In These New Times

A new paradigm for a post-imperial world

Archive for the ‘Battle for Europe’ Category

Europe freezes out Goldman Sachs

Posted by smeddum on July 21, 2010

Shocked by past deals with Italy and Greece, governments are excluding the Wall Street bank from sovereign bond sales


  • The Observer,
  • Sunday 18 July 2010
  • Lloyds Blankfein of Gldman Sachs Protestors jeer Goldman Sachs chairman Lloyd Blankfein as he prepares to face US Senators over the banking crisis. Photograph: Jim Young/REUTERS
    European governments are turning their backs on Goldman Sachs, the all-conquering investment bank that has suffered a series of blows to its reputation, capped by the biggest ever fine imposed on a Wall Street firm. Read the rest of this entry »

    Posted in Battle for Europe, Financial crisis | Tagged: | Leave a Comment »

    If you can’t beat them, join the euro!

    Posted by seumasach on July 20, 2010

    Cailean Bochanan

    20th July, 2010

    As David Cameron and Barak Obama meet in Washington there is a lot of silly talk about the so-called special relationship being over. Britain may be the junior partner as Cameron puts it, but is nonetheless a crucial one. There will be no divergence over core issues such as covering up the scale of the disaster in Afghanistan or covering up the scale of the disaster in the Gulf of Mexico. Nor will the much noted divergence between London and Washington over stimulus versus austerity lead to sparks flying. Britain and the US remain joined at the hip and the only puzzle to emerge out of these talks will be why exactly the special relationship remains so enduring, for better or for worse, richer or poorer.

    Most of us had some sense that the transatlantic connection had something to do with economies based on “financial services”. The last couple of years have made it much clearer what these “services” amount to. But it is the events of the past months which have clarified more than anything what the Atlantic alliance is really about. Britain and the US, or, rather, the City and Wall Street have combined in a bid to undermine the euro and derail the european project. We have been engaging in a currency war whose scarely veiled goal has been to boost the dollar and the pound by knocking out the leading rival to  reserve currency status. In the process the dollar and the pound have been confirmed as joint pillars of the atlanticist system, the twin pillars of anglo-saxon financial hegemony. Logically, the pound should simply be merged into the dollar, but that is hardly realistic from a political point of view. The pound continues to exist as the weak link in the system: the junior partner. So whereas the US can continue to call the bluff of the markets, expanding credit like there’s no tomorrow, knowing that, for China and others, divesting from  the dollar is the Samson option, there is no logical reason for the pound to stay afloat given the unrivalled levels of indebtedness of Britain at personal, corporate, local and national government level. For the sake of the alliance the pound must be saved since its decline would lead to irresistible pressure to join the euro and one of the twin pillars of the empire would be gone.

    Of course, it didn’t all have to end in tears if the anti-euro assault had succeeded. The alliance was right to spot the weakness inherent in the Eurozone and right to expect the response of the European elite, still dreaming the American dream, to be dithering.  Only German Christian Democrats responded appropriately with Merkel’s ban on naked short selling while leftists governments in Greece and Spain failed to get to the heart of the matter, the speculative attack by hedge funds operating largely out of the City, and, instead, limited themselves to hacking at the limbs.

    Anglo-America understood as well that this was about politics, about war and that they disposed, as usual, of the weapons of mass destruction: the rating agencies, the hedge funds and the media. They also had a trojan horse, the European left, within the enemy camp. Why, then, did it fail as it now seems clear it has?

    The West has been slow to pick up on multipolarity and they had failed to see that the success of the European project was key element in the new multipolar framework. Were China and Russia really going to stand by as Europe and the euro were knocked out of the equation? How then could they break out of the dollar straightjacket? Was it in their interest to return to a cold war against a consolidated, unified West led from Washington and London? Russian diplomacy, in particular, is aimed at drawing Europe out of the Atlanticist sphere of influence whereas a fragmented Europe would be one under US/UK tutelage. Russia has made concessions elsewhere in order that romance should finally blossom between Angela Merkel and President Medvedev. And with what chivalry have they deferred to Europe in allowing a European peace-keeping force in Kirgyzstan, their own back yard!

    So, in  the end, the anti-euro campaign was more like a bit of guerrilla warfare  which brought some temporary gains for the dollar and the pound. Now it’s back to reality with Britain in the eye of the storm. If anyone doubts that thinking the euro is thinking the unthinkable, read the British press or dwell on the fact that not a single political tendency from the far right and the Tory little englanders to the no longer-smirking Blairites (or Millibandites) and the far left backwoodsmen dares to come out in any serious way for the euro. Visceral opposition is the norm, it unites the British race. One of the great things about the new coalition is that it effectively defangs the only possible exception, the Lib-Dems: any pro-European sentiment is now definitively disenfranchised.

    So with all escape routes sealed the slaughter can begin. The British people are to be sacrificed to shore up the Atlantic alliance. They have yet to learn of the ruthless and predatory nature of the British elite: it will be a crash course. What makes it all the more horrific is its utter futility. No amount of cutting can alter the fact that, with Anglo-American power ebbing away by the hour, the complete and utter bankruptcy of Britain lies exposed and the pound can only fall.

    It is this recognition of the hopeless state of British finances, largely hidden up to now with an accountant’s slight of hand, that has made me hesitate to call for our adoption of the euro. How is it possible for Europe to add the burden of British debt to its own? But it is a mistake to look at things from the point of view of economics alone. We live in a moment of history where geopolitics trumps mere economics. For Europe it might just be better if we weren’t there , but we are and our full engagement with the European project is strategic necessity for Europe and a lifeline for ourselves. The problems of Britain are those of Europe carried to the ultimate extreme and can be resolved inside Europe. Together we must learn that prosperity is the fruit of labour, our own labour and not some God-given right of the West, of the white man. A service- based , consumer economy is mere fantasy and finance must be at the service of the reconstruction of industry and agriculture, of the real economy.

    The unanimity of British society against the euro, reflecting the complete triumph of the ruling class point of view,  should suggest that this can be the focus of any putative opposition. There is now, for the first time in history a complete disconnect between the interests of the British people and our financier elite. Suddenly, it is becoming clear that the perspectives of the latter have nothing to do with any British national interest. The need for an opposition is then an urgent one and given the ravages of thirty years of Thatcherism, the near complete destruction of our economy at the behest of oligarchy only reconstruction within a European context provides a way out.

    Posted in Battle for Europe | Tagged: , | 2 Comments »

    The dollar’s predicament

    Posted by seumasach on July 19, 2010

    Reuters on Friday quoted China’s Prime Minister Wen Jiabao: “I want to say that at this time, when some European countries are suffering sovereign debt crises, China has always held out a helping hand.”

    Clearly, it’s a major development that Chinese deep pockets have come to the eurozone’s aid. There are reasons for China’s policymakers to see it in their country’s best interest to purchase European debt. At the top of the list, euro weakness provided an opportunity to diversify some of its $2.45 trillion – and counting – of international reserves. The markets have been focused on European structural debt issues. But perhaps the Chinese, from a longer-term strategic point of view, see European investment as more favorable than accumulating additional US debt.

    Doug Noland

    Asia Times

    20th July, 2010

    According to the Federal Reserve’s Z.1 “flow of funds” data, Rest of World (ROW) holdings of US financial assetsended the 1980s at about US$1.9 trillion and closed the nineties at $5.6 trillion. By the end of 2009, ROW holdings had ballooned to $15.3 trillion. During the past decade, the world’s holdings of our financial assets surged to 108% of US GDP from 60%.

    Gigantic and unending US current account deficits were the major force behind the extraordinary foreign accumulation of our (largely debt) securities. This implies structural deficiencies in both the credit system and real economy. It would also be quite unusual for such a fundamental backdrop to support a strong currency.

    To better gauge the soundness of the dollar, one must attempt some necessarily subjective assessment of underlying US financial and economic structures. Over the past 20 years, total system credit rose from $12.830 trillion to $52.328 trillion – or from a historically very high 234% of GDP to an unprecedented 367%. The important question then becomes, did this historic increase in debt correspond with an expansion of production/wealth-producing investment? Does our economy have the wherewithal to pay back our foreign creditors? When will it matter in the marketplace?

    Read full article here

    Posted in Battle for Europe, Financial crisis | Tagged: | Leave a Comment »

    Unavailability of spending

    Posted by seumasach on July 7, 2010

    Doug Noland

    Asia Times

    7th July, 2010

    My thesis holds that the market’s structural debt fears are shifting from the eurozone to the US. The euro gained 1.5% last week against the dollar. The Swiss franc jumped 2.7%. European debt markets showed hopeful indications of stabilization. For the week, Greek (five-year) credit default swap (CDS) protection dropped 130 bps to 840 bps. Portuguese CDS fell 50 bps to 280 bps, and Spain CDS declined 10 bps to 255 bps.

    It is worth noting that credit protection (five-year CDS) is higher for the states of California (342bps), Illinois (360bps), and Michigan (283bps) than it is for troubled Portugal (280bps). New Jersey (276bps) and New York (276 bps) are priced above Spain and just a little less than Portugal. A strong case can be made that these debt markets are on the cusp of a crisis of confidence.

    Read the rest of this entry »

    Posted in Battle for Europe, Financial crisis | Leave a Comment »

    Ditch the Buck! Dollar demise ‘a matter of months’

    Posted by seumasach on July 3, 2010

    Posted in Battle for Europe | Tagged: , | Leave a Comment »

    Obama strategy for G-20 in Ottawa: push Euro down, drive Renminbi up, attack Germany, and keep toxic derivatives in charge of the world economy

    Posted by seumasach on June 26, 2010

    Webster Tarpley,

    Tarpley.net

    25th June, 2010

    With Obama’s letter to the G-20 countries released at the end of last week, the US strategy for the upcoming Ottawa summit is clear:  Obama will attempt to sabotage the meeting with a two-pronged attack designed to knock China and Germany off balance, and to prevent any urgent measures from being discussed which might roll back the exorbitant proliferation of derivatives, impose a Tobin tax on speculators, or regulate and restrain the hedge fund hyenas whose activities are ravaging the globe.

    Read the rest of this entry »

    Posted in Battle for Europe | Tagged: | Leave a Comment »

    ‘A Pandora’s Box’

    Posted by seumasach on June 22, 2010

    Spiegel

    21st June, 2010

    The recent arrest of an alleged Mossad agent in Warsaw could adversely affect German-Israeli relations. Officials in Berlin say the Israeli secret service went too far in obtaining a German passport for alleged use in the murder of a Hamas official in Dubai — especially as they apparently used a fake story of Nazi persecution to get it.

    Read the rest of this entry »

    Posted in Battle for Europe | Tagged: | Leave a Comment »

    Medvedev Pushes Ruble Reserve Currency to Cut Dollar Dominance

    Posted by seumasach on June 19, 2010

    Though Russia is “very carefully monitoring what’s happening in the euro zone,” the emergence of the euro as a currency to rival the dollar’s dominance helped soften the impact of the global crisis, Medvedev said.

    “If the world depended completely on the dollar, the situation would have been more difficult,” Medvedev said.

    The anglo-saxon campaign to destroy the euro looks doomed: China, Russia and all who seek to diversify out of the dollar have an overwhelming interest  in maintaining the euro.

    Business Week

    18th June, 2010

    June 19 (Bloomberg) — Russia wants the ruble to be one of the world’s reserve currencies as President Dmitry Medvedev renews his push to reduce the dollar’s dominance and make Moscow a global financial hub.

    “Only three, five years ago it seemed like a fantasy” to create a new reserve currency, Medvedev said yesterday in a speech in St. Petersburg, Russia. “Now we are seriously discussing it.”

    Medvedev, who has repeatedly called for a supranational currency to match the dollar, said discussions with China are continuing on broadening the global options. Russia sold U.S. Treasuries for a fifth consecutive month in April, the U.S. Treasury Department said June 15. The world may need as many as six reserve currencies, Medvedev said.

    “It’s something that’s obviously needed,” he said at the St. Petersburg International Economic Forum. “Developing a financial center in Moscow will considerably help to strengthen the ruble’s position as one of the reserve currencies.”

    Medvedev’s comments underline Russia’s ambition to reassert its global power following the financial crisis. Gross domestic product shrank 7.9 percent last year, the worst contraction since the fall of communism in 1991, after the credit crunch sent commodity prices plunging.

    If a country wants to alter the world economic order, including the number of reserve currencies, it must become an international financial center, Bank of Israel Governor Stanley Fischer said in an interview yesterday.

    ‘Don’t Emerge by Fiat’

    “For a currency to be a reserve currency, you have to have capital markets in which you can sell it and buy it very easily,” Fischer said. “New reserve currencies don’t emerge by fiat. They emerge as countries change.”

    Medvedev said he envisages a new economic hierarchy allowing emerging-market giants such as Russia and China to drive the global agenda as the world emerges from the first global recession since the 1930s.

    “We really live at a unique time, and we should use it to build a modern, prosperous and stron Russia, a Russia that will be a co-founder of the new world economic order,” he said.

    The BRIC countries — Brazil, Russia, India and China — were net sellers of U.S. assets in April, driven mainly by Russian divestments, Brown Brothers Harriman & Co. Senior Currency Strategist Win Thin said in a June 15 note.

    Russia may add the Australian and Canadian dollars to its international reserves as the central bank diversifies the world’s third-largest stockpile away from the greenback, central bank First Deputy Chairman Alexei Ulyukayev said in a June 16 interview.

    Though Russia is “very carefully monitoring what’s happening in the euro zone,” the emergence of the euro as a currency to rival the dollar’s dominance helped soften the impact of the global crisis, Medvedev said.

    “If the world depended completely on the dollar, the situation would have been more difficult,” Medvedev said.

    Posted in Battle for Europe | Tagged: | Leave a Comment »

    EU parliament hits out at ‘immoral’ credit ratings agencies

    Posted by seumasach on June 16, 2010

    Brian Johnson

    The Parliament

    16th June, 2010

    Parliament’s Socialist group leader Martin Schulz has called on EU leaders to ensure they take action to curb the power of credit ratings agencies (CRAs).

    Schulz’s call comes ahead of Thursday’s summit, when EU leaders will meet in Brussels for crunch economic recovery talks, and amid growing anger at the role and influence of CRAs.

    Read the rest of this entry »

    Posted in Battle for Europe | Tagged: | Leave a Comment »

    €uro: the worst case scenario

    Posted by seumasach on June 16, 2010

    Whilst it is important not to underestimate Atlanticist influence in Europe, it is equally important not to overestimate it. Vernochet’s claim that the centralisation of Europe’s institutions renders them, automatically, subordinate to Washington strikes me as a defeatist fantasy. Even supposed puppet governments in nations occupied by US forces are escaping the empire’s control. Europe has nothing to gain by subordinating itself to Washington and London: the latter’s only hope is to break up Europe and destroy the euro, which threatens the dollar’s monopoly on international transactions. This, precisely, is the goal of the concerted destabilisation campaign against Europe which Vernochet has the merit of recognising. It is for this reason, the defence of the European project itself, that nominally Atlanticist politicians like Merkel have taken decisive action against anglo-saxon speculators and also why China has reaffirmed its support for that project. Vernochet fails to make the case that “nothing can prevent the integration of Europe within a trans-Atlantic Bloc”. On the contrary, despite the US/UK throwing in everything at their disposal, the Battle for Europe seems to have been lost and we are witnessing an independent Europe emerging.

    The Greek budgetary crisis, which has become a crisis of the euro, is not the inevitable result of market self-regulation, but rather the consequence of a deliberate attack. According to Jean-Michel Vernochet, the crisis was provoked by an economic offensive directed from Washington and London that followed similar principles to those of contemporary military warfare, employing game theory and a strategy of ‘constructive chaos’. The ultimate aim is to oblige the Europeans to enter into an Atlantic bloc, i.e. an empire where Anglo-American budgetary deficits would be automatically financed through the expedient of a dollarised euro. The agreement concluded between the European Union and the IMF, giving the Fund partial oversight of Union economic policies, is a first step in this direction.

    Jean-Michel Vernochet

    Voltairenet

    11th June, 2010

    The financial attack launched against Greece because of its sovereign debt and its potential insolvency soon proved to be an offensive against the Euro and to have only a distant relationship with the flaws and structural deficits of the Greek economy itself. These ‘vices’, incidentally, are largely shared by the bulk of post-industrial countries which have acquired the bad habit of living beyond their means and on credit, hence the soaring quantum of debt, a bubble (as any other) doomed to burst.

    Read the rest of this entry »

    Posted in Battle for Europe | Leave a Comment »

    China ‘set to invest billions in debt-stricken Greece’

    Posted by seumasach on June 16, 2010

    As anglo-american fraudsters try yet again the rating agency trick, China backs Greece and the euro.

    Telegraph

    15th June, 2010

    Chinese Vice-Premier Zhang Dejiang visits the debt-laden country on Tuesday and will reportedly commit to investment in maritime affairs, telecoms and the renovation of a landmark tower building in Athens’ port of Piraeus, the Financial Times said, citing an unnamed Greek government official.

    Read the rest of this entry »

    Posted in Battle for Europe | Leave a Comment »