Fear and Loathing in the EU

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

EU, Crisis, Politics, Economy, Finance

It’s not just the eurozone that is increasingly derided as a failure: Now, the very European Union itself is mistrusted by its largest members. And who discovered this gem of Eurosceptic propaganda? The EU’s own statistics agency.

In the heyday of ancient Rome, the Emperor satisfied the citizens with ‘panem et circenses’ (bread and circuses). Alas, the Roman law-based empire the European Union is spluttering through waves of crises thanks to their odd belief that bread and circuses can be replaced by austerity. Nations have been left wearing hair shirts (and worse) in the masochistic belief that they can slim their way to health if sufficiently starved of stimulus.

So it may not be such a surprise that polling conducted by the EU’s own EuroBarometer agency has shown a simply staggering reversal in how major European nations view the EU. In 2007, Germany’s refusal to abide by Euro currency rules was copied by Mediterranean states, economic growth was taken for granted, and various asset bubbles propelled a sense of calmness, confidence and wealth. At the time, polling showed that the EU was widely trusted, except in the UK.

But now, even in Poland, where economic growth has continued, the percentage of people who distrust the EU has catapulted from 18 percent to 42 percent. The pragmatic Poles are wavering in their support of joining the Euro. Indeed, one poll showed some 20 percent suggested fiscally sound Euro nations should join the Zloty!

In five other nations a majority of citizens now clearly distrust the Brussels apparatus. In Britain, this amounts to a remarkable 69 percent, up from 49 percent in 2007, placing them second behind the Spaniards, where post-property-bust distrust has leapt from 23 percent to a resoundingly skeptical 72 percent.

This message from the heart of EU bureaucracy ought to be very clear: The European Union is utterly and completely out of step with the views of its citizens. Some 59 percent of Germans distrust the EU over frustrations at having to transfer billions in bailouts to Mediterranean states, while on the southern fringes of Europe the citizenry who trusted the EU are now being forced to deal with austerity that will deliver significant pain.

The EU remains an organization with plenty of presidents, but no leadership. The crumbling quasi-imperial edifice fails to appreciate the tectonic shifts shredding its influence. A democratic deficit at the top with limousine liberals on tax-free salaries looks as out-of-touch as the Soviet Politburo in 1985. A genuinely beneficial free trade zone has been hijacked by a crazed group of political integrationists convinced of their divine right to make Europe one big nation.

However, this is not one big happy family. Nor is the opposition a single unitary group. This may permit divide-and-conquer politicking within the EU, but the ultimate fissures will be very hard to paper over to achieve the foolish integrationist ideal. The EU itself may yet collapse.

Yet even though distrust is at record-high levels, the Eurosceptics are anything but harmonized. The Five Star Movement in Italy has little in common with Scandinavian True Finns or Britain’s UKIP. British Euroscepticism is tinged with a right-wing individual determinism and innate distrust of central government. In other places, Euroscepticism may wear the mask of Fascist or other unpleasant socialist extremists. In the Mediterranean, there is incredulity that the EU is not the ultimate lender of last resort there to bail out bankrupt welfare systems. Ironically, such models of patronage and state-assisted folly were not reduced earlier, because the Euro had artificially low interest rates as the ECB sought to keep the German economy healthy.

Brussels, aided and abetted by a generation of political pygmies, has played its cards so badly that while the Euro faces death by a thousand cuts, even the core universal benefits of the EU itself are endangered. Barbaric cures to sustain a flawed currency are being disowned by a formerly Europhile political generation, such as German Socialist Oskar Lafontaine and British Conservative Nigel Lawson. Both formidable finance ministers now see how the Euro threatens European unity at all levels.

Meanwhile, with a perfect demonstration of how his political skills have become more attuned to the Brussels trough as opposed to the problems of ordinary citizens, President Barroso has remarked that the clear path to a better EU is more federalism.

When politicians ignore the people from their position of privilege, the end result is usually upheaval.

Chinese alternative to Fitch and Moody’s to challenge credit rating system

 Currencies, China, USA, Economy

China is set to offer its alternative to the big three US credit rating agencies, Moody's, Fitch, and Standard and Poor's. The Universal Credit Rating group is due to launch next month in Hong Kong, and is a joint Chinese, Russian, and American venture.

The US ratings agency Egan-Jones Ratings Co and Russian RusRating will become partners with Dagong Global Credit Rating in the undertaking. The new agency will start with around 20 analysts aiming to gradually grow to more than 100.

UCRG will be the second such venture based in Hong Kong after China Chengxin, which established an office in Hong Kong in August last year.

The project is aimed at boosting China’s influence on the global ratings system, and challenging the prevalence of the big American firms. The impartiality of their work has been questioned since the global financial crisis in 2008. 

Many experts say the ratings agencies are largely to blame for fuelling the crisis with their inaccurate and excessively high ratings for problematic asset-backed securities, which led to the credit crunch.

According the Chairman of Beijing-based Dagong, Guan Jianzhong, the current system is ill disposed and favors developed economies, the China Daily reports.

"We hope that UCRG will bring a new perspective to the current ratings landscape and help build a new credit ratings system," Guan Jianzhong who will also be chairman of UCRG, said. He added that UCRG plans to create a new credit ratings system that will accurately disclose credit risks between creditors and debtors in six years time.

Sean Egan, the president of Egan-Jones, said UCRG's aim is to provide an alternative ratings system, by bringing in new partners from different countries.

"The current system is New York-centered. UCRG will bring the perspective of China and Russia to the table. That means UCRG will get a different rating results from the big three," he said.

BRICS: pros and cons

The Fourth BRICS Summit, hosted by New Delhi for the first time this year, looks like another milestone in a short, yet, impressive record of the fast-growing informal block of major emerging economies which includes Brazil, Russia, India and South Africa. The theme of the summit, formulated as “BRICS Partnership for Global Stability, Security and Prosperity”, spells out the ABC of the globalized and increasingly interdependent world as seen by the leading non-Western powers. In fact, the summit motto in itself describes what BRICS – be it a block or an alliance – is all about after six years into its existence.

No longer an enigma or geopolitical UFO, BRICS is making headlines as it rapidly evolves into a new global powerhouse with more say in restructuring the world economy, as well as in ending the political monopoly of the elite club (a club notorious for its division of the world into the West and the rest).

At first sight, BRICS, as a lose amalgamation of the five fast-growing economies, can really be described as an awakening giant. Young and ambitious, it’s come into a world of obsolete institutions with the guts and verve needed to shift global power structures and change the rules of the game.

Does BRICS have the potential to do this? If you look at BRICS in terms of statistics, the question seems irrelevant. In his recent article, contributed to the Moscow News daily, Prime-Minister Putin shares his vision on the matter: “BRICS brings together five countries with a population of almost three billion people, the largest emerging economies, colossal labor and natural resources and huge domestic markets. With the addition of South Africa, BRICS acquired a truly global format, and it now accounts for more than 25% of world GDP.”

“When BRICS is really up and running, its impact on the world economy and politics will be considerable,” Putin predicts.  

According to Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research, BRICS “might also be dubbed the R-5, after its members' currencies – the Brazilian real, the Russian ruble, the Indian rupee, the Chinese renminbi and the South African rand." And let me add that if one day, say, the Chinese renminbi is endorsed as the new global currency, it will undermine the US dollar’s supremacy in the world financial structure, especially when it comes to trade and investment in emerging markets. No surprise, seeing that impatience to put an end to the Us dollars world monopoly prompted the South African government to say it was ready to discuss the issue at this week’s BRICS summit. It goes without saying that switching from the US dollar to the Chinese renminbi will help African businesses, seeing that a lot of their trade is with BRICS countries.

While some will call the idea to make the renminbi the preferred global currency premature, another proposal – to create a common development bank for the BRICS countries – has already topped the Delhi summit agenda. Initially a brainchild of India, the initiative to set up a five-nation bank is due to get a much-wanted stamp of approval on the part of BRICS nations at the Delhi summit itself.

And it won’t just be a mere formality. Once set up, the BRICS development bank will give the green light for indirect investment of central bank foreign reserves inside the BRICS countries. It is reported that the BRICS bank could issue convertible debt, which can be bought by central banks of all the BRICS countries. So, in practical terms, for it will serve as a vessel for investment risk-sharing for BRICS countries

As seen by financial analysts, the proposed BRICS bank is a way for emerging nations to try and pull out of the western dominated World Bank and IMF. “Basically India, China and perhaps Russia are now trying to show off their economic clout; to prove to the West they can get on just fine on their own. Above all, they need freedom from Western financial influence," John Mashaka, an expert with Wells Fargo Capital Markets, said.  

In the meantime, Moscow sees its way to set up a new trend to allow developing economies to increase their role in international financial institutions. As Russia’s presidential aide Arkady Dvorkovich put it on his way to New Delhi, “BRICS should play a more important role in the management of international financial institutions”. While BRICS had already injected a large amount of capital into the IMF, some European countries still think the amount should be enlarged. “Increasing the bloc’s participation in the IMF should be related to a rethinking of its share in the structure,” Dvorkovich said. All in all, if European countries need more capital from BRICS countries, the voice of BRICS’ in the IMF should be enhanced.

However, let us not allow ourselves to be overwhelmed with the euphoria over BRICS performance and regard it as an unbreakable alliance with five partners standing shoulder to shoulder to fight a Western monopoly in the global economy and world politics. The BRICS countries, which represent very different political cultures whose economic interests often clash, have certain limits to joint action, both in setting up the agenda of restructuring world financial bodies and in adopting common stand on the key geopolitical issues, like Iran or Syria.

Even the road to a common development bank seems to be more bumpy than was initially expected. While China claims it should have a permanent presidency in the BRICS bank, this approach will hardly be welcomed by Russia and India, which also demand the president’s chair.

Moreover, there is a serious, while not much-spoken economic rivalry and military standoff between the two key BRICS Asian members – China and India. Symbolically enough, just weeks before the Delhi BRICS summit, a group of Indian pundits, including well-known scholars, diplomats, military and public figures unveiled a report called 'Nonalignment 2.0'. The report labels China as one of the major threats to Indian security and her economic interests.

According to the survey, while China and India were equal in economic size a few decades ago, the Chinese economy today ($7.3 trillion in 2011) is nearly four times as large as that of India ($1.8 trillion).

Describing the tense situation at the Sino-Indian border after the 1962 war, the authors insist that in its dealings with China, India should be ready for responding to any Chinese occupation of Indian Territory in a future border war “with a land grab of it own across the current border with China in Tibet”. While 'Nonalignment 2.0' is not an official New Delhi doctrine, such rhetoric hardly corresponds with the goals of enhancing global stability, security and prosperity, as proclaimed by BRICS’ leadership.

So, the future of the five-member body is probably not as cloudless as described by its global army of its fans all over the world, inspired by the idea of challenging a world order built on the bedrock of American imperialism. The question of whether a common will might prevail over national egoisms is still up in the air.

No doubt, that BRICS is a new giant, and this is good news. However, the bad news is that it is a giant with a quite limited capacity to run, as a heavy weight remains chained to its feet.

Sergey Strokan, for RT

Σιδηρόφρακτοι πολιτικοί

Στο άψε - σβήσε τελείωσε στην πλατεία Συντάγματος η κωμικοτραγική χθεσινή στρατιωτική παρέλαση. «Είμαστε μια πολύ ωραία ατμόσφαιρα!», φανταζόμαστε ότι θα αναφώνησαν ανακουφισμένοι οι υπουργοί του ΠΑΣΟΚ και της ΝΔ και οι πάσης φύσεως υπόλοιποι πολιτειακοί και πολιτικοί παράγοντες που έβγαλαν αυτή τη σεμνή τελετή μεταξύ τους, χωρίς καθόλου «πλέμπα», με αστυνομικούς μπροστά τους, πίσω τους, δίπλα τους, γύρω τους, αλλά και... από κάτω τους, καθώς είχαν κλείσει και όλους τους κεντρικούς σταθμούς του μετρό για να μην ξεπηδήσουν οι «κολασμένοι»!

Ουδέποτε, κανένα καθεστώς της χώρας μας -με εξαίρεση τα χρόνια της ναζιστικής κατοχής- δεν θεώρησε αναγκαία την δια μέσου χιλιάδων αστυνομικών πλήρη απαγόρευση της προσέλευσης του ελληνικού λαού προκειμένου να εορτάσει την επέτειο της Επανάστασης του 1821 με στρατιωτική παρέλαση. Σχεδόν διακόσια (!) χρόνια τώρα, πρώτη φορά οι πολιτικοί προύχοντες χρειάστηκαν κυριολεκτικά χιλιάδες αστυνομικούς για να τους πάνε και να τους φέρουν σώους από τον χώρο των παρελάσεων. Ούτε από το... Κολωνάκι (!!!) δεν τόλμησαν να περάσουν πεζή οι υπουργοί.

Εσπασε κάθε ρεκόρ η ταχύτητα διεκπεραίωσης των παρελάσεων. Στην Αθήνα διήρκεσε μόλις... 35 (ναι, τριάντα πέντε!) λεπτά - και για καφέ να πήγαιναν οι επίσημοι, περισσότερος χρόνος θα χρειαζόταν για να τους σερβίρουν! Στη Θεσσαλονίκη, όλες οι παλιές καραβάνες της πολιτικής την είχαν κάνει με ελαφρά πηδηματάκια από την εξέδρα των επισήμων και είχαν «αναμειχθεί με τον λαό», αφήνοντας μόνον του έναν δυστυχή υφυπουργό Υγείας πάνω στην εξέδρα, ο οποίος άκουσε τα μύρια όσα κατά της συγκυβέρνησης ΠΑΣΟΚ - ΝΔ στη βάση του Μνημονίου.

Τη μεγαλύτερη ίσως πολιτική σημασία έχει το γεγονός ότι οι σφοδρότερες διαμαρτυρίες και συγκρούσεις διαδηλωτών με την αστυνομία έγιναν στο Ηράκλειο της Κρήτης και στην Πάτρα - δύο ισχυρότατα επί δεκαετίες προπύργια του ΠΑΣΟΚ. Στην Κρήτη είχαμε μάλιστα επεισόδια και στα Χανιά και στο Ρέθυμνο, κάτι που δεν προοιωνίζεται ίσως ευτυχή αποτελέσματα στις εκλογές για το κυβερνών κόμμα.

Σημασία δεν έχουν ούτε οι λεπτομέρειες των επεισοδίων ούτε οι απώλειες του άλφα ή του βήτα κόμματος της συγκυβέρνησης στη μια ή στην άλλη περιοχή, οι οποίες άλλωστε μόνο τη νύχτα των εκλογών θα μετρηθούν αξιόπιστα στην κάλπη και μόνο σ' αυτήν. Αυτά θα συζητηθούν στον καιρό τους.

Εκείνο όμως που με βεβαιότητα μπορεί να ειπωθεί από τώρα και το οποίο επαναβεβαιώθηκε για πολλοστή φορά χθες στις παρελάσεις, είναι ότι πλέον οι πολιτικοί πρώτης γραμμής του ΠΑΣΟΚ και της ΝΔ δεν μπορούν να εμφανιστούν σε δημόσιο χώρο χωρίς την προστασία ισχυρότατης αστυνομικής δύναμης προκειμένου να αποτραπούν εκδηλώσεις εντονότατης αποδοκιμασίας εις βάρος τους.

Στον βαθμό που αυτό δεν αφορά τέσσερα - πέντε άτομα με διαβλητή προσωπική συμπεριφορά, αλλά το σύνολο των ηγετικών στελεχών των δύο κυβερνητικών κομμάτων, η ευρύτατη λαϊκή αντιπάθεια και εχθρότητα σηματοδοτούν την ύπαρξη πρωτοφανούς στα μεταπολιτευτικά χρόνια ρήγματος μεταξύ των πολιτών και της πολιτικής ηγεσίας.

Μόνο στη βρώμικη εποχή της οργανωμένης από τη Δεξιά, το Παλάτι και τους Αμερικανούς «Αποστασίας» του 1965-1967 είχαμε ανάλογη διάσταση λαού και πολιτικών, αν και ακόμη και τότε το μίσος στρεφόταν εναντίον μόνο των πολιτικών της Ενωσης Κέντρου, που εξαγοράζονταν και περνούσαν στο στρατόπεδο της Δεξιάς και της ανωμαλίας, όχι εναντίον του συνόλου των βουλευτών των δύο και τότε κυβερνητικών κομμάτων.

Τώρα η απαξίωση των πολιτικών των κομμάτων εξουσίας στα μάτια της κοινής γνώμης είναι ευρύτερη και χειρότερη από εκείνες της αποφράδες ημέρες, εβδομάδες, εποχές. Το ρήγμα υφίσταται, αλλά ακόμη δεν έχει παγιωθεί. Οσο δύσκολες και αν είναι οι συνθήκες, από την πολιτική που θα εφαρμοστεί θα κριθεί αν αυτό το ρήγμα θα καταστεί αγεφύρωτο χάσμα με απρόβλεπτες, αλλά σίγουρα συγκλονιστικές, συνέπειες για την πολιτική και κοινωνική ζωή της χώρας. Ερχονται δύσκολοι, πολύ δύσκολοι καιροί.

Δύο δρόμοι
Πολιτική πυγμής ή ενσωμάτωσης;

ΣΕ ΣΤΑΥΡΟΔΡΟΜΙ βρίσκεται η Ελλάδα. Αν οι δημοσκοπήσεις επαληθευτούν και στις κάλπες σε λογικό βαθμό, τότε τουλάχιστον ο μισός ελληνικός πληθυσμός θα ψηφίσει κόμματα που τάσσονται κατά της πολιτικής των Μνημονίων. Αν επίσης δεν υπάρξουν συγκλονιστικές εκλογικές εκπλήξεις, η ΝΔ και το ΠΑΣΟΚ θα έχουν από κοινού πάνω από 151 βουλευτές, πράγμα που σημαίνει ότι θα συγκυβερνήσουν και θα συνεχίσουν να ασκούν την ίδια πολιτική αδιαφορώντας για τις αντιδράσεις, όπως κάνουν μέχρι τώρα. Το ερώτημα είναι αν θα επιχειρήσουν να αποτρέψουν το ενδεχόμενο κοινωνικών εκρήξεων προκαταβολικά, θέτοντας ως στόχο να ενσωματώσουν κοινωνικά στρώματα και ομάδες μέσω διαφοροποιήσεων της πολιτικής που υλοποιούν.

Απο www.ethnos.gr