from Bernd Debusmann:
Who is the superpower, America or Israel?
On February 18, the United States vetoed a U.N. Security Council resolution on Israeli settlements in occupied Palestinian territories. The vote raises a question: Who dominates in the alliance between America and Israel?
Judging from the extent to which one partner defies the will of the other, decade after decade, the world's only superpower is the weaker partner. When push comes to shove, American presidents tend to bow to Israeli wishes. Barack Obama is no exception, or he would not have instructed his ambassador at the United Nations to vote against a policy he himself stated clearly in the summer of 2009.
"The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop," he said in a much-lauded speech in Cairo.
Compare this with the text of the resolution that drew 14 votes in favor and died with the U.S. veto: "Israeli settlements established in the Palestinian Territory occupied since 1967, including East Jerusalem, are illegal and constitute a major obstacle to the achievement of a just, lasting and comprehensive peace."
Linguists may quibble over the difference between "illegal" and "illegitimate" but the substance of the two statements is pretty much the same. So why the veto? It followed an energetic campaign by the Israeli government and its allies in the United States to keep the issue out of the United Nations, seen by Israel as a reflexively anti-Israeli body.
Washington's ambassador at the U.N., Susan Rice, had a different explanation. Though the U.S. opposed settlements, she said, adopting that resolution would have risked hardening the positions of both sides in future negotiations. In other words, let's return to the parallel universe of the "peace process."
In that universe, American presidents make optimistic predictions detached from the realities on the ground. George W. Bush, early in 2009: "The peace agreement should happen and can happen by the end of the year." Obama, last September, held out the prospect of an agreement that would, by next year," lead to a new member of the United Nations - an independent state of Palestine, living in peace with Israel."
Nuclear bombs and the Israeli elephant
-The views expressed are the author’s own-
For the past four decades, there has been an elephant in the room whenever experts and government officials met to discuss nuclear weapons. The elephant is Israel’s sizeable nuclear arsenal, undeclared under a U.S.-blessed policy of “nuclear opacity.”
It means neither confirming nor denying the existence of nuclear weapons. “Deterrence by uncertainty,” as Israeli President Shimon Peres has called it. The United States became a silent partner in Israeli opacity with a one-on-one meeting between President Richard Nixon and Israeli Prime Minister Golda Meir on Sept. 26, 1969.
That policy made strategic and political sense 40 years ago but it has outlived its usefulness, conflicts with Israel’s democratic values, is counter-productive and should be abandoned. So argues Avner Cohen, one of the world’s leading experts on Israel’s bomb, in a new book “The Worst-Kept Secret”, which delves deeply into the history and strategic and political implications of the policy.
The book’s publication coincided with a rising chorus of warnings by U.S. and Israeli hawks over the dire consequences of Iran obtaining a nuclear bomb, an aim Iran firmly denies. In several essays over the summer, American neo-conservatives pounded the drums of war against Iran. On a visit to the U.S. last week, Israeli Prime Minister Benjamin Netanyahu said a “credible threat of military action” from the West was necessary to stop Iran from making a nuclear bomb.
In his book, Cohen says it is almost impossible to predict the outcome of the current battle of wills between Iran and the West. But if Iran were willing to negotiate seriously, it might agree to substantial concessions only on a regional basis, as a step towards establishing a nuclear-free zone.
“In such a case, Israel could be pressed to make its own nuclear contribution, possibly even to shut down the Dimona reactor as part of the price for halting Iran’s (uranium) enrichment activities at Natanz.”
If there is one nation that is entitled to have nuclear weapons-it’s Israel. Tiny territory, surrounded on all sides
by hostile populations, with genocidal intentions;
It would be shear insanity for Israel to even consider
giving up nuclear weapons.
U.S., China and eating soup with a fork
-The opinions expressed are the author’s own-
Are economists the world over using an outdated tool to measure economic progress?
The question, long debated, is worth pondering again at a time when two economic giants, the United States and China, are sparring over trade, currency exchange rates and their roles in the global economy.
In the run-up to U.S. mid-term elections on November 2, politicians from both parties, for different reasons, blamed trade with China for American job losses. China responded with irritation and hit back by accusing the U.S. of “out of control” printing of dollars tantamount to an attack on China with imported inflation.
Measured by Gross Domestic Product (GDP), the United States tops the list of countries. China overtook Japan in August to become number two. Depending on whose forecasts you believe, China will overtake the United States in 2020, 2035 or 2040 and therefore turn the 21st century into the long-predicted Chinese Century. It’s becoming conventional wisdom that the United States will play a reduced role on the world stage.
Crystal ball gazers might do well to remember that long-range forecasts have often been wrong in the past. At the turn of the 20th century, eminent strategists predicted that Argentina would be a world power within 20 years. In the late 1980s, Japan was seen as the next economic leader, on the strength of supposedly unstoppable progress. Forecasters extrapolated from past GDP growth rates.
They are widely used to compare standards of living in one country with those in another but critics say GDP is too narrow to be a realistic indicator. Joseph Stiglitz, the Nobel-prize winning American economist, has complained that world leaders make a fetish out of it and suffer from GDP-obsession.
Illegal immigration is not a problem for China [and there is much from Afghanistan in the west , Myanmar in the south ,Mongolia in the north ,to North Korea in the east [via the US and EU] Why ? Because it can absorb them into it’s growing economy .
Illegal immigration is a problem for the US because the economy is growing very slowly cannot absorb the influx of people following their dreams [or should that be illusions] .
Cheap Labour is a good thing unless they are cheapening my labour is the cry across the the “developed” [read privileged ] world !
Get real we all must learn to share and coexist !
Quickly Please !
Euro zone faces QE2 pain test
QE2 — a second round of quantitative easing — means that soon the U.S., Japan and Britain will all be busily exporting their deflation, raising the question: Just how much pain can the euro zone take?
If by November we have three of the largest economies printing money and buying up their own debt, the outcome — in fact the intention — will be to drive their currencies lower against their trading partners, opening new international markets for their goods and, by raising the price of imported goods, fighting deflation before its debilitating psychology can take hold.
That is the plan, at any rate, and, unless something else happens, it will force the euro up against all major currencies, including, as it is tied to the dollar, the Chinese yuan. The euro has risen about 9.5 percent against the dollar in the past month, a trend that ultimately will murder European exporters and its stock market.
For reasons of history, society and sheer cussedness, the European Central Bank does not seem inclined to join in, though as usual there is dissension.
Speaking in New York on Tuesday ECB President Jean-Claude Trichet said that the ECB’s own version of QE, buying bonds of euro zone weak links and other liquidity support, will continue as planned at least until the end of the year, at which point, “We will see.” In contrast governing council member Axel Weber, speaking in the same city on the same day, pointedly called for an end to special measures immediately, saying the risks do not justify the benefits.
Forcing Europe to absorb more of the global deflation is really nothing more than a “back at ya” by the U.S. and others. Europe, in deciding to cling to its currency union and impose austerity on its weaker members, was doing exactly the same thing; exporting deflation, both in terms of a weaker euro and through the desperate actions of Greek and Irish residents who will consume less and must export more.
So, why won’t Europe simply power up its own printing presses and join the currency debasing party? In part it is a matter of history; the old Bundesbank horror, bred in the bone, of the inflation that devastated Weimar Germany.
Euro zone faces QE2 pain test ?
actually this title is “Reverse engineering”
of the U.S., Japan and Britain deflation
problem
The Speculation group against the Euro on hold,
R&D investments made in a strong Euro currency will
return investments. Who invests in Innovation in a
low Dollar Zone without the Sub-prime Scams returning
Investments….Good bye old economy view.
America’s trouble with Islam
Of the many posters held aloft in angry demonstrations about plans for an Islamic cultural centre and mosque in New York, one in particular is worth noting: “All I ever need to know about Islam, I learned on 9/11.”
As an example of wilful ignorance, it’s in a class by itself. It passes judgment, in just 12 words, about a sprawling universe of 1.3 billion adherents of Islam (in 57 countries around the world) who come from different cultures, speak a wide variety of languages, follow different customs, hold different nationalities and believe in different interpretations of their faith, just like Christians or Jews. Suicidal murderers are a destructive but tiny minority.
But for the people waving all-I-ever-need-to-know posters in front of national television cameras two blocks from “ground zero,” site of the biggest mass murder in American history, Islam equals terrorism. No need for nuance, no need for learning, no need for building bridges between the faiths. The mindset epitomized by the slogan mirrors the radical fringe of Islamic thought, equally doubt-free and self-righteous.
Both sides have data to back up their assertions. The Islam-equals-terrorism school of thought can point to 3,000 victims of the attacks on New York’s World Trade Center and the Pentagon. Those who preach that the U.S. is waging war on Islam itself, and terror acts are therefore a form of self-defence, can argue that Christian soldiers have been killing Muslims through history, from the Crusades to the wars in Iraq and Afghanistan.
The “ground zero mosque” affair began with a dispute over the center’s proximity to the hole where the Twin Towers once stood. Too close to hallowed ground, argue opponents, including family members of people who died in the attack. The question of location morphed into a national debate on religious tolerance and prompted demonstrations against planned mosques more than a thousand miles from New York.
Does all this add up to a rising wave of anti-Muslim bigotry? Or is it more of the same, with the volume turned higher in advance of mid-term elections? There are no hard data to answer that question and it is worth looking back a few years at polls on American attitudes towards Muslims. In 2006, a Gallup survey found that 39 percent favoured rules requiring Muslims, including U.S. citizens, to carry special identification to better spot potential terrorists.
Callers to a Washington radio show host who followed up on the ID issue suggested identifying Muslims with a crescent-shaped tattoo on their foreheads, stamps on their driving licenses, passports and birth certificates, or special armbands.
I wonder why it is that as soon as the threat of the cold war ended Islam steped up to fill the vaccum of peace?
For assets, demographics may be destiny
Right about now a massive demographic shift is getting under way which will put substantial downward pressure on house and stock prices, perhaps suppressing global asset prices by one percent a year.
This is going to complicate the response to a series of thorny outstanding problems. Less buoyant asset markets will make it that much harder to work out from under a massive overhang of debt in many advanced economies. It will also put retirement plans in a vise, as more would-be retirees find the assets they had hoped to live off of in old age are not worth enough.
That means longer working lives but also higher savings, which may, you guessed it, hit consumption, company profits and give stock and other asset prices another shove lower.
And, if you believe that the sharply rising house and stock prices of the last generation were in part a social phenomenon, then look out for the opposite, as stocks and houses get a bad name as they suffer from a series of unfortunate effects.
A new Bank for International Settlements working paper by economist Elod Takats looks at the interaction of demographics and asset prices and finds not a meltdown but a long hard slog for house prices and, by extension, for other assets like stocks.
“If you look at the U.S., or most English-speaking countries, the next 40 years is substantially different from the last 40,” Takats said.
“We had demographic tailwinds over the past forty years and will have headwinds over the next forty.”
US intelligence spending – value for money?
America’s spy agencies are spending more money on obtaining intelligence than the rest of the world put together. Considerably more. To what extent they are providing value for money is an open question.
“Sometimes we are getting our money’s worth,” says John Pike, director of GlobalSecurity.org, a Washington think tank. “Sometimes I think it would be better to truck the money we spend to a large parking lot and set fire to it.”
The biggest post-Cold War miss of the sprawling intelligence community was its failure to connect the dots of separate warnings about the impending attack on New York and Washington on September 11, 2001. It also laid bare a persistent flaw in a system swamped by a tsunami of data collected through high-tech electronic means: not enough linguists to analyse information.
That problem was thrown into sharp focus by the government’s disclosure, long after September 11, that it had a 123,000-hour backlog of pre-attack taped message traffic in Middle Eastern languages, clear evidence of a system drowning in its own information.
The overall amount of money spent on the collection and analysis of intelligence as well as on covert actions and counter-intelligence by civilian agencies and the military was long shrouded in secrecy. It was disclosed last September by Dennis Blair, then President Barack Obama’s director of national intelligence: $75 billion a year.
No other country comes even close and no other country has as many people working in the intelligence industry — at least 200,000, counting private contractors. Russia and China lag behind.
“Nobody is quite as ambitious as the United States because nobody is trying to project global power as much as the U.S.,” said Steven Aftergood, an expert on intelligence spending who heads the Federation of American Scientists’ Project on Government Secrecy.
In terms of terrorist threats I think it is fair to say that intelligence is our only front line hope to success, it is quite clear from Afghanistan, Hamas, Yemen, Pakistan, etc. that armed confrontations cannot remove these threats. Really we are better off spending the money we do on intelligence than on the regular military.
As far as whether or not the money spent yields the results it should we must recognize a couple things, first the difficulty of dealing with the sheer amount of information our services need to deal with, and secondly how daunting it is to really reform entrenched bureaucratic interests. The first issue makes it clear how important the second issue is. By creating the Department of Homeland Security we had hoped to solve a lot of the problems we have in duplication of efforts and sharing of information between departments. It is clear that effort at reform fell short and that we need to revisit that.
It isn’t the money we spend, it is what we get in return for it.
China’s export dominance must force U.S. rethink
Managing the rise of China’s vast economy and healing the U.S. trade deficit will require a new willingness and capacity to boost U.S. technology exports at affordable prices. More importantly it requires a new language from policymakers and a new mindset.
In a recent survey of American businesses, the proportion who felt unwelcome operating in China had risen sharply, amid tense stand offs involving Rio Tinto and Google. But with U.S. legislators in full flag-waving cry about China as a currency manipulator, is it really surprising China is looking to become more self-reliant?
At the heart of the trade problem is the difficulty the United States (and other western economies) are experiencing in adjusting to China’s rise to superpower status in the 21st century. It is causing the same problems the rise of Germany, Japan and the United States itself caused for Britain in the 19th and early 20th centuries.
Until now most analysts have focused on destabilising military aspects of that competition and the need to prevent a re-run. But almost equally important were tensions in the industrial sphere.
China’s rise is also reshaping the world manufacturing base. Inevitably, it will leave some industries in North America washed up and uncompetitive, the equivalent of Britain’s rusting mill towns and shipyards. Rather than drawing up the dikes and hoping history will go away, the challenge is to develop export-focused industries capable of selling competitively into China’s vast internal market.
FULL SPECTRUM DOMINANCE
The U.S. economy is in deep trouble. Even a quick look at the trade statistics reveals that no conceivable adjustment of the exchange rate could hope to rebalance bilateral trade flows between the United States and China.
Well, the average view of an American is that he is fat lazy and greedy. A really bad combination. I’m sure that isn’t all true. Perhaps the truth is more complacency due the the fact that they thought their well being was a right. Because it was written on a piece of paper. A long time ago. But the American constitution means nothing to a neo mercantile elsewhere. To fix this the American people are going to have to change their identity. To a people that thrive under pressure, think out the box, leverage their own intelligence (you know, like in the movies). America is a nation that was build on character and values. Unfortunately, that doesn’t always get you the contract or tender (Ask me, I live in Africa). Throughout modern history America has had an influence. If they did not fight in Korea and Vietnam who knows where communism would draw its boundaries now. We owe America much. I’m rooting for you.
At least U.S. has Japan to fall back on
(James Saft is a Reuters columnist. The opinions expressed are his own)
The bad news for holders of U.S. debt, in case you missed it, is that China has sold so many Treasuries that it is no longer America’s leading lender.
The worse news is that there is a new creditor-in-chief, and it is Japan, an aging country with its own government debt bubble to contend with.
China sold about $34 billion of Treasuries in December, taking its holdings to $755 billion, while Japan increased its purchases and now is in the top spot of the Treasury Department’s scroll of merit, with $768 billion. China’s holdings peaked in April, since when the trend has been gently downward.
From a demographic point of view, though, the United States making a long term borrowing plan based on access to Japanese funding is a bit like my daughter making a retirement plan that has me continuing to work when she stops at its centre.
Japan is a wonderful country with many strengths, but one salient feature of Japan is that it is aging, or should that be aging, deeply in debt and dependent upon very low rates to continue to make those debts manageable.
Japan’s government debt to GDP ratio is 190 percent, as against 84 percent for the U.S. That huge debt, which has nearly quadrupled in the past 15 years, is made tenable because the Japanese are great savers and own the vast majority of their government’s stock of debts, unlike Americans, who own instead the vast majority of stuffed animals made in China. Japanese debt is also manageable because market interest rates are so low — just a 1.32 percent yield on 10-year government bonds.
This is really big. Perhaps 2010 will be the year when we will see the fall of modern Spain empire. To understand this you have to look to 16-17 century Spain and its overseas silver production. It may seem that the things are different now but in its essence the story is the same.
However in these times you need to prepare yourself mentally. You need to start growing peace in yourself in order to take advantage of these times we are living in.
My blog tells about it (see my webpage if interested in).
Who wins in U.S. vs Europe contest?
In these days of renewed gloom about the future of Europe, a quick test is in order. Who has the world’s biggest economy? A) The United States B) China/Asia C) Europe? Who has the most Fortune 500 companies? A) The United States B) China C) Europe. Who attracts most U.S. investment? A) Europe B) China C) Asia.
The correct answer in each case is Europe, short for the 27-member European Union (EU), a region with 500 million citizens. They produce an economy almost as large as the United States and China combined but have, so far, largely failed to make much of a dent in American perceptions that theirs is a collection of cradle-to-grave nanny states doomed to be left behind in a 21st century that will belong to China.
That China will rise to be a superpower in this century, overtaking the United States in terms of gross domestic product by 2035, is becoming conventional wisdom. But those who subscribe to that theory might do well to remember the fate of similar long-range forecasts in the past. At the turn of the 20th century, for example, eminent strategists predicted that Argentina would be a world power within 20 years. In the late 1980s, Japan was seen as the next global leader.
The latest pessimistic utterances about Europe were sparked by a debt crisis in Greece which raised concern over the health of the euro, the common currency of 16 EU members. Plus U.S. President Barack Obama’s decision to stay away from a U.S.-EU summit scheduled for May in Madrid, with a new EU leadership structure that should have made it easier to answer then U.S. Secretary of State Henry Kissinger’s famous question: “Who do I call when I want to talk to Europe?”
There are still several numbers to call in the complex set-up, giving fresh reasons to fret to those crystal-gazers who see the future dominated by the United States and China, the so-called G-2.
Pundits who see the European way of doing things as a model for the United States (and others) to follow are few and far between, not least, says one of them, Steven Hill, because most Americans are blissfully unaware of European achievements and, as he puts it, “reluctant to look elsewhere because ‘we are the best.’”
As foreigners traveling through the United States occasionally note, the phrases “we are the best” and “America is No.1″ are often uttered with deep conviction by citizens who have never set foot outside their country and therefore lack a direct way of comparison. (They are in the majority: only one in five Americans has a passport).
EU has today also the largest military by Libon treaty and the most dangerous weapon on Earth set on french SSBN:The M51.
I really loved the Lawyer analogy; it fits. But nothing will change. Hillary is still owned by the NYC crowd, and is beholden to AIPAC. Obama needs all the domestic friends he can get, including and especially the NYC crowd. The GOP can’t antagonize its religious conservatives.
It’s not that the Israelis play good Real Politik, it’s that we play it very poorly. They haven’t had a Talleyrand in a long time, and Liberman (both ours and theirs, but in this reference theirs) is simply a corrupt old pol. Really, the problems with the U.S./Israel thing expose the real dangers of democracy. This is like some historical reading of debate in Athens.