Opinion

The Great Debate

from MacroScope:

Will China make the world green?

Workers remove mine slag at an aluminium plant in Zibo, Shandong province December 6, 2008. REUTERS/Stringer

Joschka Fischer was never one to mince words when he was Germany's foreign minister in the late '90s and early noughts. So it is not overly surprising that he has painted a picture in a new post of a world with only two powers -- the United States and China -- and an ineffective and divided Europe on the sidelines.

More controversial, however, is his view that China will not only grow into the world's most important market over the coming years, but will determine what the world produces and consumes -- and that that will be green.

Fischer, who was leader of  Germany's Green Party, reckons that due to its sheer size and needed GDP growth, China will have to pursue a green economy. Without that, he writes in his Project Syndicate post, China will quickly reach limits to growth with disastrous ecological and, as a result, political consequences.

This will have serious consequences on the the way the West lives.

Consider the transition from the traditional automobile to electric transport. Despite European illusions to the contrary, this will be decided in China, not in the West. All that will be decided by the West’s globally dominant automobile industry is whether it will adapt and have a chance to survive or go the way of other old Western industries: to the developing world.

This is not the usual view of China. Many greens have long feared the impact of a huge leap in Chinese growth on the global environment -- refrigerators in a billion homes, cars in a billion garages etc.

Islamophobia and a German central banker

How do you reconcile the traditions of many Muslim immigrants with the freedoms and values of 21st century Western Europe?

It’s a question that has led to periodic outbursts of vigorous debate from France to Holland and Switzerland. In Germany, the discussion has been relatively subdued. Until now.

Why? A passage in a book considered so unsettling that its author, Thilo Sarrazin, was forced to resign from the board of Germany’s central bank this month, provides part of the answer.

from The Great Debate UK:

Greece loses a major incentive to stay within EMU

cr_mega_503_JaneFoley-150x150-Jane Foley is research director of Forex.com. The opinions expressed are her own.-

Germany’s Finance Ministry this week denied a report in Le Monde that Germany, France and other countries were working on a package to rescue Greece. It seems that for now the official line from the grandfathers of European Monetary Union is that Greece can sort out its own budget deficit. The official line from the Greek government is much the same; it continues to maintain that it doesn’t need a bailout.

The problem with this is that this lacks credibility. The blowing out of the yield spreads on Greek government bonds over bunds and the price of credit default swaps are evidence of that. In the months after EMU, the 5 year Greek-bund spread was less than 200 bps. This week it was over 400 bps. Unless the impact of bond yields can be contained Greece loses a major incentive to stay within EMU.

from The Great Debate UK:

Getting to grips with the post-Cold War security threat

johnreid -John Reid, formerly the UK Defence Secretary and Home Secretary, is MP for Airdrie and Shotts, and Chairman of the Institute for Security and Resilience Studies at University College, London. The opinions expressed are his own. -

The fall of the Berlin Wall, on November 9, 1989, was one of history’s truly epochal moments. During what became a revolutionary wave sweeping across the former Eastern Bloc countries, the announcement by the then-East German Government that its citizens could visit West Germany set in train a series of events that led, ultimately, to the demise of the Soviet Union itself.

Twenty years on, what is most striking to me are the massive, enduring ramifications of the events of November 1989. Only several decades ago, the Cold War meant that the borders of the Eastern Bloc were largely inviolate; extremist religious groups and ethnic tensions were suppressed, there was no internet (at least as we know it today) and travel between East and West was difficult. The two great Glaciers of the Cold War produced a frozen hinterland characterised by immobility.

Today’s world is a vastly different place. When one of the great Glaciers - the former Soviet Union – melted it helped unleash a potential torrent of security problems. We now live in an era characterised by huge mobility and instability, in which issues such as mass migration, international crime and international terrorism have a much higher prominence.

from The Great Debate UK:

German elections too close to call

Erik Kirschbaum- Erik Kirschbaum is a Reuters correspondent in Berlin. -

Has this been dullest German election campaign in decades or the most exciting?  Has the battle for power in Berlin between Chancellor Angela Merkel and Foreign Minister Frank-Walter Steinmeier that concludes with Sunday's election been a memorable showdown or a forgettably boring contest?

Many journalists, pundits and voters have complained it's all been a merciless bore compared to the high-octane battles of the past with little action and precious few highlights.

But I would argue that in many ways it has been one of the most interesting campaigns in decades. Why? Because the outcome is so uncertain and there are more different government possibilities that could result from it than at any time in Germany's post-war history.

from The Great Debate UK:

Ghosts of Germany’s communist past return for election

kirschbaum_e- Erik Kirschbaum is a Reuters correspondent in Berlin. -

Will the party that traces its roots to Communist East Germany's SED party that built the Berlin Wall soon be in power in a west German state?

Or is the rise of the far-left "Linke" (Left party) in western Germany to the brink of its first role as a coalition partner in a state government with the centre-left Social Democrats (SPD) simply a political fact-of-life now so many years after the Wall fell and the two Germanys were reunited?

Will a "red" government in Saarland scare away investors and doom the state, as its conservative state premier Peter Mueller argues in a desperate fight to his job?

from Commentaries:

GM blog lifts hood on power struggle over Opel

cfcd208495d565ef66e7dff9f98764da.jpgIt's not often you get to lift the hood and watch a power struggle going on in the engine room of General Motors. But the vice-president of GM Europe, John Smith, has just provided tantilising details of the arguments over the rival bids for Opel/Vauxhall, the main European arm of the fallen U.S. auto giant. Smith is the chief negotiator on the sale of Opel.

In a blog apparently intended to reassure Opel staff, but accessible to the public, he insisted GM had not specified a preferred bidder. But he made clear his own preference for the bid from Belgian financial investor RHJ International, which is loosely related to U.S. private equity fund Ripplewood, over the offer by Canadian-Austrian car parts maker Magna and its Kremlin-backed Russian partner Sberbank.

Smith's post is entitled "Clearing the Air" and was ostensibly written to clarify GM's intentions and dispel erroneous reports ascribed to interested parties. But his account shows just how poisonous the atmosphere appears to be between GM and Magna, and GM and the German government, which backs Magna's bid. It also suggests that the air is not too clear within GM's top management either.

Germany risks zombie banks

Margaret Doyle– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Germany’s politicians seem to have rescued their bad bank. Pushing back the valuation date for toxic assets to before the Lehman collapse has made it more likely that banks will consign their dud investments to the voluntary scheme.

It had looked as if the banks might simply boycott it. However, while the government has scored a political goal, it is no closer to its aim of boosting lending to a credit-starved German economy.
The essence of the scheme is that banks will be able to transfer some 250 billion euros of toxic assets into “eine Bad Bank”. In exchange they receive government-backed paper that they can count towards regulatory capital.

Europe frets over crisis exit strategy

Paul Taylor
– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

Higher taxes? Lower public spending? Devaluation? Inflation? Investment in green growth?

European governments are pointing in very different directions as they debate an exit strategy from the global financial crisis. Despite European Union efforts to coordinate economic policy, there are clear signs that the main European economies will charge off in disarray towards separate exits.

from The Great Debate UK:

Germany’s bad bank fudge

REUTERSpaul-taylor-- Margaret Doyle and Paul Taylor are Reuters columnists. The opinions expressed are their own --

LONDON/PARIS, April 23 (Reuters) - Germany is to set up a system of bad banks before the summer recess to hold some 250 billion euros of toxic assets. Finance Minister Peer Steinbruek has assured taxpayers that his solution -- called "eine Bad Bank" (there is no German word for the concept) -- will not weigh on the budget.

He is fooling them, if not himself. If the rescue really were such a free ride for the taxpayer, some savvy commercial investor would have stepped in. Under the proposed scheme, the taxpayer will end up carrying the risk of "Schrottpapiere" (scrap paper).

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