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BRICS. These countries were supposed to be the future economic superpowers that would eventually overcome the clumsy Western economies. But China is now pursuing goals of its own, Russia is pressed against the wall, Brazil and South Africa are lagging behind... What happened?

The BRICS meeting in China was a good chance for the host country to demonstrate their prowess right before the 19th congress of their Communist Party. To show off both to the world and at home. The sensitive topics were to be ignored for a while, lest any unrest be caused before the umpteenth re-grouping of the ruling elite. Only topics where relative consensus exists are to be touched, like free trade, climate change, and protection from cyber terrorism. Oh, and the challenges to the digitalized economy, a subject that's of particular importance for the Indian chairmanship of BRICS. Except, the big summit and the demonstrations of like-mindedness can't conceal the fact that China has long abandoned the main purpose of BRICS. With their New Silk Road initiative, they've shown they pursue their own goals and they want to increase their domination of the Asian continent.

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It seems the Trump plan for US economic growth relies almost exclusively on corporate tax cuts and tax cuts for the wealthy. A "let's put all our growth eggs in one basket and hope for the best" sort of approach. During his presidential campaign, Trump promised to create 25 million new jobs and generate an economy that trots along at a 4-6% annual growth rate. Apparently, neither Trump promise is going to happen any time soon*:

Forecast of weak economic growth raises big questions about Trump’s populist agenda

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Or it could be more about the fact that the third wave of recovery following the Carter bubble is taking a little long to come, hmm? Picking up international growth numbers might save us, but the rates were not corrected and there is a lot of money sloshing around. To prevent a recession might be rather difficult given the parameters and optimism that seems to be rather misplaced.

* That, and the fact that Trump's plan assumed that the RINO congress led by McConnell and Paul Ryan would be able to pass legislation, which it so far has been unable or unwilling to do.
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One of the problems with America is that EVERYTHING is for profit. Some services like health, public schools, and prisons should be provided by the state. There is simply no other way. Trickle-down economics and the invisible hand of the infallible free market does not work here (not to mention that it's bullshit).

The US has inferior healthcare that delivers inferior health for 3 times the price of other systems. No one wants to admit it. Everyone wants to make money by exploiting the weak, sick and elderly. FOX tells the ignorant that it is great and they believe it. It is a sad spectacle.

And this extends to other spheres of social life. The US healthcare is one of the most expensive in the world, sure. So much for market efficiencies. But take a look at schools. Public schools serve crap lunches to kids because big corporations lobby hard for these contracts. So your kid's health is secondary to corporate profits. The prison system is overflowing because it pays to have lots of people in jail. It's good for business. It seems that private corporations are extremely good at billing the government insane amounts of money for the crappy services they provide. What should operate as a free market economy is lost to private networks and good old cronyism - because after all, it's just taxpayers' money!

Corporate greed cannot come before the well-being of your citizens. This will only weaken the entire society over time. It was Mahatma Ghandi who said "A nation's greatness is measured by how it treats its weakest members". And it's true. Because whenever the social and economic gaps in a society widen beyond a certain critical point, major upheaval follows.

But of course politicians don't care about that. As long as they keep filling their pockets, it's all birds and roses.
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When George Marshall, Truman's secretary of state and former commander in chief of the US army visited Harvard to receive his honorary title in June 1047, the decision wasn't deemed too important by the press. The historians say his hosts at the university didn't know what he would say in his speech. But that speech marked the beginning of changes of enormous scale across post-war Europe. Within a single short paragraph, Marshall described the devastation in Europe and said it was logical that America would do whatever it takes to help restore the economic health of the world, because without a stable economy there could be no peace and stability anywhere. That day is considered the birthday of the Marshall Plan.

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Has the Shambling Mound finally stopped? No, of course not. It's just for the second time in a row other events have had priority and let's face it, the stumbling of Lord Dampnut, mayor of the global village, after a while, do give a sense of more of the same. It's almost that sheer incompetence, random lurching, and a complete disdain for facts has all become the new normal. It was appropriate then, that the weekend started with Earth Day and a March for Science in 600 cities around the world. Because in 2017, this is apparently necessary.

The first item of the week was revelations that the Senate Intelligence Committee into Russian influence in the 2016 election had failed to make much progress, with much blame being laid on chairperson, Richard Barr, who apparently was refusing to sign any letters for even a single subpoena. Meanwhile it was revealed that former National Security adviser Michael Flynn had received payments from Russia Today and over a half a million dollars on payments from Turkey for lobbying purposes - quite clearly I'm in the wrong business - and all without authorisation or proper disclosure.

Moving to economic matters House Republicans tried to avoid a government shutdown by removing $1 billion USD proposed to build Wall of Evil. Lord Dampnut quickly assured on Twitter (where else?) that the Wall would be built, and followed up with a tariff on Canada (Congress Republicans are desperately trying to get Lord Dampnut not to abandon NAFTA). The following day was a frankly insane tax policy which included reducing the number of tax brackets, reducing the corporate tax rate by more than half, and getting read of inheritance tax (gee, who will that benefit?). Economists were less than impressed, but what would they know? They know what the weakest growth in three years means.

The weekend of the fifteenth week started with Lord Dampnut skipping the White House correspondents dinner (the first time in 36 years), and going to a rally in Pennsylvania to celebrate 100 days as Lord Mayor of the global village - and claimed a record attendance; apparently facts don't matter. And they didn't matter the following day with the gaffe that Andrew Jackson was really angry about the US civil war. I'd be angry too if I had been declared dead and buried for sixteen years before the war even started.

Another attempt to end the Affordable Health Care Act was a feature of Week 15, but whilst actual humans had another story to tell, it managed to get through the House with a wafer-thin majority (217-213), replaced with the American Health Care Act. Comparisons between the two systems are inevitable; you can decide for yourself. The medical professions were not impressed. The Senate plans it's own health care bill. But at least the soul will receive healthcare; an executive order is signed allowing for religion to be more involved in politics.
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It's nice when you're swimming amidst tons of cash, right?

Belt and Road Initiative: China Plans $1 Trillion New ‘Silk Road’

It's got all in this plan: ports, power plants, power grids, telecommunications networks, roads, railways, bridges, transport hubs, transport manufacturing (train/ship builders) etc.

Here's a nice colorful map of it all:

Well, all I see is a colourful streak on a map running through many Muslim countries pretending to be functional nation states. This must end well.

Would love to see how China would be taking its turn in dealing with the (in)famous Middle East quagmire. It should help accelerate global distrust of China.


Read more... )
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Two pieces of news, one from Denmark, the other (the one that I am going to focus on) from Norway:

Denmark's government now has no foreign currency debt — for the first time in 183 years

Norway is the world's happiest country in 2017, according to the World Happiness Report

This thing about Norway can't be right, OK? Hey, their most famous writer Karl Ove Knausgaard (who!?) regularly writes about his dad's alcoholism for a living. His colleague Jo Nesboe tells stories about lots of blood and murder. And Edvard Munk's most famous painting Scream calls associations of anything but happiness.

Hey, and let us not forget that it is cold, damp and dark for most of the Norwegian winter. And yet... turns out the happiest people in the world live there (and in that region in general). How come?

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The string of terror attacks and the gradual amping up of authoritarianism of the Erdogan regime may've been perceived as Turkey's main problems, but in truth, their woes are economic first and foremost. Do bear with me.

The Turkish economy has registered a 1.8% slump for the 3rd quarter of last year, and the forecasts are even grimmer for the last quarter. And all of this, after a decade-long growth. Question is, would Erdogan and his almost one-party state have survived politically in the conditions of an impending economic crisis? Very unlikely - if Turkey still had a democracy.

However, the ruling regime has done their best to crush any dissent in recent months, and find new enemies (internal and external) that they could focus people's discontent upon. In the meantime though, the two major rating agencies S&P and Moody's have remained unimpressed, and have downgraded the Turkish debt below the acceptable levels, now placing it at "Junk".

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The annual meeting of the Illuminati/Bilderberger cabal in Davos has come up with a new motto: "Responsive and Responsive Leadership". Sounds nice and timely, what with the inauguration of President Douche who has vowed to shake up the existing world order, whatever that's supposed to mean.

So, the Davos smart-heads are unanimous that the main culprits for The Donald's shocking rise are the key crises of the recent years: polarized society, income inequality, and many countries shutting themselves in and getting introvert. This years Global Risk Report (something like a Davos manifesto setting the priorities for the next year) outlines five factors that will determine world events from now on. 1) Slow growth plus high debt and demographic shifts that will increase inequality and give ammo to the anti-globalist camp and those who feel marginalized by the current capitalist model. 2) Smeared-out national identities, systematically undermined by globalization, and the subsequent emotion-prone decision-making process. 3) The Fourth Industrial Revolution having changed modern societies, economies, and ways of doing business. 4) The transition to a multi-polar world order that threatens stable global cooperation. 5) The need for urgent action on climate change that's hanging like a sword over everybody's heads with an ever growing menace.

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In late November, the canals of St. Petersburg, the so called Northern Venice, are covered in ice. The few hours of sunshine and the extremely low temperatures make these days quite an ordeal. The ambulances crisscross the city in search of hobos and drunken people, taking them off the streets to prevent deaths from frostbite. Every winter about 600 people die on the streets of St. Petersburg, and that's not counting all those who've had their limbs amputated, and other victims of frost.

At the Nevsky Ave, in the center of the golden-clad city that was built by Peter the Great in place of some swamps next to the Gulf of Finland, posh shops are lining the sidewalks, alongside shiny restaurants and souvenir shops. St. Petersburg is not just a tourist hub and Russia's primary Baltic port, but also the country's second most important city after Moscow. It's a huge economic center. But it still hasn't managed to avert the crisis that has engulfed the whole country.

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Recently, I got an interesting glimpse into the issue of affordable housing in San Francisco when I attended a City Hall hearing on the transfer of liquor licenses. One of the cases involved the transfer of a license into a space on the ground floor of an apartment building. There was, the building owners insisted, only one tenant who had been there more than twenty years, and he was fine with the bar going in downstairs.

"How many units are in the building?" asked one of the supervisors.

"Thirty" replied the owner.

"You mention one tenant. Are the other 29 units vacant?"

This is a question that, one would think, could easily be answered "yes," or "no," but that seemed beyond the power of the owner, who immediately launched into a speech about how everything he was doing was perfectly legal...

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Fewer Americans today (as a share of the total population) are part of the middle class than at any time since WW2. As serious a threat as that is, what's worse is the HUGE number of middle class families who are one bad day away from poverty:

76 million Americans are struggling financially or just getting by

"Some 46% of adults say they can't cover an unexpected $400 expense or would have borrow or sell something to do so.While lower income Americans said they'd have the toughest time handling this emergency charge, some 38% of middle class Americans reported they'd have trouble too. Even 19% of those raking in over $100,000 a year said they couldn't pay the bill promptly.
"Nearly one-third of non-retired adults have not socked away anything for their Golden Years nor do they have a pension. This includes 27% of those age 60 and older."

The numbers speak for themselves )
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Imagine you're participating in a TV show and you're asked to guess which US presidential candidate has said that many Americans are angry because of the state of the economy, which is rigged in favor of the elites. This statement could've easily been Trump's or Hillary's, or Bernie's. And not because of the cynicism of the former two, both representatives of the economic and political elites, respectively. Kind of doesn't make sense to hear a top-1-percenter whining against the privileged, right? It's just that both presumptive nominees (what a weird term) are now eager to ride the wave of protectionism that's been sweeping across hearts and minds in America, and is shaping up to become the new slogan at the upcoming general election. Oh, by the way, the words are Hillary's. She said them back in February at the Uni of Wisconsin. Funny, right?

In short, the main reason for a freshly renewed protectionism schtick is that more and more US workers are worried they could lose their jobs if the trade agreements with other parts of the world kick in, and cheap stuff from China starts undermining the US economy. The presidential candidates, in turn, are tempted to play by that tune and use it in their favor to garner support and earn votes. Doubtless, Trump is more extreme in his statements than Hillary. He has turned the debate on free trade into one of the pillars of his campaign, hurling numerous tough utterances against China, Mexico and Japan, and proposing a 45% tariff on all Chinese goods. But Hillary is not too far behind, either. She has said she doesn't support TPP, although just a few years ago while she was Secretary of State, she called it the "gold standard" of trade agreements. This "evolvement" of hers shows that the popularity of open economy and market is dwindling. And that's a rather risky tendency in the current situation, where the global economic growth remains way below the pre-2008 levels (this year's WB forecast is for 2.4%), and the G-7 leaders still can't come up with a way to bolster it.

Things aren`t as hunky-dory as the official stats suggest )
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Suffice to have a brief look at a picture of the Qatari capital Doha from 30 years ago and see the stunning difference from today. The country's oil history is well-known, it's what has launched Qatar onto the world stage, economy-wise and income-wise. Surely, many of its citizens used to believe until very recently that this wealth was reserved to them for eternity, and the world was arranged in a way that would grant them prosperity and a high living standard for centuries. But this belief has started being shaken in recent months and years. The dynamic changes of the time haven't bypassed this Gulf state either: the stability and security that the Qataris used to take for granted, and the predictability of their economy, seems to have gone for good. The moving sands of globalisation have caught up even with countries that were presumably the most stable. The deep changes in the world of energy production and the increasing competition between the (ever increasing number of) major players, the fracking revolution, the boom in the transportation of energy resources, the growing interdependence and constant shift towards renewables - all of this is making the accelerated adaptation of the (now former) energy hegemons inevitable and urgently necessary for their survival.

The two-digit deficits from last year in many Gulf states have naturally attracted the analysts' attention, as well as the de facto undermining of OPEC which for decades used to utterly dominate the energy markets and institutionally enforce the present development model of the world. These problems instantly started generating ripples. The most significant among them, the shrinking public expenses and the cuts in some of the larger-scale projects, as well as diminishing subsidies for oil and gas. But this year, even deeper signs of change have started coming to the surface. In places like Saudi Arabia, Qatar and UAE, massive layoffs have started at the (mostly foreign-dominated) labour markets. The biggest oil company in Abu Dhabi for instance has cut 10% of their staff in a single sweep. Riyadh was also forced to take similar measures, being pressured by almost 30% of youth unemployment, which could further deepen their economic woes. Apart from these events though, the most intriguing element of what's happening is related to the emergence and implementation of new development strategies in those societies.

The end of easy money )
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When he took office in 2014, Ukrainian PM Yatsenyuk called his decision a political suicide. That was before the Russian annexation of Crimea and the start of the conflict in the Donbass. Now two years later, Yatsenyuk may've not officially become a political corpse yet, but he's close. Although his government did survive a no confidence vote last month, since then the ruling coalition has been in shambles. And the political stupor is threatening not just the PM's fate but also Ukraine's hopes for normalization.

The impression is that an oligarchic counter-revolution has been launched, as one Serhiy Leshchenko, a current PM, recently said. One initiated by none else but Yatsenyuk himself, and president Poroshenko. Ukraine is again fighting its internal demons: paralyzing corruption and the suffocating embrace between business and power. In result, the country is at the brink of political chaos and economic collapse, while the rulers are quickly running out of favor with the populace, and losing the credit of trust that they were given both from outside and inside.

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(The shop is temporarily closed. Says it all really.)

In recent days, the main economic news in Russia is not the oil price (which of course remains dangerously low), but the clearing out of street stalls and kiosks around the subway stations. Those used to serve the function of mini-markets for the passers-by for a long time. Of course, most of them were pretty ugly and they looked as if they had been compiled out of materials from the scrap-heap. But many people still bemoan their removal because, apart from essentially being convenient little stores, they used to sell cheaper than the larger supermarkets. The authorities are preparing to remove at least 100 such vendors from various parts of Moscow, claiming these have been raised in violation of trade law and all hygiene requirements.

The response around the social networks has been that of dismay and anger. Many have called the actions of the Moscow mayor "the night of the long shovels", in a somewhat hyperbolised allusion to Hitler's Night of the Long Knives. Still, one could sympathise with the Muscovites, because the measure will narrow the market down to a very elitist segment of big trade chains, and will force many people to change their customer habits, and spend more money in a situation that already awfully smells of recession. Some are logically asking themselves why the city authorities would do such a thing in an election year, and risk creating thousands of potential protest votes.

This animosity to the actions of the Moscow mayor Sergey Sobyanin (himself a former Putin party aide) is added to the deteriorating economic situation in the country. Recent polls indicade that 40% of the Russians believe the situation is worse than it was in 2005 (another crisis time). And for a good reason. Last year the Russian economy shrank by 3.8%, which is its worst slump since 2009. Inflation was 13% in 2015, and keeps soaring. Meanwhile, the real salaries are plunging. Foreign investment is drying up because of the sanctions, and the low oil prices have caused the ruble to plummet. Which all means that 2016 will be a second recession year in a row.

The problem could no longer be swept under the rug at this point. )
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It is no secret that everyone who would venture into Iran (say, on a business trip) would sooner or later come into the focus of the so called Revolutionary Guard. Indeed, this institution seems to be running everything in Iran - from the transportation links with the airport (where you are first supposed to set foot into the country) to border control, airport management, international ports, and all trade. These guys decide which goods would enter the country and which would stay banned. They do not pay customs fees and taxes, they answer to nobody about the nature of their trade activities, and they are the perfect vehicle to the black market, which in turn is a perfect source of revenue for the elite guard.

The Army of the Guardians of the Islamic Revolution, as the full name of that institution says, has ground armies, a navy, and air forces, and controls Iran's strategic arsenal. It has more than 120 thousand elite soldiers. What's more, the guardians of the Islamic Revolution are basically a huge corporation - they run all sorts of businesses, from clinics and road-building companies, to railways and city subways. They are also heavily involved in the oil and gas sector; they build dams and mines, etc.

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The Stone Age didn't come to an end for a lack of stones, the same way the oil epoch won't end because oil would run out, sheikh Ahmed Zaki Yamani, the Saudi minister of oil warned back in the 70s. Now his words are being regurgitated by people like Herman Gref, a prominent Russian banker who recently said the time of carbon fuels is almost over - maybe there'll be some final 10 years before it dies completely. Russia is one of the biggest losers in that respect, by the way, because it has failed to adapt its economy to the new realities.

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Salman bin Abdulaziz al-Saud rose to the throne in Saudi Arabia about a year ago - just after the death of his brother Abdullah, who ruled over the kingdom for a decade. Many believed back then that Salman, who became king at the age of 79, woud be just an intermediary footnote in the history of his country - a set-up for the next generation of rulers, so to speak. I'm talking of the grandsons of Abdul Aziz bin Saud of course, the founder of the kingdom. It was clear right from the get-go that the transfer of power would be happening in a very difficult period for the theocratic monarchy.

Indeed, no other Saudi king had previously encountered so much trouble right from day one: wars in Syria and Yemen, highly volatile relations with Iran, a growing terrorist threat, serious economic problems, and a rising social discontent at home.

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Even if performing better in 2016 than in 2015 may've been among their New Year's resolutions, the worst-performing economies are more likely to keep scoring bad results in the months to come. That's what most analysts forecast for the major lagging economies. Venezuela's GDP for example is expected to shrink by 3.3% (annual basis). Venezuela is among the countries that are expected to suffer the most this year, closely followed by Brazil, Greece and Russia.

The Recession club that nobody wants to be in, does have some surprises, though.

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Talk Politics.
A place to discuss politics without egomaniacal mods


Divisive Rhetoric


"Favoring multiculturalism is something Westerners give a lot of lovely lip service to until they have to actually do it."

September 2017

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