European Union Wins the Nobel Peace Prize, Norway No Longer Taken Serious

In what has to be considered one of the biggest pranks in the history of the Nobel Peace Prize the panel in charge of giving out the award decided on the European Union as this years recipient.  The rationale is simple I suppose in that one of the reasons the EU was founded was to integrate Europe to lessen the chance for war between member countries.  Since its founding no member state has fought another.  What those in charge of the award seem to have conveniently forgotten was the role that NATO played in Europe since the end of World War II.  Specifically the contributions of the US, UK, and Canada.  For it was these 3 members of NATO that do not reside on the continent of Europe but still provided literally hundreds of thousands of soldiers as a part of the NATO frame work to keep the peace on the continent that should have been awarded the Nobel Peace Prize.

The reason I say this is simple  because nothing the EU is credited with having done would have been possible without the soldiers from these countries literally making the possibility of war between member states all but impossible.  Frankly the award being given to the EU for what NATO really accomplished is a slap in the face to all those who served in Europe as a part of NATO.  The reality of what happened last week was that the EU received an award that NATO should have been given.  This happened not because the EU deserved the award but because the EU is falling apart and those in charge wanted to give the organization some positive news for once.  This attempt at positive reinforcement failed miserably because any rational thinkers outside of mainland Europe know the EU is undeserving of the award.  The end result has thus been to further tarnish a damaged brand that already had looked incredibly incompetent after awarding the prize to President Obama who had done nothing to deserve it.  Perhaps it’s time to recognize that the award and the publicity that goes with it just is not what it has been hyped up to be.  To be honest it has become a joke.

http://blog.norway.com/2012/

Consequences Of Globalization

It is interesting to see the consequences of globalization taking place all around the world today.  People so often in the 90’s talked about how globalization would improve people’s lives across the globe.  To be fair to some degree that has happened in places like China where several hundred million people have been lifted out of poverty by moving from the countryside to the urban manufacturing centers of China.  Other nations like Germany have also benefited greatly from globalization in the form of the EU.  With the barriers to trade removed from the internal European market German companies have proceeded to destroy their fellow European competition and reap the rewards.  Unfortunately these two examples of countries benefiting from globalization have also cast a dark shadow across many other countries who have suffered while China and Germany have benefited.  In China’s case many of the jobs in manufacturing that now power the Chinese economy were once based in America.  The fallout from this in America has been significant because many of the jobs lost to China were some of the best paying jobs a non skilled worker could find in America.  Recently in the last several years there has been a small glimmer of hope in the American manufacturing sector where instead of losing jobs they have actually begun adding some.  It remains to be seen if this is just part of the economy coming back from the lows of the economic meltdown in 2008 or if this is part of a new trend of increased American industrial production over the long term.

The situation in Europe seems more straight forward where there is little doubt that the Euro has made life much more difficult for countries like Greece, Italy, and Spain to compete with Germany since they can no longer devalue their own currency to become more competitive.  The result has been that much of southern Europe chose to use debt to fuel economic growth (much like America has done) instead of trying to make their economies more competitive.  The consequences of this have been tragic for those countries with some like Greece in what can only be described as a economci depression.  One thing is for certain, you don’t seem to hear nearly as many world leaders talking up the benefits of globalization because the real long term consequences have now manifested themselves and it is not a very pretty picture.

Putin Says The West Is In Decline

Vladimir Putin once again the president of Russia recently spoke to Russian diplomats and was reported to have said that the West was in decline.  He also went on to point out that the decline of the West was much more than just the current Euro crisis.  Even though Putin had his own reasons for talking about the decline of the West, such as trying to make himself look better, the fact of the matter is that irregardless of his reasons he is essentially correct.  The West for all its talk on Syria and Iran and what needs to be done in both places is beginning to find that nobody is listening.  Why should Russia take us seriously when they know we are broke and there is no stomach for another military adventure.  We keep telling everyone what they should do but they know now that they do not have to listen anymore.

Russia’s Putin says the West is on the decline

http://blog.chron.com/apentecostalperspective/2011/06/is-america-beyond-saving/

Obama Rebuked By German Finance Minister

 

It is pretty apparent European leaders have pretty thin skins these days.  If you have read this blog at all before you probably know that I’m no fan of Obama but in this latest transatlantic dust-up I’m going to defend him.  President Obama has been calling on Europe to do more, especially Germany, to finally resolve the Euro crisis.  Yesterday German Finance Minister Wolfgang Schaeuble was quoted saying that “Mr. Obama should first of all take care of reducing the American deficit, which is higher than in the eurozone.”  While if the EU is taken as a whole he is probably right but unfortunately when you look at individual countries you find that many of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) are in far worse shape than the US which is why there is a Euro crisis.

  Frankly, European leaders should be embarrassed for their numerous attacks on the US.  Constantly trying to shift blame for their problems by saying the crisis originated in America, or trying to tell the world how much worse off the US is.  Yes, America has plenty of problems that we need to work on asap.  However, Europeans are the ones endangering the global economy with their ill-conceived debacle that is the Euro.  Europe needs to shut up, stop blaming everyone else, and either fix the problem or scrap the Euro.  Period.

German Finance Minister Rejects Obama Criticism of Crisis

Saudi Arabia Pumps It Up

In a very informative article over at www.foreignpolicy.com by Steve Levine entitled The Coming Oil Crash he details the problems petro states like Russia, Iran, and Venezuela among others face with the recent fall in oil prices.  The article gives estimates on what each state needs the price of a barrel of oil to be to balance their budgets.  Russia, for example, is said to require a price of $110 per barrel to stay in the black, oil was going for around $96 a barrel on Monday.  In fact many of the other petro states are in a similar position to Russia, so our gain is their pain so to speak.  Many analysts expect the pain to go up for the petro states for the obvious reasons: global economic slowdown reducing demand, US and Canadian shale oil deposits, and Saudi Arabia insisting on producing 10 million barrels a day when all they appear to be doing is hurting themselves by producing so much.

  All of the reasons seem to make sense except for the Saudis, why on earth would they purposely drive down the price of oil when all it does is take money out their own pockets?  Well, that is where it gets interesting.  According to the article the Saudis are intentionally trying to drive the price of oil down for several different reasons.  First, they believe cheaper oil will help the global economy weather this rough patch.  They also apparently liked all the prestige they gained by driving down the price of oil in the late 90’s during the Asian financial crisis.  Second, they feel threatened(the original article used the word terrified to describe how they felt) by the shale oil deposits in the US and Canada.  They recognize that shale oil is harder and more expensive to obtain than normal liquefied deposits.  Because of that oil has to be at a certain price to make going after shale oil worth it.  Last but certainly not least, the Saudis are trying to impose their will on both Russia and Iran on two key issues.  The first would be Iran’s attempt to get the bomb.  The Saudis and Iran are natural competitors because one is Sunni and the other is Shia.  The Saudis feel that a nuclear armed Iran would be unacceptable so they are purposely driving down the price of oil to put the squeeze on Iran to force them to give up the pursuit of the bomb.  The second issue is with Russia blocking a deal being made on Syria.  The Saudis once again feel they can pressure Russia into playing ball on Syria by driving down the price of oil.  It will be interesting to see how long and how painful the Saudis are willing to make this.  As the article points out they have one of the largest financial reserves in the world at around $700,000,000,000 so suffice it to say that they can keep this up for some time.  If I was Russia and Iran I would be worried.

The Coming Oil Crash

World On The Brink

 

The world today has not been in a state of flux this great since the collapse of the Soviet Union about 20 years ago.  The difference between now and then was unquestioned American power militarily, economically, and politically.  Today that is no longer the case and the world is worse off for it.  In reality the danger to the world has not been this great since the Cuban Missile Crisis in 1963. 

Threats Of War

1.  From the Iranian pursuit of nuclear weapons to near civil war in Syria the middle east could explode in a major war drawing in outside powers like the US that could have disastrous consequences for the entire globe.

2.  The Arab Spring has resulted in a change of leadership in key countries that have left many guessing what those nations (think Egypt) strategic direction will become.  This level of doubt has added a new twist to the problems of thinking through a potential crisis in the region.  Just like a free market economy despises uncertainty in policy so does the strategic thinker.  Uncertainty in a country’s geo-political thinking leaves its neighbors only able to guess and make assumptions with all the consequences that entails.

3.  Mexico is fighting an insurgency every bit as lethal as that in Iraq and Afghanistan.  The only difference is that we share a large unguarded border with this failed state.  The threat from the flow of illegal drugs and possible terrorist infiltration cannot be underestimated.  The www.latimes.com did a story in June of 2011 (over a year ago) that said 34,000 had already died as a result of the military crack down against drug gangs, it hasn’t gotten any better since then either.  Although the mexican economy is doing well the possibility that this violence will ultimately collapse Mexican authority over large parts of their own territory cannot be ruled out.

4.  Tensions in Asia continue to rise as China begins to flex its muscles by attempting to enforce its disputed territorial claims throughout the region.

5.  Iraq today still struggles with severe violence as the government attempts to finish off the insurgency there.

6.  Afghanistan at best can only be described as a long work in progress.  Which, oh by the way, has to be finished off by Afghans.  Who wants to wager what the outcome will be once US troops leave by 2o14.

7.  Nations like China, Russia, Iran, and Syria seem to be working in informal cooperation against the United States.  Although the US could counter each country individually or even in groups of two, when they all align against America it would be near impossible for America to impose its will on a situation like the insurgency in Syria.  Right now you have China and Russia actively working against the US administration via the UN Security Council to prevent Washington from resolving the situation.  With Europe consumed by the Euro nightmare the United States now truly stands alone against a powerful informal alliance of countries that do not share western values, and are actively working to undermine western strategic goals in the middle east and beyond. 

Economic Collapse

1.  All eyes towards Europe for in spite of continued European attempts to blame America the Europeans have managed to design and implement the biggest threat to the global economy since communism.  They did such a bad job engineering the institutions and laws governing the Euro that its collapse seems all but guaranteed, and it almost makes you wonder if they intended for this to happen from the beginning.  An outright collapse of the Euro would throw the global economy in turmoil and set off a chain of events so destructive that it would take a generation for the world to recover.

2.  Unfortuanately the problems facing the Euro also weigh on the UK, US, and Japan among others.  The difference at least for now is that these countries have the proper institutions and laws in place to attempt to deal with the problem in a reasonable manner.

3.  The entire global economy appears to slowing down all at the same time including the BRICS (Brazil, Russia, India, China, South Africa) which were partly responsible for helping to prop up the global economy during the 2008 meltdown.  If everybody slows down at once where will the help come from this time?

Conclusion

As the world hurdles towards darkness one has to wonder if this madness can be stopped?  I am sure that many of the situations can be managed to outcomes that are not so catastrophic, but the original idea in the first paragraph of massive change and imminent danger to global order should not be underestimated.  The challenges are as great as they are numerous, although some challenges (perhaps Afghanistan) will appear as less important if others play out in dire fashion.  The two that I feel are the most worrisome; the Euro, and Iran are also the two most likely to come to a head in the near future.  Both of these situations are real and will be resolved one way or another.  The Euro will either collapse dragging down the world economy with it or the Europeans will take the necessary steps in fixing the Euro.  Iran will either get the bomb and begin to act even more belligerent, or the US and Israel will strike Iran to try to prevent this.  The problem is that a strike will only delay Iran, the only way to prevent them from getting the bomb is to end the regime.  Unfortunately after the debacle in Iraq no one has the stomach for that kind of action so it will be interesting to see what happens.  Either way both of these issues will be resolved in the near future for better or worse.  

How many have died in Mexico’s drug war? – latimes.com

 Iran, Russia, China, Syria Plan Massive War Game with 90,000

 

G20 Summit, Europe Still Blaming America.

With most of the European economy grinding to a halt and much of the so called PIIGS (Portugal, Ireland, Italy, Greece, Spain) in near collapse Europe’s answer to the crisis when talking to the world press is to still try and blame America.  When asked a question by a Canadian reporter at the G0-20 summit in Mexico about why should North Americans continue to invest in Europe European commission president Jose Manuel Borroso could only respond with this below.

 “Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.

“This crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market.”

These kind of comments from European leaders are nothing new, in fact, it is what they really believe.  In spite of all the evidence smacking them in the face on a daily basis that the Euro as it is presently constructed does not work they continue to try and blame America for their own mess.  It is really somewhat sad and pathetic.  The Euro was a time bomb waiting to go off and now that it has you cannot try and glue all the pieces back together the same way as before.  Europe is being led by incompetents who cannot seem to face up to reality.  Unfortunately the real losers in this mess are the people of Europe who were sold the lie that is the Euro and now only ten years since introduction they find their entire economic system near collapse because of it.

G20 summit: Barroso blames eurozone crisis on US banks

China, Japan, And Germany Are The Real Axis Of Evil

 

The title says it all, the nations listed above prey on all the other nations they trade with by promoting their export based economies that purposely intervene to keep their currencies weak, have policies designed to discourage consumption, and encourage saving money.  Well that doesn’t sound that bad does it, they are only organizing themselves in a smart way, being competitive.  Wrong, their policies and the massive global imbalances (trade deficits countries like the US have with all of them) are directly responsible for the economic crisis in 2008.  Their trade surpluses with our country helped to fuel the housing bubble in this country that eventually went bust and collapsed the financial markets here.  It is well documented that German economic policies or german influence on EU economic policy has greatly contributed to the current crisis in Europe.  German banks helped fuel the housing bubble in Spain, as a matter of fact it is quite possible that the Euro has or will eventually turn into nothing short of a German economic empire, accomplishing what they failed to do militarily in the last century. Free Trade is a grand idea and would probably be a great thing for America if we could ever get it, but we won’t get it unless we  hold predatory nations such as these to account and level the playing field once and for all.  Until then we are just waiting for the next big melt down to happen.

Eurointelligence – Currency – The Weapon of Choice in Trade Wars

Insane in Spain – NYTimes.com

 

On To Italy, Back To Greece

     

With this past weekends bailout of Spanish banks investors are now beginning to look to the Greek elections this weekend to see if Greece elects a party either for or against the EU imposed austerity measures that have demolished the economy but have secured the emergency funding to keep the government running.  Investors are also beginning to take a closer look at Italy to see if there is anything there they could get nervous over.  Italy being the Euro zone’s 3rd largest economy would be an end game scenario for the Euro if investors were to get too nervous and let panic set in.  With its huge debt and the size of its economy the EU would have serious problems raising the kind of capital needed to bail out Italy without thinking of radical measures, like debt mutualization.  So for now we will just have to wait and see, frankly I am growing tired of the whole situation.  It has been going on now for several years, it is clear that the EU is not currently capable of dealing with the matter in a decisive enough manner that will actually end the misery once and for all.  If I did not recognize the gravity of the situation for the wider global economy I would have already hoped Europe would have imploded so we could be done with it.

NEXT: Worry for Italy Quickly Replaces Relief for Spain…

Germans Suffer Reality Check

 

Since the Euro crisis began several years ago Germans had enjoyed a relatively strong economy based in large part on the great products they make being snapped up in emerging markets like China and Brazil.  This seemed to give many of them false hope believing that they were almost immune to what was happening to the rest of Europe.  With this sense of immunity and the fact that they have Europe’s largest economy they went about dictating ridiculously short-sighted austerity measures on the rest of Europe as the price for underwriting the bailouts appearing to believe that they would be able to whether the storm in fairly good shape.

 Well I would say that they have begun to realize that is no longer the case.  The German economy is slowing partly because of demand falling outside of Europe as China and others suffer their own economic slow down, but also because of near economic collapse through out much of Europe.  This collapse in economic activity due in large part to the austerity measures imposed by Berlin have finally impacted demand for German goods to the point of alarm inside Germany.  The Germans now find themselves in a serious mess because it is widely recognized that their policies have only made the situation worse. They committed to pouring hundreds of billions of Euros into bailing out struggling countries, and now they are going to be forced to either go all in the European Project or be blamed for causing the destruction of the Euro.

 It is a lose lose situation for Germany now because if they do what their own people want and rebuff the call for deeper integration ( code for using Germany’s good credit to help finance debt for troubled EU nations) the Euro crumbles.  If they buck what the average German wants and go for further European integration they will soon be on the hook for possibly trillions of Euros instead of just billions.  Unfortunately they have to accept much of the blame.  They chose to join the Euro, even pushing for its creation.  They also helped craft the unworkable design of a single currency without political integration that was doomed to fail.  One of the reasons Germany was inclined to underwrite the rescue was because it was often German banks that fed the credit bubbles in other EU countries so German banks stood to lose hundreds of billions of Euros if they defaulted.  When the Euro went into crisis they called the shots and came up with the failed policies that were supposed to rescue the Euro, now 2 years later you have to ask if there is anything left worth rescuing?  Already having to carry the burden for destroying Europe twice in the last century you almost feel sorry for them as they once again get ready to assume the blame for the destruction of Europe in this century.

Euro Troubles The End of Germany’s Illusions

Insane in Spain – NYTimes.com