollar half way around the world, the Canadian government strikes a deal with a state run by death squads.
In 2007 Canada's two-way merchandise trade between Colombia and Canada totalled $2.45 billion, a quarter of what Americans will spend this Father's Day, and the total Canadian investment in Colombia was about $1.8 billion (isn't it lovely we don't have to say if it's in Cdn$ or U$ anymore seeing as they're about the same). Obviously these totals are a drop in the bucket, meaningless, with no hope of any really meaning anything. Unless of course you take the whole legitimizing the policies of a government thing into consideration a la the US and Cuba or even Iran. Once you talk to them, you say they are OK. Once you make a FTA you say you support them. So, what does the Canadian government now support...
In a country of almost 44 million, more than 3 million have been displaced by war, government sponsored death squads and strife. A country where more than 2500 trade unionists have been murdered in the last ten years, leading to a decline in union membership from 15% five years ago to under 3% today. A place where each of the six banana companies operating pays between 3 and 4 cents for every banana produced directly to support death squads. This helps to ensure that 79% of the Afro-Colombian population has been internally displaced through massacres, killings, threats and intimidation so the companies can move in and use the land. A country that doesn't respect international borders, launching cross border attacks into foreign territories to achieve military objectives. Maybe the weakest argument against the deal is that even the American government is holding up it's passage through congress. Yes I know, it may be a political stunt by the Democrats, but they still at least have their reservations.
So, go ahead, do business with the Colombians. Let's ignore the fact that the government is sponsored by narco-terrorists and ignores human rights. After all Canada, you've just signed a deal with Peru as well without noticing that they too ignore all environmental standards and even refuse to acknowledge the fact that there are uncontacted tribes deep (or not so deep anymore) in the Amazon. Yes, Nova Scotia Power needs the cheap coal from Colombia and the world needs the gas that might be found in the forests of Peru. So by all means, rape and plunder to get it. Just don't tell me about legitimizing evil regimes.
If you're Canadian and don't think this is a good idea, click here to fax your petition to your MP.
Saturday, June 7, 2008
Football, the European kind, can be a confusing area for a North American on the old continent. From individual national leagues with their myriad of titles to pan-European tournaments including the UEFA cup and Champion's League, the club season can go on forever. Then there is the World Cup with it's long and winding qualification stages which remind me of the American presidential primary process. This summer, kicking off today in Austria and Switzerland, the football world's focus switches to the European Championship, Euro2008. Like the World Cup, the Euro Cup is a once every four year competition featuring national squads. With very few breaks, the whole system seems to have been devised to keep fans attention focused on football throughout the year. Unlike many of the other tournaments, the World Cup and Euro Cup have the additional emotional impact of national pride. Sometimes this can rise to the boiling point and turn ugly.
As luck would have it Germany and Poland both drew into the same group, along with Croatia and co-host Austria, from which only two teams will advance to the quarter finals. Of course a tabloid war is to be expected in the run up to such a confrontation, but this one has taken a nasty turn. First, the Polish paper Fakt ran a story imploring the team: “Leo, repeat Grunwald!”. The reference is to the 15th century Battle of Grunwald where the Poles defeated the Germans. The picture accompanying the story had the German captain Michael Ballack kneeling before the Polish coach Leo Beenhakker who was brandishing a sword. The Germans were disgusted and hit back, seemingly oblivious to the fact that the newspaper is German owned. Not to be outdone by their rival, another Polish tabloid, The Super Express, ran a story which has drawn the most attention. The story's picture (top of post) features the Polish manager once again, this time holding the severed heads of the above-mentioned Ballack along with his manager. Diplomatic lines have been buzzing with Peter Danckert, chairman of the German parliament's sports commission, calling for an "appropriate reaction" from the Polish government. Poland's ambassador to Germany Marek Prawda was quoted as saying, "This shows an idiotic lack of taste. I wish them the worst" and continued, "I think it is particularly bad that this is published at a time when fans are coming into contact. It's completely unnecessary an really should be ignored." Oooh, ignored, bad taste. Maybe we should be more careful. Will the animosity build to the point that it did between Honduras and El Salvador before the outbreak of the so-called “Football War”?
On July 14, 1969, with the attention of the rest of the world focused on the impending moon landing a week later, El Salvador launched an air strike on their Honduran neighbours, starting the Football War. Coincidentally or not, the two nations had just played a tie-breaking qualification match for the 1970 World Cup that featured an inordinate amount of nationalism. The build-up to the game was intense with the two sides having met a week earlier. After the first game an 18-year-old El Salvadoran girl committed suicide after seeing the Honduran side score the lone goal. The rampant nationalism on both sides of the border due to economic and land disputes combined with martyrdom of the girl to create an atmosphere that was ready to explode and did just a few hours after the final whistle. The cost of the 100-hour war was about 6,000 deaths and 15,000 wounded.
There are some who point to another football match as the true beginning of the Balkan conflict of the 90's. The match was to feature the Croatian side of Dinamo Zagreb up against the Serbian side, Red Star Belgrade in Zagreb. Instead of a football match, the stadium played host to a pitched battle between supporters of both sides. Some of the fighters included future war-crime indictees, players themselves delivering flying kicks, police and of course fans of both teams. In an effort to avoid such a spark to war, football's world governing body, FIFA, suspended a match between Sudan and Chad just last week. As in the German and Polish situation, both nations had drawn into the same group, this time in the African Cup which will determine African representation in the 2010 World Cup. The suspension came after Sudanese authorities had blamed Chad for a rebel attack near the Sudanese capital of Khartoum earlier in May. Chad had also sealed it's border with Sudan and cut-off economic ties with it's neighbour.
So what will happen after Sunday night's game? Well, I'm certain enough that war can be avoided, but with the number of flags I can see fluttering around my adopted home town of Poznań here in Poland, you'd think it was Independence Day. Let's hope the nationalism doesn't result in the outbreak of war, especially seeing as I'm only about 133km from the German border. However, if the Poles do manage to break their 14-game drought against their rivals, maybe the party could get too loud for the neighbours...
Wednesday, June 4, 2008
The picture is absorbing. The fear is real. An attack from above from what must seem to them as an attack from space would feel for us. The Mars lander searches for signs of life on the red planet while a small plane flies over the tree canopy of the Brazilian Amazon jungle. The plane had made a pass above the village near the Brazilian/Peruvian border earlier in the day and the tribesman had obviously been put on war footing, dressed in warpaint and armed with bows and arrows. Although Peruvian president Alan Garcia, in his race for oil and logging, has openly questioned the possibility of such uncontacted tribes, it is estimated that about 100 such tribes do exist. Their fear of the unknown is apparent. Like a scene out of The Gods Must be Crazy they had no idea what this mechanical bird was or anything of it's intentions. Bodies painted, weapons at the ready, as if they knew that encounters such as this with the outside world almost always proved fatal to tribes like theirs.
The modern world's equivalent to these planes looking down on hidden tribes in the amazon are the thousands of satellites circling the globe doing everything from taking pictures to providing communication to searching for hidden oil. So what would happen if these satellites suddenly became offensive weapons with the ability to shoot down others or rain down destruction on Earth? This is part of a scenario described a few years back by a commission lead by none other than Donald Rumsfeld in what he called a “space Pearl Harbor”. When Rumsfeld was nominated to defence secretary, retired general David Jeremiah took over the commission chairmanship and said "Increasingly, people like Osama bin Laden may be able to acquire capabilities on satellites" and will be able to threaten US ground stations. Take note that this was just a few months before 9/11.
The subject has regained relevancy recently due to a couple of different factors. Firstly, the current Outer Space Treaty, signed and ratified by most countries including the US, China and the former Soviet Union, came into existence in 1967 and prohibits placing weapons of mass destruction in space but is vague when it comes to other weapons such as lasers or the shooting down of satellites. Which brings us to January of 2007. China became the third nation, after the US and Russia, and the first in 20 years to successfully shoot down an orbiting satellite. It was an obvious effort the force the Americans into dialogue over the militarisation of space, to stop an arms race in space, to which the US has consistently maintained that no such race exists. Of course they don't mention the fact that the national space policy of the US strongly asserts the American right to defend itself in space against any actions it considers hostile. Therefore the predictable response by the US to the Chinese action was to shoot down a "toxic" satellite themselves.
Control of space represents the ultimate military control of the high ground so it's not hard to see why this is such a touchy subject. What is difficult to figure out is why the American government seems so adamant in their refusal to enter into serious discussions to disarm this growing crisis. How does the old expression go...people in glass houses shouldn't throw stones, yeah that's it. As usual though, the Bush administration has plenty of rocks that they're not afraid to throw. There isn't any military more technologically advanced than that of the USA, yet at the same time they are completely dependent on the information provided to them by the satellite system zipping around the globe. Knock a few of them out and before you know it they're fighting blind. So one would believe that they would jump at the chance to enter into a treaty guaranteeing their primacy in orbit.
How many American know that the nation refusing to discuss a treaty aimed at preventing an arms race in outer space is their own? The Russians want nothing more than to maintain a balance of power and China is definitely on board, both have made proposals. Dennis Kucinich has attempted to introduce legislation into congress. Even the Canadians have tried to bring it up. Instead the American are opting for the arms build up, a new space race as evidenced by their RAIDR project or space based kinetic missile interceptors. This is a game that China has demonstrated it is willing to play, and I'm sure the Russians will come along for the ride as well. There could be only one reason. Could it be that there is a fortune to be made in developing the technology to fight in space?
Sunday, June 1, 2008
50-Cent shoots a video featuring the Euro, the Canadian dollar trades for more than a U$ while oil zooms over $135/barrel. Since the Bretton Woods agreement over 60 years ago tying the value of the U$ to gold and all other currencies to the U$, the USA has been the unquestioned economic superpower. While the gold standard was abandoned, many nations have maintained some kind of peg to the value of the dollar and most of the world's commodities are priced in U$. It's becoming increasing clear however that this policy is adding to other nation's economic problems more that helping. Dollar flight has been underway for much of the decade, but the worst is yet to come.
Most of the world is still priced in dollars, from oil to rice, but the rising cost to other nations is threatening to end this system. From Russia to Kuwait, countries are cutting their ties to the greenback one by one. Why? Quite simply they've lost faith in it's value. Meanwhile the price of importing from other countries has risen, fueling inflationary pressure beyond “acceptable” levels. Russia abandoned it's effort to tie the ruble's movement to the dollar in 2005. The second largest exporter of oil also wants to sell it to Europe priced in euros. The Eurozone is the largest source of imports for OPEC nations, so a nation like Saudi Arabia pays more for, say, French oil equipment which is of course priced in ever more expensive euros. In gulf nations, where the economies are booming due to rising oil prices, they are also forced to cut interest rates in line with US central bank due to the dollar peg, further adding to inflation. I'm sure these countries see the vicious cycle of higher oil prices leading to higher US deficits leading to a weaker dollar leading to higher oil prices, so why do they keep the peg?
On May 21st, 2007 Kuwait cut it's peg to the US buck. One could almost feel the shiver going up the spine of the American economy that is so dependent on oil imports from the region. Remember Bush visiting the Middle East a few months ago to supposedly ask for more oil and to be seen as supporting the Israeli-Palestinian peace process. Well, he was politely refused the oil and the Israelis stepped up their military operations in the occupied territories and tightened it's blockade of Gaza just three days after Bush left Jerusalem. But what he did accomplish was an agreement to maintain the pricing of oil in US dollars, for now. Even with prices spiralling out of control, causing migrant worker riots in Dubai as inflation is at it's highest level in 19 years in the UAE and at 16 year highs in Saudi and Oman they are toeing the line. The question is how long will these countries be happy watching the value of their trillion dollar investment in US Treasuries and securities erode?
It's not hard to see why it's so important for the US to maintain the pricing system in dollars. Let's imagine for a moment a world where prices were in other currencies and currencies such as the Chinese yuan weren't tied to the dollar, something many would like to see change to address the trade deficit. Every day the US needs to borrow to keep running, to fight two losing wars, to buy more oil from the Middle East and buy more Chinese products. Much of this debt is financed by the Chinese and other foreign countries. So while the US is busy printing money and pushing the dollar down, they are driving the growth of China and the Middle East, helping push their currencies higher. This of course in turn makes it more expensive to borrow tomorrow as the comparative values of the foreign currencies and the dollar move in opposite directions. Now, the economic argument would normally be that currency valuations will eventually cause buying behaviour patterns to change, but America is addicted to both oil and Walmart, spelling doom for the economy.
In 1971 the Gold Standard was abandoned, leaving an economic system based on fiat money, where there is no commodity backing up the value of currency, only the faith that people have in its value. Shortly thereafter a deal was struck with the Saudi's to conduct oil transactions only in dollars, thus was born the petrodollar era. If oil suddenly stopped being traded exclusively in US bucks, the dollar would no longer serve as the international currency which would force the US to reduce its trade deficits by becoming an export nation again, something I don't see happening. The route they've chosen is to maintain the system with an iron fist. In September 2000, Saddam Hussein may have sealed his fate by announcing that Iraq was no longer going to conduct oil transactions in dollars. The often delayed Iranian Oil Bourse finally opened in February of this year (despite some cable problems) with petroleum trading for non-dollar currencies, hmmm, I wonder what will happen next?