Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

November 11, 2009

China Will Allow Yuan Gains to Slow Inflation, Riverfront Says

China may resume the crawling peg as early as next week

By Allen Wan

Nov. 11 (Bloomberg) -- China will allow for faster appreciation of the yuan against the dollar next year as it seeks to curb accelerating inflation, according to Riverfront Investment Group and RBC Capital Markets.

“China can either let the yuan appreciate or allow inflation to accelerate at the risk of causing social unrest,” said Michael Jones, who manages $1.4 billion in stocks, including Chinese equities, at Richmond, Virginia-based Riverfront. “Inflation pressures will push China to allow substantial yuan appreciation.”

The world’s third-biggest economy expanded 8.9 percent in the past quarter, the fastest pace in a year, according to official data. Money supply increased a record 29.4 percent in October from a year earlier, the central bank said today.

“Rapid Chinese money supply growth led to inflation in 2004 and 2008,” Jones said. “It could happen again.”

He predicts the inflation rate may rise as high as 7 percent next year, with food prices double that estimate. Under that worst-case scenario, Chinese policymakers may be forced to revalue the currency by 25 percent, Jones said.

Consumer prices fell 0.5 percent last month, the smallest drop since declines began in February, according to a Bloomberg survey. Prices will rise 2.7 percent in 2010, according to the average of 16 economist estimates compiled by Bloomberg.

“Pressure from the international community to allow yuan appreciation is not that big,” People’s Bank of China Governor Zhou Xiaochuan said Nov. 6.

Economic Stimulus

China’s 4 trillion yuan ($586 billion) stimulus spending and record lending may lead to a pick-up in inflation, prompting the government to allow for an appreciation of the yuan, said RBC’s global head of emerging research Nick Chamie.

“Strong stimulus and very easy liquidity conditions are likely to stoke inflation pressures in the months ahead, suggesting that tighter policy will be needed -- currency appreciation will likely be part of the package,” Chamie wrote in a note to clients.

RBC predicts the yuan may strengthen to 6.50 against the dollar by the end of next year. China has maintained the currency’s value at around 6.83 against the dollar since July 2008, after allowing it to rise 21 percent in the previous three years. Yuan forwards indicated on Nov. 9 that traders expect the currency to resume gains, climbing 3 percent in the next year.

‘Tough Stance’

Policy makers are unlikely to allow the currency to resume its appreciation this year after keeping it almost unchanged since July 2008, Beijing-based Zhu Baoliang, the chief economist at the State Information Center, said in an interview on Nov 9. China will stick with its “tough stance” on the currency until overseas sales rebound, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said in a separate interview.

The central bank may first allow for a “gradual” appreciation of the yuan by reintroducing a so-called crawling peg that was shelved during last year’s financial crisis, Riverfront’s Jones said. That would allow the yuan to rise against the U.S. dollar and maintain its value against other major currencies such as the euro and yen, he said.

China suspended the crawling peg as the financial crisis sparked aversion to risk and boosted the dollar, Jones said. Since then, major currencies have rebounded, allowing the government to resume its previous approach, he said.

“We believe that as other currencies continue to rally, China will likely resume a crawling peg strategy against the dollar,” Jones said. “Such a shift in policy will likely motivate a rally as global financial markets breathe a collective sigh of relief.”

‘Material Revaluation’

China may resume the crawling peg as early as next week, when U.S. President Barack Obama visits the Asian country, Jones said.

Asian currencies such as the Taiwanese dollar and South Korean won may appreciate further if the yuan gains as governments in the region have been reluctant to risk further gains on concern they may become less competitive, he said.

“A material revaluation of the yuan could potentially unleash substantial domestic consumption in China, be a catalyst for a boom in global trade, and spark a secular bull market in equities,” Jones said.

Petrobras is the third biggest company in the Americas

Petrobras - 11/11/2009 13:29

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Petrobras is the third biggest publicly traded company on the American continent, according to a study published by the Economática consultancy firm Tuesday (11/10). The survey shows the Company experienced a growth of $192.5 billion in its market value from December 2002 to November 2009, which surged from $15.4 billion to $207.9 billion in the period. The first and second spots on the list are held by American outfits Exxon ($345.8 bn) and Microsoft ($257.4 bn).

In late 2002, Petrobras ranked 121st among the largest publicly-held companies on the continents. Since then, it rose 118 positions.

The result places Petrobras ahead of companies of the likes of Wall Mart ($200.6 bn), Apple ($181.5 bn), and Procter & Gamble ($180.7 bn), which ranked fourth, fifth and sixth on the list, respectively. The ranking also features other multinational corporations like Google, Johnson & Johnson, Texaco and Coca-Cola.

November 09, 2009

Correa Defends Alliance Between Petroecuador and PDVSA

EFE News Services
11/09/2009 15:07

President Rafael Correa defended the strategic alliance between Petroecuador and Venezuelan state-owned oil giant PDVSA for the operation of the Amazon's Sacha field, one of Ecuador's largest oil fields.

Correa criticized politicians who oppose the alliance, arguing that Petroecuador holds a 70 percent stake in the venture while PDVSA has only a 30 percent interest.

The state-owned companies formed the Rio Napo consortium, which will be a "service provider" in the Sacha field, Correa said Saturday.

Rio Napo will only receive reimbursement for production costs from the 50,000 barrels per day (bpd) currently produced at Sacha, the president said, adding that the benefits from the deal would come from increased production due to new investment by the consortium.

The alliance will make it possible to increase Sacha's output by some 20,000 bpd, with Rio Napo barely receiving $1 for each additional barrel produced and Petroecuador getting 70 cents out of each of those dollars, Correa said.

Ecuador is also receiving environmental protection technology in the deal, the president said.

An average of 48 oil spills used to occur annually in the Ecuadorian Amazon, but this year there have been only three spills, Correa said.

Ecuador produces some 480,000 bpd of crude, with Petroecuador accounting for some 60 percent of output and about a dozen private companies the rest.

Oil is Ecuador's main export product and revenues from its sale finance about 35 percent of government spending.

China Calls on U.S. to Control Deficit

Nov. 9 (Bloomberg) -- Chinese Premier Wen Jiabao urged the U.S. to limit the size of its deficit to ensure the stability of the dollar, Reuters reported.

America should play a responsible role in contributing to a global recovery, Wen was quoted as saying yesterday at a briefing in Sharm el-Sheikh, Egypt. It should keep the deficit at an appropriate size, the premier said.

Wen is renewing concerns expressed in March, when he said he was “worried” about China’s holdings of Treasuries and wanted assurances that the nation’s U.S. investments were safe. The dollar fell today after the Group of 20 governments agreed to keep stimulus measures and remained silent on the greenback’s decline this year.

The U.S. currency has dropped about 13 percent against a basket of currencies of major trading partners in the past seven months and the International Monetary Fund indicated in a Nov. 7 report that it may still be overvalued.

China’s foreign-exchange reserves climbed to a record $2.273 trillion in September and the nation is the largest holder of U.S. Treasuries, owning $797.1 billion of the securities in August.

China is closely watching its U.S. assets, which are a very important part of the nation’s wealth, Wen was quoted as saying. He reiterated that his government sought safety, liquidity and good value when investing its currency holdings.

China is facing calls to let its own currency gain against the dollar.

Chinese central bank Governor Zhou Xiaochuan told Bloomberg News on Nov. 6 that “the pressure from the international community to allow yuan appreciation is not that big,” deflecting calls from Europe and Japan to let it rise.

November 07, 2009

Iran extends €300 million line of credit to Cuba

Press TV - Nov 2009 11:21:00 GMT

Iran has agreed to extend a 300-million-euro ($445 million) line of credit to Cuba to finance quick-return projects in the Latin American country.

The Memorandum of Understanding was signed between the officials of the two countries at the end of their 14th joint economic cooperation committee meeting in Havana.

Iran's minister of Industries and Mines Ali-Akbar Mehrabian says the new deal will increase the Iranian credit line to Havana from the current 200 million euros to 500 million.

Mehrabian says the line of credit will also provide Cuba with facilities for buying Iranian goods and engineering services.

He says Tehran is ready to expand its economic ties with Havana.

Cuban Minister of Transportation Jorge Luis Sierra also welcomed the agreement, saying his country attaches great importance to its ties with Iran.

Tehran and Havana began bilateral cooperation in 1981. Since that time, the two states have signed several bilateral cooperation agreements in health care, biotechnology, construction, fishing, culture, trade, agriculture, labor, social security and sports.

November 03, 2009

Population Growth and Hunger: Is there a relationship?

November 3, 2009

Are there too many people?

There is "a staggering fertility decline.

"In the 1970s only 24 countries had fertility rates of 2.1 or less, all of them rich.

"Now there are over 70 such countries, and in every continent, including Africa." (Fertility: Go forth and multiply a lot less)

People are starving?

"Experts estimate that corruption in India indirectly kills more than 8,000 people a day by diverting money from food programs into the pockets of crooked officials." (India's New Anti-Corruption Laws May Not Work )

We still have the feudal system.

Bangladeshis making cheap clothes for supermarkets are paid as little as 3p an hour.

(Stunning Photos: ZORIAH - PHOTOGRAPHER'S BLOG.)

The book World Hunger: Twelve Myths (12 Myths About Hunger.) tells us the following:

1. The world produces enough food.

But low incomes prevent many people from getting enough to eat.

The elite (A) prevent the poor from owning land (B) pay starvation wages.

2. Climate is a factor.

In America many homeless people die from the cold every winter.




Rich people in Kenya will not starve. Kenya exports food.

3. Birth rates are falling rapidly worldwide.

In countries like Nigeria, Brazil and Bolivia, lots of food is grown but many people are too poor to buy a decent meal.

The Netherlands has little land per person but manages to feed its people and export food.

Countries like Cuba and Sri lanka have managed to greatly reduce population growth rates.

They have done this by improving the lives of the poor, especially poor women.

4. Efforts to feed the hungry are not causing the environmental crisis.

Large corporations are mainly responsible for deforestation.

Most pesticides are applied to export crops.

Cuba overcame a food crisis through self-reliance and sustainable, virtually pesticide-free agriculture.


5. We must fight the prospect of a ‘New Green Revolution' based on biotechnology, which threatens to further accentuate inequality.

6. Large landowners often leave much land idle.

A World Bank study of northeast Brazil estimates that redistributing farmland into smaller holdings would raise output an astonishing 80 percent.

7. The market only works efficiently when everyone has a decent income.


8. As a result of 'Free Trade', Brazil exports soybean ­to feed Japanese and European livestock.

Export crop production squeezes out basic food production.

Since NAFTA there has been a net loss of jobs in the USDA and Mexico.

9. Poor people, such as the Zapatistas in Chiapas, seek change.

We should remove the obstacles often created by large corporations, U.S. government, World Bank and IMF policies.

10. Most U.S. aid works directly against the hungry.

US aid is used to keep repressive governments in power.

11. Low wages ­in the Third World may mean cheaper bananas, shirts, computers and fast food for Americans and Europeans.

But the system leads to greater poverty for the majority.

Corporations seek cheaper and cheaper labour.

12. ­The 'right to unlimited accumulation of wealth' ­is in conflict with 'ending hunger'.

Source

November 01, 2009

Quotes from the great depression

September 1929

"There is no cause to worry. The high tide of prosperity will continue." — Andrew W. Mellon, Secretary of the Treasury.

October 14, 1929

"Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board." — New York Times

December 5, 1929

"The Government's business is in sound condition." — Andrew W. Mellon, Secretary of the Treasury

December 28, 1929

"Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression." — Associated Press dispatch.


January 13, 1930

"Reports to the Department of Commerce indicate that business is in a satisfactory condition, Secretary Lamont said today." - News item.

January 21, 1930

"Definite signs that business and industry have turned the corner from the temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed the tide of employment had changed in the right direction." - News dispatch from Washington.

January 24, 1930

"Trade recovery now complete President told. Business survey conference reports industry has progressed by own power. No Stimulants Needed! Progress in all lines by the early spring forecast." - New York Herald Tribune.

March 8, 1930

"President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days." - Washington Dispatch.


May 1, 1930

"While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States - that is, prosperity." - President Hoover

June 29, 1930

"The worst is over without a doubt." - James J. Davis, Secretary of Labor.

August 29, 1930

"American labor may now look to the future with confidence." - James J. Davis, Secretary of Labor.

September 12, 1930

"We have hit bottom and are on the upswing." - James J. Davis, Secretary of Labor.

October 16, 1930

"Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment." - Charles M. Schwab.

October 20, 1930

"President Hoover today designated Robert W. Lamont, Secretary of Commerce, as chairman of the President's special committee on unemployment." - Washington dispatch.

October 21, 1930

"President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter." - Washington Dispatch

November 1930

"I see no reason why 1931 should not be an extremely good year." - Alfred P. Sloan, Jr., General Motors Co.

January 20, 1931

"The country is not in good condition." - Calvin Coolidge.

June 9, 1931

"The depression has ended." - Dr. Julius Klein, Assistant Secretary of Commerce.

Quotes compiled by Tim W. Wood - Cyclesman.com

October 30, 2009

Ford wants 'made in China' engraved on Volvo

Press TV
October 28, 2009 16:00:41 GMT
Volvo S60

Ford Motor Co. reportedly says that China's largest independent carmaker Geely stands the highest chance of buying its envied European project Volvo.


"Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward, while preserving its core values and the independence of the Swedish brand," said Ford's chief financial officer Lewis Booth, AFP reported on Wednesday.

The Chinese enterprise has reportedly forwarded a request to buy Volvo for USD 2.5 billion, said the US daily The Wall Street Journal.

The US giant auto manufacturer put the brand up for sale in December 2008, having flogged its Land Rover and Jaguar nameplates for USD 2.5 billion in June the same year to reportedly minimize losses. The Swedish project lost USD 231 million in the second quarter, the journal added.

"Any prospective sale would have to ensure that Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise," Booth added.

The Origins of the “Global Warming” Scare

Notsylvia Night - October 30, 2009

Did you know, that the “Human caused Global Warming” hypothesis didn´t originate in the 1980s, but actually in the 1880s? Although, until the late 1970s, the hypothesis was considered “a curiosity”, since it contradicted observed events.

Did you further know, that at first this hypothesis wasn´t publicly promoted by scientists or even environmentalists, but by a UN ambassador and a very ambitious British Lady politician?

It’s snowing in April. Ice is spreading in Antarctica. The Great Barrier Reef is as healthy as ever. And that’s just the news of the past week. Truly, it never rains but it pours – and all over our global warming alarmists.

Time’s up for this absurd scaremongering. The fears are being contradicted by the facts, and more so by the week.

- wrote Andrew Bolt in the Australian Herald Sun last April.

Then he goes on to debunk many of the main claims most “Global Warming” (renamed “Climate Change”) believers will cite in public:

-like the claim that
the earth is rapidly warming at the moment.
The facts, however, are
that according to data from Britain’s Hadley Centre, NASA’s Aqua satellite and the US National Climatic Data Centre
the fall in temperatures from just 2002 (until 2009) has already wiped out half the warming our planet experienced last century.
(See also: Climate Sensitivity Reconsidered)

-or the claim that
the polar ice is rapidly melting.
The facts, however, are
that a British Antarctic Survey, working with NASA, last (April) confirmed
ice around Antarctica has grown 100,000 sq km each decade for the past 30 years.

-or the claim, that
the oceans are warming up
The facts, however, are
according to Josh Willis, of NASA’s Jet Propulsion Laboratory who evaluated
a five years study (done using) a network of 3175 automated bathythermographs deployed in the oceans by the Argo program, a collaboration between 50 agencies from 26 countries:
“There has been a very slight cooling”…

-or the claim that
sea-levels are rising dramatically.
The facts, however, are
according to the Jason-1 satellite mission monitored by the University of Colorado, that
for almost three years, the seas have stopped rising,

-or the claim,
that world-wide devastating storms (cyclones) are getting worse.
The facts, however, are
according to Ryan Maue of Florida State University, who
recently measured the frequency, intensity and duration of all hurricanes and cyclones to compile an Accumulated Cyclone Energy Index.()
The energy index is at its lowest level for more than 30 years.

-or the absolutely ridiculous claim by World Vision boss Tim Costello that Asia was a “region, thanks to climate change, that has far more cyclones, tsunamis, droughts”.
The facts are
(besides that Tsunamis are caused by earthquakes)
according to a 2006 study by Indur Goklany, who represented the US at the Intergovernmental Panel on Climate Change:
“There is no signal in the mortality data to indicate increases in the overall frequencies or severity of extreme weather events, despite large increases in the population at risk.”

Most of the myths, which are now slowly being debunked by scientists through intensive research, have once been created by “scientists”.

The United Nations’ Intergovernmental Panel on Climate Change (IPCC) has for several decades now employed “scientists” who claim

that human activities are responsible for nearly all earth’s recorded warming during the past two centuries.

writes David R. Legates in “Breaking the “Hockey Stick”

A widely circulated image used by the IPCC dramatically depicting these temperature trends resembles a hockey stick with three distinct parts: a flat “shaft” extending from A.D. 1000 to 1900, a “blade” shooting up from A.D. 1900 to 2000, and a range of uncertainty in temperature estimates that envelops the shaft like a “sheath.”

This image was produced by Michael Mann, Ray Bradley and Malcolm Hughes

(other colleagues working with Mann on his subsequent “climate change” research-papers were Philip D. Jones and Gavin Schmidt)…..

However, five independent research groups have uncovered problems with the underlying reconstructions by Mann and his colleagues in their 1998 and 1999 work that have persisted through his most recent collaborative efforts, calling into question all three components of the “hockey stick.”

Mann and Jones indicate that globally- and hemispherically-averaged air temperatures from A.D. 200 to 1900 were nearly constant. Missing from their timeline, however, are the widely recognized Medieval Warm Period (about A.D. 800 to 1400) and the Little Ice Age (A.D. 1600 to 1850).
Most proxy records from around the globe show these climatic events, as Willie Soon, Sallie L. Baliunas and I concluded in a 2003 paper published in Energy and the Environment.

For instance:
* In such widely disparate regions as Argentina, Chile, southern Peru, southern Africa and northern China, records indicate a marked warming at the beginning of the last millennium followed by extreme cold during the middle centuries.

* Historical proxies for temperature – such as tree rings, ice cores and bore holes – in New Zealand, Australia and California also confirm widespread, significant warming and cooling trends…..

(Scientists) Stephen McIntyre and Ross McKitrick..().. contend that Mann and his colleagues in their 1998 and 1999 papers unjustifiably truncated or extrapolated trends from source data, used obsolete data, made incorrect calculations, and associated data sets with incorrect geographical locations….

More recently,(scientists) David Chapman, Marshall Bartlett and Robert Harris identified methodological problems in a 2003 Geophysical Research Letters study by Mann and G. Schmidt.

Specifically, Mann and Schmidt eliminated specific proxy records (data from bore holes) they thought were inaccurate. Chapman et al. showed that Mann and Schmidt had unjustifiably excluded the bore-hole data and concluded that their methods were “just bad science” and that they presented a “selective and inappropriate presentation” of results..….

Jan Esper, David Frank and Robert Wilson () further argued that the fatal flaw with Mann, Bradley and Hughes’ temperature reconstruction is its incorrect representation of longer-term trends.

They observed that the statistical methods used inappropriately remove trends over long time periods..

But the meteoric rise of the “Global Warming – bad science” into a global dogma and from there into the legislation of, by now, most nations on earth, did not originate with scientists at all.

Richard Courtney, founding member of the European Science and Environment Forum and technical adviser to several members of the British Parliament as well as to some British members of the European Parliament wrote the 1999 article “Global Warming: How It All Began” in which he explores the history of this particular pseudo-science.

The hypothesis of man-made global warming has existed since the 1880s. It was an obscure scientific hypothesis that burning fossil fuels would increase CO2 in the air to enhance the greenhouse effect and thus cause global warming. Before the 1980s this hypothesis was usually regarded as a curiosity because the nineteenth century calculations indicated that mean global temperature should have risen more than 1°C by 1940, and it had not.

Then, in 1979, Mrs. Margaret Thatcher (now Lady Thatcher) became Prime Minister of the UK, and she elevated the hypothesis to the status of a major international policy issue…..

Courtney goes on to explain, that in 1979 Thatcher actually did not yet have a much stature abroad or at home. In Britain her only claim to fame as an Education Secretary in the Heath administration that collapsed in 1974 was as ‘Milk Snatcher Thatcher’ due to her policy of ending distribution of milk to British school-children.

It was Britain´s Ambassador to the United Nations, Sir Crispin Tickell, who suggested she should use the issue of “Global Warming” as a means to gain national and international credibility.

He also suggested, that Thatcher with her education, a degree in chemistry, could easily win debates on scientific subjects, since most other politicians were “scientifically illiterate” .

As an aside, there are quite interesting parallels between the British “Iron Lady” of the 1980s and the German “Iron Lady” of today.

Like Thatcher, Angela Merkel was not widely known before she was put into office by her party.
(Why they chose her is rather a mystery. Merkel was actually loosing votes for her conservative Christian Democratic Party, with her pro-Iraq-war position, when practically the whole German nation was opposed to it, and the seeming inability to produce a single genuine smile reaching the eyes, which gave her a definite lack of public charisma.)

Like Thatcher, Merkel also has degree in science, a doctorate (Dr. rer. nat.) for her thesis on quantum chemistry.

Like Thatcher, Merkel is busy cutting down on workers´ rights and on the German social safety net. Merkel, the pro-corporate and anti-union German chancellor, is also a strong supporter of carbon tax legislation, both in Germany and in Europe, as well as a mandated global reduction in CO2 to combat “Global Warming”.

Margaret Thatcher went for Ambassador Tickell´s “Global Warming” to strengthen her prominence. Her Conservative Party went for it, to weaken the British coal-miners labor union. “Global Warming” would then give the nuclear industry a push, since now coal-fueled power-stations could be replaced by nuclear power-stations for “environmental” reasons. Britain´s nuclear industry urgently needed that kind of a push since the Three Mile Island accident had damaged public confidence in nuclear technology.

The other rationale for why nuclear power should be used instead of coal, the alleged cost benefit, was being destroyed, when privatization of the Britain’s electricity supply industry exposed that British nuclear power was produced at four times the cost of electricity produced in coal-fueled power plants.

And, writes Courtney,

the Conservative Party wanted a large UK nuclear power industry for another reason. That industry’s large nuclear processing facilities were required for the UK’s nuclear weapons programme and the opposition Labour Party was then opposing the Conservative Party’s plans to upgrade the UK’s nuclear deterrent with Trident missiles and submarines.

Subsequently the “Global Warming” issue was promoted by large government grants and funds. Scientists fell in line through peer pressure and for fear of losing their research funding and not because they actually were convinced by the argument.

In 1992 Greenpeace International conducted a survey of the world’s 400 leading climatologists. Greenpeace had hoped to publicize the results of that survey in the run-up to the Rio summit, but when they completed the survey, they gave very little publicity to its results. In response to the survey, only 15 climatologists were willing to say they believed in global warming, although all climatologists rely on it for their employment.

Though not all scientists sold out their integrity for funds:

Following the Leipzig Climate Conference in November 1995,

the Leipzig Declaration disputes the IPCC assertions about man-made global warming. It was drafted and has been signed by over 1,500 scientists from around the world.

Today the “Global Warming” and “Climate Protection” issue is being sold to the public as being a liberal or even a left-wing concern. Forgotten is it´s very much right-wing, anti-union corporate and militarist origin.

Green and environmental minded people also seem to have forgotten the connection between “Global Warming” and the nuclear power-industry, and anti-war activists never seem to register, that “Global Warming” was actually used to create more weapons of mass-destruction.

The fact that the “Global Warming” or “Climate Change” issue isn´t really about environmental protection is clearly shown, for instance, by the US Climate Change Bill, promoted by the new US Obama Administration and his “progressive” Democratic Party.

Atheo News writes about the bill in Dr. Chu’s Energy Bait and Switch

The congressional mandates “are very weak and really will not require any additional renewables beyond what states already are doing,” says Mark Sinclair of Clean Energy States Alliance. “It will be meaningless. It’s just a gesture.”

Marchant Wentworth of the Union of Concerned Scientists came to a similar conclusion, seeing that absolute requirements for renewables, after allowances, would be as low as 8 percent of total electric power generation for each utility. This is hardly a challenge for most utilities in a nation that in 2006 generated almost 10 percent of its electricity from renewable sources, including hydro power.

In other words, the proposed renewable sources requirements amount to little more than shallow symbolism. The current public subsidies and underwriting for nuclear power already make the nuclear choice more economically viable for utilities to maximize return on utility investment. The legislation is, in fact, a thinly veiled mandate for building new nuclear power plants, or to increase output from existing ones.

Republicans are offering a different plan that simply calls for building 100 new nuclear plants within the next twenty years.

These plans mirror similar policies across the Atlantic where the government in Britain is rushing a new generation of nuclear power plants, with a goal to begin construction within four years. Both ‘energy independence’ and climate change were cited as rationales by policy makers there as well.

Obama’s Secretary of Energy, Dr. Steven Chu, from Lawrence Berkeley National Laboratory, is a staunch advocate of nuclear power, citing it as “essential” due to global warming while at the same time ignoring the carbon emissions of the “nuclear cycle” that are produced from the mining, milling, enrichment, fuel fabrication and disposal of spent fuel. The new appointee described nuclear power as “carbon free” at his confirmation in January.

While the “Global Warming” or “Climate Change” skeptics (sometimes called “deniers”) are often accused of being paid assets of the oil industry, the economical and political advantages of the “Global Warming” pseudo-science for the nuclear power industry cannot be denied any longer.

There is, however, an even stronger and even less publicly known connection of the “Global Warmers” with another industry, as Aletho News reports:

The new Democratic climate change bill , introduced in the Senate by Barbara Boxer and John Kerry, contains more advantages for nuclear power than even the legislation which passed in the House of Representatives last June. Included are waste management, financing and loan guarantee arrangements, regulatory risk insurance, as well as R&D and training programs. Joseph Lieberman is understood to be preparing the fine print for the bill which is presently “short on details”…..

As with other major pieces of legislation under consideration by the current Congress, the financial industry is a central actor, venture capitalists “are ready to pour multibillions of dollars into clean energy” if Congress passes “some kind of bill that talks about energy independence and climate change,” Boxer said.

How deep the connection between the “Climate Change” movement and the financial industry actually is, and how important the matter is for the elite of this industry, and how this even is connected to the issue of Iran´s civilian nuclear energy program, will be the subject of part two of this report.


Part Two:

Where "Global Warming" and "Peak Oil" meet

October 29, 2009

Latin America's economic rebels

Ecuador and Bolivia are achieving remarkable growth because they reject conventional economic wisdom

By Mark Weisbrot - The Guardian - October 27, 2009

Among the conventional wisdom that we hear everyday in the business press is that developing countries should bend over backwards to create a friendly climate for foreign corporations, follow orthodox (neoliberal) macroeconomic policy advice, and strive to achieve an investment-grade sovereign credit rating so as to attract more foreign capital.

Guess which country is expected to have the fastest economic growth in the Americas this year? Bolivia. The country’s first indigenous president, Evo Morales, was elected in 2005 and took office in January 2006. Bolivia, the poorest country in South America, had been operating under IMF agreements for 20 consecutive years, and had a per capita income lower than it had been 27 years earlier. Evo sent the IMF packing just three months after he took office, and then moved to re-nationalize the hydrocarbons industry (mostly natural gas). Needless to say this did not sit well with the international corporate community. Nor did Bolivia’s decision in May 2007 to withdraw from the World Bank’s international arbitration panel (ICSID), which had a tendency to settle disputes in favor of international corporations and against governments.

But Bolivia’s re-nationalization and increased royalties on hydrocarbons has given the government billions of dollars of additional revenue (Bolivia’s entire GDP is only about $16.6 billion, with a population of 10 million people). These revenues have been useful for a government that wants to promote development, and especially to maintain growth during the downturn. Public investment increased from 6.3 percent of GDP in 2005 to 10.5 percent for 2009. Bolivia’s growth through the current world downturn is even more remarkable in that it was hit hard by falling prices for its most important exports – natural gas and minerals, and also by a loss of important export preferences in the U.S. market. The Bush administration cut off Bolivia’s trade preferences that were granted under the ATPDEA (Andean Trade Promotion and Drug Eradication Act), allegedly to punish Bolivia for insufficient co-operation in the “war on drugs.” In reality, it was more complicated: Bolivia expelled the U.S. Ambassador because of evidence that the U.S. government was supporting the opposition to the Morales government, and the ATPDA revocation followed soon thereafter. In any case, the Obama administration has so far not changed the Bush administration’s policies toward Bolivia; but Bolivia has proven that it can do quite well with or without Washington’s cooperation.

Ecuador’s leftist president, Rafael Correa, is an economist who, well before he was elected in December 2006, had understood and written about the limitations of neoliberal economic dogma. He took office in 2007, and established an international tribunal to examine the legitimacy of the country’s debt. In November 2008 the commission found that part of the debt was not legally contracted, and in December Correa announced that the government would default on roughly $3.2 billion of its international debt. He was vilified in the business press, but the default was successful. Ecuador cleared a third of its foreign debt off its books by defaulting and then buying the debt back at about 35 cents on the dollar. The country’s international credit rating remains low, but no lower than it was before Correa’s election - and it was even raised a notch after buyback was completed.

The Correa government also incurred foreign investors’ wrath by renegotiating its deals with foreign oil companies to capture a larger share of revenue as oil prices rose. And Correa has bucked pressure from Chevron and its powerful allies in Washington to drop his support of a lawsuit against the company for massive pollution of ground waters, with damages that could exceed $27 billion.

How has Ecuador done? Growth has averaged a healthy 4.5 percent over Correa’s first two years. And the government has made sure that it has trickled down: health care spending as a percent of GDP has doubled, and social spending in general has expanded considerably from 5.4 percent to 8.3 percent of GDP in two years. This includes a doubling of the cash transfer program to poor households, a $474 million increase in spending for housing, and other programs for low-income families.

Ecuador was hit hard by a 77 percent drop in the price of its oil exports from June 2008 to February 2009, as well as a decline in remittances from abroad. Nonetheless it has weathered the storm pretty well. Other unorthodox policies, in addition to the debt default, have helped Ecuador to stimulate its economy without running too low on reserves. Ecuador’s currency is the U.S. dollar, so that rules out using exchange rate policy and most monetary policy for counter-cyclical efforts in a recession – a significant handicap. Instead Ecuador was able to cut deals with China for a billion-dollar advance payment for oil and another one billion dollar loan. The government also has begun requiring Ecuadorian banks to repatriate some of their reserves held abroad, expected to bring back another $1.2 billion, and has started repatriating $2.5 billion in Central Bank reserves held abroad in order to finance another large stimulus package. Ecuador’s growth will probably come in at about 1 percent this year, which is pretty good relative to most of the hemisphere – e.g. Mexico, at the other end of the spectrum, is projected to have a 7.5 percent decline in GDP for 2009.

The standard reporting and even quasi-academic analysis of Bolivia and Ecuador are that they are victims of populist, socialist, “anti-American” governments – aligned with Venezuela’s Hugo Chavez and Cuba, of course – and on the road to ruin. To be sure, both countries have many challenges ahead, the most important of which will be to implement economic strategies that can diversify and develop their economies over the long run. But they have made a good start so far, by giving the conventional wisdom of the economic and foreign policy establishment – in Washington and Europe -- the respect that it has earned.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He received his Ph.D. in economics from the University of Michigan. He is co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He is also president of Just Foreign Policy.

October 28, 2009

Iran, Turkey seek to triple trade by 2014

Press TV - October 28, 2009 01:02:51 GMT

Turkish Prime Minister Recep Tayyip Erdogan (L)
and Iranian President Mahmoud Ahmadinejad


Iranian First Vice President Mohammad-Reza Rahimi says Iran and Turkey have agreed to increase the level of their annual trade exchanges to $30 billion.

"Following a proposal from Iran, the level of trade between Iran and Turkey will increase to $30 billion within the coming 4 to 5 years," IRNA quoted Rahimi as saying on Tuesday.

"The level of trade ties between Iran and Turkey stands at about $11 billion, which is not satisfactory," he added.

"We should conduct some of our trade in Iran's rial and the Turkish lira through establishing joint banks," Iran's vice president stated.

Turkish Prime Minister Recep Tayyip Erdogan arrived in Tehran on Monday and was officially welcomed by Rahimi in a ceremony on Tuesday.

October 27, 2009

Sugar: The Bitter Truth

The processed foods industry knew that their products would cause an epidemic of obesity among their customers, but they also realized that their bottom line would see a huge boost. The FDA and USDA provided all the cover needed and then some by pointing the finger in the wrong direction. The "low fat" foods fad was a complete hoax.

UCtelevision

Robert H. Lustig, MD, UCSF Professor of Pediatrics in the Division of Endocrinology, explores the damage caused by sugary foods. He argues that fructose (too much) and fiber (not enough) appear to be cornerstones of the obesity epidemic through their effects on insulin. Series: UCSF Mini Medical School for the Public.

Power Plays in Florida

Rate Increases, Nukes and Deception

By ALAN FARAGO - October 27, 2009

Today President Obama takes the bully pulpit for a new energy future to a rural, conservative town in Florida; Arcadia where Florida Power and Light is building the largest solar energy facility in the nation. But in its home state, Florida Power and Light in mired in controversy unlikely to be publicly noted by the president. However politically deft today's visit may be, President Obama should reflect that Shakespeare used Arcadia in his dramas: it was place where no one ages and nothing decays, where time stands still; in other words perfectly suited for humankind's ambient atmosphere-- deception.

The state's most powerful electric utility has been fending off a raft of bad news lately: its quest for a 30 percent base rate increase is opposed by Governor Charlie Crist and recession-weary Floridians. In the meantime, an ugly episode boiled up: FPL sought to unduly influence the Public Service Commission by allowing its lobbyists to converse with agency staff through untraceable Blackberry messaging.

Within governmental schematics regulating Florida's utilities, FPL has been one of the power players that keeps conservation of energy as a low priority in comparison to many other states. Yes, Florida Power and Light is one of the nation's biggest producers of electricity from wind and solar, but in Florida the corporation is accustomed to getting its own way and has throttled progressive regulation to maximize conservation. Then, there are the local problems.

The main part of public opposition to FPL turns on permitting for new power plants; near the Everglades, the corporation sought to buy off local county commissions and suppress public opposition to a new coal-fired plant. That plan sunk of its own weight. Today, the public is increasingly restive against plans for two new nuclear reactors on the edge of Biscayne National Park in South Florida.

Turkey Point reactor

Its existing reactors at Turkey Point in Homestead, Florida were highly controversial when they were built nearly forty years ago. The corporation was forced through extensive civic protest and litigation to build miles and miles of cooling canals instead of ejecting cooling water directly into Biscayne National Park. Today, those cooling canals are not performing as planned and permitted. With nuclear in the ground, there is no turning back the clock on environmental damage.

Public concerns about nuclear safety at Turkey Point have been amplified by bad news on several fronts: salt water intrusion toward drinking water wellfields, and FPL's ham-fisted attempts to obstruct the use by state agencies to monitor that intrusion through a radioactive isotope, tritium, commonly used as a chemical marker to trace the movement of water. Long-term questions about radioactivity--such as those raised by the Tooth Fairy Project that measured background levels of Strontium 90 in infant's teeth in South Florida-- raise doubts that the state is adequately monitoring public health. Serious breaches in plant safety at Turkey Point and questions about upper level management at FPL caused the Turkey Point plant manager to resign last summer.

Additionally, there are environmental and public health concerns about the new FPL reactors; from controversial permitting at the local level, that eases the way for FPL over the objections of residents to use of recycled municipal wastewater as the primary coolant for the new units, new high voltage overhead transmission lines through heavily populated areas, threats of additional rock mining to Biscayne Bay wetlands in order to elevate a multi- hundred acre site dozens of feet above sea level, new roadway infrastructure through those same wetlands--protected by environmental laws, and the indignity that ratepayers are already paying for permitting costs related to the new reactors as a separate add-on charge approved by the state.

In many ways, the worst possible location for new nuclear power in the United States is at Turkey Point; at sea level and surrounded by fragile wetlands protected by federal law and national parks, including the Everglades-- subject of a multi-billion dollar restoration project embraced by a strong bipartisan majority according to recent polling by The Everglades Foundation. One senses that the reasoning behind FPL's aggressive tactics in South Florida is that if new nuclear can be permitted at Turkey Point, it can be permitted anywhere.

But no where will that cynicism be on display today; in Arcadia, dancing around FPL's maypole, it is all about delight.

Alan Farago lives in south Florida. He can be reached at: afarago@bellsouth.net

October 26, 2009

Rainforest treaty 'fatally flawed'


Climate summit loophole lets palm oil producers cull vital wilderness

By Michael McCarthy
October 26, 2009

A vital safeguard to protect the world's rainforests from being cut down has been dropped from a global deforestation treaty due to be signed at the climate summit in Copenhagen in December.

Under proposals due to be ratified at the summit, countries which cut down rainforests and convert them to plantations of trees such as oil palms would still be able to classify the result as forest and could receive millions of dollars meant for preserving them. An earlier version of the text ruled out such a conversion but has been deleted, and the EU delegation – headed by Britain – has blocked its reinsertion.

Environmentalists say plantations are in no way a substitute for the lost natural forest in terms of wildlife, water production or, crucially, as a store of the carbon dioxide which is emitted into the atmosphere when forests are destroyed and intensifies climate change.

Now they are calling on Britain to take a lead in restoring the anti-plantations safeguard at the final negotiating session in a week's time, saying that otherwise the agreement – which seeks to halve global deforestation rates by 2020 – will be fatally flawed.

"It is a priority for the safeguard to be reinserted, or otherwise we will have a situation where countries are paid for converting their natural forests into palm plantations," said Emily Brickell, the climate and forests officer for the Worldwide Fund for Nature (WWF-UK).

"If this is not changed, the agreement will be part of the problem, not part of the solution, because it will allow things to carry on as they are now and we will continue to see the loss of natural rainforest," added Simon Counsell, the executive director of the Rainforest Foundation.

The key piece of text which was lost said that parties to the treaty "shall protect biological diversity, including safeguards against the conversion of natural forests to forest plantations".

It was deleted in closed negotiations but some observers think it was done at the instigation of African rainforest countries, such as the Democratic Republic of the Congo and Cameroon, while other states including Indonesia and Malaysia are believed to have supported it. Both are heavily involved in the oil palm industry, which is a major driver of deforestation because palm oil is used to make biofuels.

A move to reinsert the clause was blocked at the last talks in Bangkok by British officials, who feared that the gains of the week's negotiations (the text was reduced from 19 pages to nine) would be lost if the text were reopened. Green campaigners accept that this was a matter of procedure but think it will have been a disastrously bad call if officials do not move swiftly to replace the lost text at the final negotiations in Barcelona, beginning a week today.

"The EU has to make sure the wording goes back in," said Charlie Kronik, of Greenpeace. "It's absolutely essential, otherwise it leaves open the possibility of removing intact, high-value forests and replacing them with oil palms as party of the treaty."

The Department of Energy and Climate Change said: "The UK is pushing hard for the strongest possible deal to stop deforestation and that includes wanting specific language in the UN text on the protection of natural forests."

The proposed forest pact, which could be one of the most positive outcomes of the Copenhagen summit, addresses the fact that deforestation, mostly in Central and South America, Africa and Asia, now produces nearly 20 per cent of annual carbon dioxide (CO2) emissions – more than from all the world's transport. Many policymakers consider that the key goal of limiting global warming to no more than C above the pre-industrial level will be unattainable unless the problem of deforestation emissions is tackled. The issue, which has become known in official jargon as Redd (reducing emissions from deforestation in developing countries), now has a section to itself in the proposed Copenhagen accord.

Full article

Are You Ready for the Next Crisis?

By PAUL CRAIG ROBERTS - October 26, 2009

Evidence that the US is a failed state is piling up faster than I can record it.

One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.

Another conclusive hallmark is rising income inequality as the insiders manipulate economic policy for their enrichment at the expense of everyone else.

Income inequality in the US is now the most extreme of all countries. The 2008 OECD report, “Income Distribution and Poverty in OECD Countries,” concludes that the US is the country with the highest inequality and poverty rate across the OECD and that since 2000 nowhere has there been such a stark rise in income inequality as in the US. The OECD finds that in the US the distribution of wealth is even more unequal than the distribution of income.

On October 21, 2009, Business Week highlighted a new report from the United Nations Development Program concluded that the US ranked third among states with the worst income inequality. As number one and number two, Hong Kong and Singapore, are both essentially city states, not countries, the US actually has the shame of being the country with the most inequality in the distribution of income.

The stark increase in US income inequality in the 21st century coincides with the offshoring of US jobs, which enriched executives with “performance bonuses” while impoverishing the middle class, and with the rapid rise of unregulated OTC derivatives, which enriched Wall Street and the financial sector at the expense of everyone else.

Millions of Americans have lost their homes and half of their retirement savings while being loaded up with government debt to bail out the banksters who created the derivative crisis.

Frontline’s October 21 broadcast, “The Warning,” documents how Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Securities and Exchange Commission Chairman Arthur Levitt blocked Brooksley Born, head of the Commodity Futures Trading Commission, from performing her statutory duties and regulating OTC derivatives.

After the worst crisis in US financial history struck, just as Brooksley Born said it would, a disgraced Alan Greenspan was summoned out of retirement to explain to Congress his unequivocal assurances that no regulation of derivatives was necessary. Greenspan had even told Congress that regulation of derivatives would be harmful. A pathetic Greenspan had to admit that the free market ideology on which he had relied turned out to have a flaw.

Greenspan may have bet our country on his free market ideology, but does anyone believe that Rubin and Summers were doing anything other than protecting the enormous fraud-based profits that derivatives were bringing Wall Street? As Brooksley Born stressed, OTC derivatives are a “dark market.” There is no transparency. Regulators have no information on them and neither do purchasers.

Even after Long Term Capital Management blew up in 1998 and had to be bailed out, Greenspan, Rubin, and Summers stuck to their guns. Greenspan, Rubin and Summers, and a roped-in gullible Arthur Levitt who now regrets that he was the banksters’ dupe, succeeded in manipulating a totally ignorant Congress into blocking the CFTC from doing its mandated job. Brooksley Born, prevented by the public’s elected representatives from protecting the public, resigned. Wall Street money simply shoved facts and honest regulators aside, guaranteeing government inaction and the financial crisis that hit in 2008 and continues to plague our economy today.

The financial insiders running the Treasury, White House, and Federal Reserve shifted to taxpayers the cost of the catastrophe that they had created. When the crisis hit, Henry Paulson, appointed by President Bush as Rubin’s replacement as the Goldman Sachs representative running the US Treasury, hyped fear to obtain from “our” representatives in Congress with no questions asked hundreds of billions of taxpayers’ dollars (TARP money) to bail out Goldman Sachs and the other malefactors of unregulated derivatives.

When Goldman Sachs recently announced that it was paying massive six and seven figure bonuses to every employee, public outrage erupted. In defense of banksters, saved with the public’s money, paying themselves bonuses in excess of most people’s life-time earnings, Lord Griffiths, Vice Chairman of Goldman Sachs International, said that the public must learn to “tolerate the inequality as a way to achieve greater prosperity for all.”

In other words, “Let them eat cake.”

According to the UN report cited above, Great Britain has the 7th most unequal income distribution in the world. After the Goldman Sachs bonuses, the British will move up in distinction, perhaps rivaling Israel for the fourth spot in the hierarchy.

Despite the total insanity of unregulated derivatives, the high level of public anger, and Greenspan’s confession to Congress, still nothing has been done to regulate derivatives. One of Rubin’s Assistant Treasury Secretaries, Gary Gensler, has replaced Brooksley Born as head of the CFTC. Larry Summers is the head of President Obama’s National Economic Council. Former Federal Reserve official Timothy Geithner, a Paulson protege, runs the Obama Treasury. A Goldman Sachs vice president, Adam Storch, has been appointed the chief operating officer of the Securities and Exchange Commission. The Banksters are still in charge.

Is there another country in which in full public view so few so blatantly use government for the enrichment of private interests, with a coterie of “free market” economists available to justify plunder on the grounds that “the market knows best”? A narco-state is bad enough. The US surpasses this horror with its financo-state.

As Brooksley Born says, if nothing is done “it’ll happen again.”

But nothing can be done. The crooks have the government.

Note: The OECD report shows that despite the Reagan tax rate reduction, the rate of increase in US income inequality declined during the Reagan years. During the mid-1990s the Gini coefficient (the measure of income inequality) actually fell. Beginning in 2000 with the New Economy (essentially financial fraud and offshoring of US jobs), the Gini coefficient shot up sharply.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com

What does China's ascendance mean for Palestine?

Sarah Irving, The Electronic Intifada, 26 October 2009

It is not likely that China will offer an alternative to US hegemony regarding Palestine anytime soon. (MaanImages)

George Habash, the late leader of the Popular Front for the Liberation of Palestine (PFLP), called China Palestine's "best friend." Indeed, he was on an official PFLP visit to China when the conflict between Palestinian forces and the Hashemite Kingdom erupted in Jordan in 1970, the events later known as "Black September."

Habash had good reason to appreciate China's friendship at the time. According to Dr. Yukiko Miyagi of the UK-based Centre for the Advanced Study of the Arab World (CASAW), one characteristic of the People's Republic's policy toward the Arab states and political movements in the 1960s was high-profile support for the Palestinian liberation movement.

"It was a matter of both ideology and identity," says Dr. Miyagi. The newly-formed Communist People's Republic of China identified with the Palestinian guerrillas and provided them with military aid and training, seeing them as fellow victims of capitalism and imperialism, as well as hoping to steer the Palestinian resistance down a socialist path. China recognized the Palestinian people as a nation in 1964 and was the first state outside the Arab world to give diplomatic recognition to the Palestine Liberation Organization (PLO). It also refused to grant the same recognition to the State of Israel.

However, according to Dr. Miyagi, China's policy was not entirely altruistic. Even in the revolutionary heat of the 1960s and early 1970s, its support for Palestinian independence was also motivated by its desire to please other Arab countries, in the hope that they would recognize the People's Republic, rather than Taiwan, as the legitimate Chinese state. As Arab countries outnumbered Israel, they were considered more valuable as allies on the world stage.

Oil imports and peace processes

In the wake of the "Cultural Revolution" and the rapprochement with the US, China's political and economic strategies shifted in the 1970s. Its support for the Palestinian liberation movement also changed and it began to adopt a more "moderate" approach. Yet, it still refused to grant Israel diplomatic recognition, and in 1978 voted in favor of a United Nations resolution which classed Zionism as a form of racism. The Chinese leadership also criticized the UN's approach to Palestine, claiming that it unfairly equated the Israeli aggressor and the Palestinian victim. However, this didn't stop it from opening up informal and secretive contacts with Israel.

This rather ambivalent position has perhaps characterized China's attitude toward the Palestinian people's rights ever since. While China maintains support for Palestinian claims to self-determination it has also become a major trading partner with Israel. According to Dr. Miyagi, by the mid-1980s, Israel was the main supplier of high technology, including agricultural equipment and military technology, to China. In addition, China's geopolitical discourse also started to include positions like "Israel's right to security." Yet, at the same time, it called the 1982 massacres at Sabra and Shatila camps in Beirut "Hitlerism" and supplied both aid and arms to Palestinian forces in Lebanon. Two years later, China gave the PLO's delegation to the Beijing embassy status and recognized Yasser Arafat as President, rather than the more commonly used title of Chairman of the PLO.

China as a player in Middle East policy?

China's public support for the Palestinian cause hit a new low in the early 1990s. After the Tiananmen Square massacre in 1989 it became an international pariah in political terms, but it remained a major exporter of consumer goods and importer of oil from the Persian Gulf countries. It abstained from vetoing the UN-authorized and US-led first Gulf War. By 1992, Beijing established diplomatic ties with Israel, without Israel having met any of the preconditions which China had originally demanded. Official visits to and by Beijing were balanced between Palestine and Israel, and China abstained from, rather than supported, a UN motion similar to that of 1978 condemning Zionism as racism. Moreover, Israeli settlements in the West Bank and Gaza were criticized as "harmful to the peace process," but the PLO was told that it should "respect Israeli security."

Since the beginning of the second Palestinian intifada in 2000, and with China's growing international status, it has become more proactive on the issue of Palestine. The People's Republic's first Middle East peace envoy toured both Palestine and Israel in 2002, and Beijing has called for Israel to "unconditionally implement" UN resolutions for it to withdraw from occupied areas, describing settlements as "a violation of Israel's obligations under international law." In January 2009, China responded to Israel's winter invasion of Gaza with its "5 Points for an Immediate Ceasefire." It has expressed support for the Hamas government, and hosted Hamas' foreign minister in Beijing in June 2006. However, it also supported the Annapolis conference which excluded Hamas.

China's official press has also highlighted its aid to Palestine, with official press agencies calling its economic and humanitarian aid "an important expression of China's support for the Middle East peace process." Such statements, however, have often been disingenuous about the scale of China's donations. According to Dr. Miyagi, it gave just $11 million of the $7.4 billion pledged by the international community at the 2007 International Donors' Conference for Palestine.

To expect larger aid contributions -- or more action -- likely misinterprets China's intentions as a global power. Although China's increasing international stature has been the subject of considerable speculation, specialists on its foreign policy insist that it has few ambitions towards the kind of global interventionist role that the US has played as a superpower. While China has massive economic clout as a state, the everyday wealth of its people is still just a fraction of that of most Americans or Europeans. Rather, according to Dr. Miyagi, China's priority has become the maintenance of a stable world order which will supply it with uninterrupted raw materials and energy, and continue to buy its products.

If there are actors hoping that China might offer an alternative to US hegemony and pushing the international community into a more just position on Palestine, it is not likely to happen soon -- if ever. As Dr. Miyagi points out, Palestine occupies a symbolic position for both China as a former revolutionary state and for China's Arab economic partners. However, Palestine itself has no oil and only a tiny consumer market to offer. While China may provide balance to the US's constant pro-Israel positions at the UN and other international arenas, the days of its unequivocal support for Palestinian rights are, it seems, long gone.

Sarah Irving is a freelance writer from Manchester, UK. She worked with the International Solidarity Movement in the West Bank in 2001-02 and with Olive Co-op, promoting fair trade Palestinian products and solidarity visits, in 2004-06. She now writes full-time on a range of issues, including Palestine and the wider Middle East.

An exclusively Jewish Investment Boom

October 26, 2009

Israel has been the best performing residential real estate property market in 2009. Exclusively Jewish developments have been fueled by Israeli government tax breaks and ultra-low interest rates set by the Bank of Israel.

The Jerusalem Post reports (emphasis mine):

New legislation passed by the Knesset may cause the pace of construction to accelerate, pushing down property prices, Construction and Housing Minister Ariel Attias said October 8. The Knesset on August 3 approved a law proposed by Prime Minister Binyamin Netanyahu to free up publicly owned land for private development and make it easier and cheaper to buy and build homes.

Mortgage rates are about 2%, according to Mortgage Israel, the country's largest home-loan brokerage. The average rate for the past five years was about 5 percent. [...]

"A bubble began to emerge this year, fueled by the Bank of Israel," said Shlomo Maoz, chief economist at Excellence Investments. "The bank is now beginning to raise rates again to fight inflation."

Ayelet Nir, chief economist at IBI said "though mortgages became cheap, credit was never widely available in Israel." [...]

Some neighborhoods in Jerusalem, Tel Aviv and Netanya are also shielded from a collapse by constant demand from Jews from the US, France and the UK, said Bernard Raskin, regional director of Re/Max Israel, the country's largest property broker.

Groups of private investors in Tel Aviv have replaced contractors and real-estate companies as the biggest purchasers of land in Israel this year, according to the Israel Lands Administration. The companies are given tax breaks by the government that allow them to pay more, inflating property prices, Maoz said.


A closer examination of the Israeli mortgage industry reveals Western financial industry connections. Shunpiking Magazine describes the process:

Political economy of recent Zionist colonisation and war

* The alternative compromise was to replace direct economic foreign aid with loan guarantees, enabling Israel to lower its borrowing costs by using the US guarantee to obtain a favourable rate of interest in the finance capital markets. For example, the Trans-Israel Highway [2] is a multinational consortium of consortia: in Canada - Derech Eretz Highways (1997) Ltd. comprises Canadian Highways International Corporation (CHIC), builder of the toll turnpikes in Ontario and Nova Scotia, control of which was acquired by the U.S. financial conglomerate CIT Group in 1999; in Israel - Africa Israel Investment Ltd. of Tel Aviv and 36 other firms; in France - Société Générale d'Entreprises of Paris; and in the United States - Hughes Transportation Management Systems and Raytheon Corp., the weapons manufacturer which supplied the billion-dollar, dysfunctional Patriot missile system to Israel. The para-military highway project itself was constructed from a US$3-billion contract, with 80 per cent of any potential losses guaranteed ...by the Israeli government. In a word: the mutual fleecing of each lesser predator by a bigger predator-partner goes 'round and around and it comes out here... in these long-term loan guarantees floated on international financial markets. For their part, business interests based in Israel acquire access to capital by means of free-trade agreements and most-favoured-nation status annexing their market to the financial houses of Wall Street [United States], London and Frankfurt [the European Union] and Bay Street [Canada].

* The first cries of pain in the business press of Israel after Hamas' election to office in the Palestine Legislative Council elections of 25 January 2006 were over the need to get the US to extend the loan guarantees ... even though only about half the facility had been used up [the data in the Ynet article below discloses that US$4.9 of US$9.0 billion has been used]. The electoral verdict created great anxiety in Tel Aviv among those sections of Israeli business and industry living off the avails of the loan guarantees. Hamas, the Islamic Resistance Movement, which won the majority and the democratic right to form the government, was not (and still is not) committed to recognising the Zionist colonies of the West Bank as Israeli territory. This non-recognition gravely jeopardises the entire house-of-cards just elaborated.

Summary:
a. Israel borrows in the money market at a highly preferred rate.

b. The Zionist magnates of the construction and real estate industry - a sector through which the Sharon family enriched itself, and intimately linked with the Jewish National Fund which holds virtually 100 per cent of the land "in trust" (and its parent, the World Zionist Council, composed of Anglo-American finance capitalists) - then borrow from the Israeli government at a slightly higher rate, but still below the mortgage market rate within Israel.

c. Finally, the numerous settlers borrow from the tiny handful of banks and-or fat-cat settlement developers at the prevailing mortgage market rate.

China Should Raise Euro, Yen Holdings, News Reports

Oct. 26 (Bloomberg) -- China should increase the representation of the yen and the euro in its foreign-exchange reserves, the Financial News, a newspaper affiliated with China’s central bank, reported today.

The U.S. dollar should retain the largest weighting in the reserves, albeit a smaller proportion than at present, according to an article by Zhou Hai carried by the Beijing-based paper. The holdings of euro and yen should be increased to reflect China’s growing trade with the European Union and Japan, the report said, without providing Zhou Hai’s job description.

The government is working to maintain an “appropriate” size of currency reserves to reduce pressure on inflation and the yuan’s appreciation, the author wrote in the article. China should improve the yuan’s exchange-rate mechanism and use monetary policy tools “reasonably” to lessen the need for “passive” purchases of foreign currencies, Zhou wrote.

China doesn’t need to include the Hong Kong dollar in its reserves owing to the latter’s peg to the U.S. currency, according to the report.

To contact Bloomberg News staff for this story: Belinda Cao in Beijing at +86-10-6535-2316 or lcao4@bloomberg.net

S&P 500 Overvalued by 40%, Set to Fall, Smithers Says


By Patrick Rial

Oct. 26 (Bloomberg) -- The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers.

Declines are also likely because banks will need to sell more shares to raise capital and restore their financial health, the economist and president of research firm Smithers & Co. said in an Oct. 23 interview at Bloomberg’s Tokyo office. A 40 percent tumble from the S&P 500’s price at the end of last week of 1,079.60 would take the gauge to 647.76, below its March low.

“Markets are very vulnerable to an end of quantitative easing,” said Smithers, 72, who recommended avoiding stocks in 2000 just as the U.S. benchmark entered a two-year bear market. “Central banks, they’ve got to stop some time and if that happens everything will come down.”

Central banks from the Federal Reserve to the Bank of England last year embarked on unprecedented measures to flood credit markets with cash in order to rescue the global financial system from the worst crisis since the Great Depression.

Those purchases may be nearing an end. The Fed’s emergency liquidity programs including the Term Auction Facility and commercial paper purchases have shrunk as the central bank completes the scheduled purchases of housing debt and Treasuries. Bank of England policy makers voted unanimously at their latest meeting to leave the asset purchase program unchanged, rather than move to increase it, minutes showed.

Asset Prices

Asset purchases have doubled the size of the Fed’s balance sheet to $2.1 trillion since the start of the current financial crisis. The Bank of England has spent 175 billion pounds ($286 billion) over the last seven months to rescue the economy.

The boost to asset prices globally helped send the S&P 500 up by 60 percent from its 12-year low on March 9. Crude-oil prices have more than doubled from last year’s bottom in December, reaching as high as $82 a barrel. This month, a Hong Kong apartment sold for a record price-per-square foot.

“Quantitative easing has set off another sharp, and so far containable asset bubble,” Smithers said. “But if it gets too high and starts to come down then we’ll go straight back” into recession.

The economist said that he stopped buying equities in the 1990s because of expensive valuations and began purchasing them again only for a brief period during the lows of the current crisis.

Tobin’s Q Ratio

Smithers, along with fellow economist Stephen Wright, argued that U.S. equities were grossly overvalued in a March 2000 book the two co-authored entitled “Valuing Wall Street.” The S&P 500 Index plunged 49 percent over 2 1/2 years from a record high reached that month.

He based his prediction in the book on Tobin’s Q, an indicator of whether the market is overvaluing or undervaluing company assets compared with their replacement cost. He uses both the Q ratio, as well as a cyclically adjusted price-to- earnings ratio compiled by Yale University’s Robert Shiller, for his estimate that U.S. shares are 40 percent overvalued.

In his latest book published in July, “Wall Street Revalued,” Smithers argues central banks need to police asset prices such as equities, real estate and debt in order to prevent the bubble and crash cycle seen in recent years.

Imperfectly Efficient

In the book he proposes a successor to the efficient markets hypothesis, naming it the imperfectly efficient market hypothesis. Smithers, who worked for 27 years at S.G. Warburg & Co. where he ran the investment management business, contends that asset prices rotate around a fair value level that can be objectively measured, whereas efficient market theorists postulate assets are always valued at the correct price and therefore need no regulation by authorities.

Central bankers may be catching on. Federal Reserve Chairman Ben S. Bernanke said on Oct. 19 asset bubbles present a challenge that Asian governments will have to deal with in the future. That contrasts with his 2002 statement that monetary policy can’t be “directed finely enough to guide asset prices.”

Not all equity markets are as overpriced as the U.S., Smithers said. Japan may be the world’s cheapest major market though he doesn’t forecast short-term gains from betting on the nation’s stocks.

Cheap Japan?

Profit margins at Japanese companies are likely to improve as companies invest less, lowering depreciation costs, he said. Depreciation eats up about two-thirds of earnings in Japan, compared with less than half for U.S. corporations, according to Smithers. Firms plan to cut capital spending 10.8 percent this year, the Bank of Japan’s quarterly Tankan survey released this month showed.

“It’s quite likely that Japan is the only significant market in the world that is not seriously overvalued,” he said. “When investment comes down, depreciation comes down.”

The economist also said banks such as Goldman Sachs Group Inc. will likely break up when they become subject to sliding- scale capital requirements that penalize them for being too large. Rising profits at financial institutions has largely been the result of shrinking competition in market-making, which has in turn provided banks with inside information on trading patterns, Smithers said.

“Market-making has become a doomsday machine,” Smithers said. “People are arrogant and think they can do wonders and they’ll be all too happy to split off. And you should raise the capital requirements until they do split off.”

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.