HONG KONG (Reuters) - For lawyer Wilfred Goh, the sign it was time to leave Dubai came early in 2009, when the financial crisis took its toll, plunging the emirate's main stock index down roughly 70 percent in a matter of months. After speaking to friends and government officials, Goh decided to return to Asia, with the thought that Hong Kong, China or Singapore offered better job opportunities. Goh, 47, eventually got a job back home in Singapore. "We just felt Dubai's economic climate was not very good and they had started to retrench people," said Goh, who works at the Central Chambers Law Corp in Singapore. The flight of top foreign work talent from the Gulf's financial hub began in early 2009, and levelled off as the market recovered toward the middle of the year. But then Dubai dropped a bombshell in November, disclosing a delay on a massive debt pile.
HONG KONG (Reuters) - For lawyer Wilfred Goh, the sign it was time to leave Dubai came early in 2009, when the financial crisis took its toll, plunging the emirate's main stock index down roughly 70 percent in a matter of months.
After speaking to friends and government officials, Goh decided to return to Asia, with the thought that Hong Kong, China or Singapore offered better job opportunities. Goh, 47, eventually got a job back home in Singapore.
"We just felt Dubai's economic climate was not very good and they had started to retrench people," said Goh, who works at the Central Chambers Law Corp in Singapore.
The flight of top foreign work talent from the Gulf's financial hub began in early 2009, and levelled off as the market recovered toward the middle of the year. But then Dubai dropped a bombshell in November, disclosing a delay on a massive debt pile.
And Good Morning! In the end, might makes right. Nothing has changed since the caveman.
California is just having a crisis of government.
Dec. 31 (Bloomberg) -- Li Nan has real estate fever. A 27- year-old steel trader at China Minmetals, a state-owned commodities company, Li lives with his parents in a cramped 700- square-foot apartment in west Beijing. Li originally planned to buy his own place when he got married, but after watching Beijing real estate prices soar, he has been spending all his free time searching for an apartment. If he finds the right place -- preferably a two-bedroom in the historic Dongcheng quarter, near the city center -- he hopes to buy immediately. Act now, he figures, or live with Mom and Dad forever. In the last 12 months such apartments have doubled or tripled in price, to about $400 per square foot. "This year they'll be even higher," says Li in the Jan. 11 issue of Bloomberg BusinessWeek. Millions of Chinese are pursuing property with a zeal once typical of house-happy Americans. Some Chinese are plunking down wads of cash for homes. Others are taking out mortgages at record levels. Developers are snapping up land for luxury high- rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand won't flag. And if families can swing it, they buy two apartments: one to live in, one to flip when prices jump further. And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. In November alone, housing prices in 70 major cities rose 5.7 percent, while housing starts nationwide rose a staggering 194 percent. The real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets, and local governments. High-End Bubble "Once the bubble pops, our economic growth will stop," warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences' Finance Research Center. On Dec. 27, China Premier Wen Jiabao told news agency Xinhua that "property prices have risen too quickly." He pledged a crackdown on speculators. Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can't be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What's clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese.
Dec. 31 (Bloomberg) -- Li Nan has real estate fever. A 27- year-old steel trader at China Minmetals, a state-owned commodities company, Li lives with his parents in a cramped 700- square-foot apartment in west Beijing.
Li originally planned to buy his own place when he got married, but after watching Beijing real estate prices soar, he has been spending all his free time searching for an apartment. If he finds the right place -- preferably a two-bedroom in the historic Dongcheng quarter, near the city center -- he hopes to buy immediately. Act now, he figures, or live with Mom and Dad forever. In the last 12 months such apartments have doubled or tripled in price, to about $400 per square foot.
"This year they'll be even higher," says Li in the Jan. 11 issue of Bloomberg BusinessWeek.
Millions of Chinese are pursuing property with a zeal once typical of house-happy Americans. Some Chinese are plunking down wads of cash for homes. Others are taking out mortgages at record levels. Developers are snapping up land for luxury high- rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand won't flag. And if families can swing it, they buy two apartments: one to live in, one to flip when prices jump further.
And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. In November alone, housing prices in 70 major cities rose 5.7 percent, while housing starts nationwide rose a staggering 194 percent. The real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets, and local governments.
High-End Bubble
"Once the bubble pops, our economic growth will stop," warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences' Finance Research Center. On Dec. 27, China Premier Wen Jiabao told news agency Xinhua that "property prices have risen too quickly." He pledged a crackdown on speculators.
Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can't be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What's clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese.
HEZHOU, China, Dec 29 (IPS) - As more and more rural Chinese bid farewell to their impoverished home villages in their pursuit of a better life in bigger cities, leaving behind their young children in the care of relatives or aging parents seems only a small price to pay, especially in times of financial crisis.But for some, the price is simply too high. When a three-story brick building in Yanghui Village in Hezhou, in south China's Guangxi Autonomous Region, was gutted by fire in November, the majority of the victims turned out to be children. Yang Chunfeng still vividly recalls what happened on that fateful morning. Awakened by the sound of a blast, he rushed out of his house and saw a huge chunk of the building next door had been blown off while flames were raging high. Villagers coming to the rescue were soon carrying out soot-blackened children while others were screaming and running for their lives. "All the children being taken out of the building were burned bare, with no hair or clothes left," recalled Yang, who is in his 50s. An explosion at an illegal firecracker workshop (employing children) inside the building triggered the massive fire. Thirteen of the 14 victims, all students of Zhiyang Primary School, were aged 7 and 15. Two of them died of severe burns. All of them either had one or two parents working in cities away from home. Yanghui Village is about two hours' drive from Hezhou City, located east of the picturesque city of Guilin and bordering Hunan and Guangdong provinces. With a population of 3,000, half of them children under 14, the village is home to only 4,000 mu (231 acres) of arable land for tobacco and paddy rice. Per capita annual income from farming is a pitiable 600 yuan (about 85 U.S. dollars), hardly enough to feed a family. Unable to make ends meet, villagers choose to work in other cities in Guangxi, including Guilin, Wuzhou and Liuzhou, or the neighbouring Guangdong Province, where labor-intensive jobs from export-oriented factories had propped up the local economy.
Zhang Xin, chief executive of Soho China, one of the country's most successful privately owned property developers, told the Financial Times the asset bubble was leading to rampant wasteful investment in the sector, undermining the country's long-term growth prospects. <...> "If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn't be so optimistic."
<...>
"If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn't be so optimistic."
PENANG, Malaysia, Dec 31 (IPS) - Malaysia may have been spared the worst effects of the economic slowdown due largely to its oil and gas reserves and other natural resources.But years of spending - some say squandering - of the nation's oil revenues on prestige projects and bailouts could have gone into strengthening the country's social safety nets. As the country's export-oriented economy took a hit, workers lost their jobs, suffered pay cuts, worked fewer days and had their overtime pay slashed. Children have been largely protected from the adverse impact of the economic crisis due to the social safety nets that were already in place. The government's provision of universal benefits, notably free education and health care, as well as subsidies on a number of essential commodities, have been able to ensure that most children and poor families do not fall through the gaps, said Eva Jenkner, the deputy representative to the United Nations Children's Fund (UNICEF) Malaysia and a senior economic social policy specialist. "But concerns remain with regard to the comprehensiveness of the social safety nets, with only limited coverage rates of programmes specifically targeted at poor families and children, and many particularly vulnerable children out of reach of school-based social interventions (such as school feeding programmes)," she told IPS in email interview.
China's state-owned banks have become a main engine of the global recovery, financing the construction of copper mines, purchase of airplanes, expansion of retail stores and other projects even as their U.S. and European counterparts scale back lending. The surge in Chinese lending, triple the 2008 rate, has provided a lifeline to international corporations during the worst recession in decades, and it reflects a diversification in China's global economic role beyond its holdings of vast amounts of U.S. government debt. Over the first nine months of 2009, new lending by Chinese banks has injected $1.3 trillion into the world economy, according to statistics from the People's Bank of China, which functions as China's central bank. The beneficiaries have included U.S.-based Southwest Airlines, the Netherlands' Aercap airplane leasing company, Civil Aviation Authority in Dubai, and Foster's brewery and Woolworths supermarket chain in Australia. China's banks have been signing so many new loan contracts so quickly that the country's banking regulatory commission recently warned them to avoid the "blind" pursuit of size lest they run into the same troubles as their Western counterparts.
China's state-owned banks have become a main engine of the global recovery, financing the construction of copper mines, purchase of airplanes, expansion of retail stores and other projects even as their U.S. and European counterparts scale back lending.
The surge in Chinese lending, triple the 2008 rate, has provided a lifeline to international corporations during the worst recession in decades, and it reflects a diversification in China's global economic role beyond its holdings of vast amounts of U.S. government debt.
Over the first nine months of 2009, new lending by Chinese banks has injected $1.3 trillion into the world economy, according to statistics from the People's Bank of China, which functions as China's central bank. The beneficiaries have included U.S.-based Southwest Airlines, the Netherlands' Aercap airplane leasing company, Civil Aviation Authority in Dubai, and Foster's brewery and Woolworths supermarket chain in Australia.
China's banks have been signing so many new loan contracts so quickly that the country's banking regulatory commission recently warned them to avoid the "blind" pursuit of size lest they run into the same troubles as their Western counterparts.
Drucker's most important insight concerned the role of the corporation in society. "The business enterprise is a creature of a society and an economy, and society or economy can put any business out of existence overnight," he wrote in 1974. "The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job." <...> Drucker showed that there is no "inherent contradiction between profit and a company's need to make a social contribution," but that the former is indispensable to achieve the latter. He also warned that an enterprise that fails to "think through its impacts and its responsibilities" exposes itself to justified attack from social forces. Consumerism and environmentalism, he taught, are not enemies to be vanquished, but symptoms of business' failure to understand its broad social role. <...> He held that the purpose of a business is to serve the customer by providing a good or service useful in both personal and social terms. Businesses that took their eyes off that objective in favor of pursuing profit as a paramount goal could not succeed. Such subtle distinctions eluded classical economists. <...> His targets included the celebrity chief executive and excessive compensation at the top. "Every CEO, it seems, has to be made to look like a dashing Confederate cavalry general or a boardroom Elvis Presley," he wrote in 1988. But real leadership "has little to do with 'leadership qualities'; and even less to do with 'charisma.' It is mundane, unromantic, and boring. Its essence is performance." <...> Excessive compensation, he wrote in 1974, is designed to create status rather than income. "It can only lead to political measures that, while doing no one any good, can seriously harm society, economy, and the manager as well." And when a financial benefit accrues to managers who lay people off, he stated in 1996, "there is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it." ...
Drucker showed that there is no "inherent contradiction between profit and a company's need to make a social contribution," but that the former is indispensable to achieve the latter. He also warned that an enterprise that fails to "think through its impacts and its responsibilities" exposes itself to justified attack from social forces. Consumerism and environmentalism, he taught, are not enemies to be vanquished, but symptoms of business' failure to understand its broad social role.
He held that the purpose of a business is to serve the customer by providing a good or service useful in both personal and social terms. Businesses that took their eyes off that objective in favor of pursuing profit as a paramount goal could not succeed. Such subtle distinctions eluded classical economists.
His targets included the celebrity chief executive and excessive compensation at the top. "Every CEO, it seems, has to be made to look like a dashing Confederate cavalry general or a boardroom Elvis Presley," he wrote in 1988. But real leadership "has little to do with 'leadership qualities'; and even less to do with 'charisma.' It is mundane, unromantic, and boring. Its essence is performance."
Excessive compensation, he wrote in 1974, is designed to create status rather than income. "It can only lead to political measures that, while doing no one any good, can seriously harm society, economy, and the manager as well."
And when a financial benefit accrues to managers who lay people off, he stated in 1996, "there is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it."
...
The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job.
The Obama administration's $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good. .... Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system. "The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway." Mr. Katari contends that banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books. Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues. "Then the carpenters can go back to work," Mr. Katari said. "The roofers can go back to work, and we start building housing again. If this drips out over the next few years, that whole sector of the economy isn't going to recover."
....
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
"The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway."
Mr. Katari contends that banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books. Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.
"Then the carpenters can go back to work," Mr. Katari said. "The roofers can go back to work, and we start building housing again. If this drips out over the next few years, that whole sector of the economy isn't going to recover."
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate
I imagine that these experts are very happy to see large numbers of people dispossessed of their homes, but would be distressed to see banks go out of business when their asset base is revealed to be worthless. How to square that circle ? keep to the Fen Causeway
... Japan's other blunder was its unwillingness to fix its banks. Regulators did not force banks and indebted firms to recognize trillions of yen worth of bad loans. Banks trundled along like zombies, squandering credit to keep insolvent firms on their feet. When the Asian currency crisis hit, many undercapitalized banks toppled over. The Obama administration has not been quite as forgiving with the banks, but it still has been nowhere near aggressive enough. The regulatory reform meant to curb bankers' destructive risk-taking is moving at a snail's pace through Congress. While the Treasury has forced banks to raise capital, many -- including some of the largest -- remain thinly capitalized and weak. <...> The Obama administration has still done a far better job -- up to now -- in addressing the crisis than Japan's governments did. As dismal as 2009 was, it pales when compared with what would have happened without the fiscal stimulus and the Fed's enormous monetary boost. The White House is now pushing another mini-stimulus plan for next year. Chances are it will need to do a lot more to push reform and boost the economy. If there is an overarching lesson from Japan's lost decade, it is that half measures don't pay.
... Japan's other blunder was its unwillingness to fix its banks. Regulators did not force banks and indebted firms to recognize trillions of yen worth of bad loans. Banks trundled along like zombies, squandering credit to keep insolvent firms on their feet. When the Asian currency crisis hit, many undercapitalized banks toppled over.
The Obama administration has not been quite as forgiving with the banks, but it still has been nowhere near aggressive enough. The regulatory reform meant to curb bankers' destructive risk-taking is moving at a snail's pace through Congress. While the Treasury has forced banks to raise capital, many -- including some of the largest -- remain thinly capitalized and weak.
The Obama administration has still done a far better job -- up to now -- in addressing the crisis than Japan's governments did. As dismal as 2009 was, it pales when compared with what would have happened without the fiscal stimulus and the Fed's enormous monetary boost.
The White House is now pushing another mini-stimulus plan for next year. Chances are it will need to do a lot more to push reform and boost the economy. If there is an overarching lesson from Japan's lost decade, it is that half measures don't pay.
Goldman Sachs' chief spokesman, Lucas van Praag, issued the following statement in response to the latest installment in Greg Gordon's investigative series on the Wall Street firm, "Investors only could lose in Goldman's Caymans deals," published on Dec. 30: "The McClatchy story on synthetic CDOs is riddled with factual inaccuracies and lacks a fundamental understanding of the instruments, the market conditions at the time and the intent of investors entering into the trades. There is nothing to be taken away from the story other than the fact that reporter fails to comprehend the subject matter." Van Praag added: "Mr. Gordon appears to have been inspired by a New York Times story on synthetic CDOs that was published on December 24." McClatchy stands by its reporting, and rejects as untrue Mr. Van Praag's allegations that the story "is riddled with factual inaccuracies" and that the reporter "fails to comprehend the subject matter." As flattering as it is, Mr. van Praag's assumption that Greg Gordon produced his Dec. 30 story in six days is incorrect. In fact, he had finished reporting and writing the story, and it was being edited on Dec. 24 when The New York Times published "Banks Bundled Bad Debt, Bet Against It and Won," that paper's variation on the theme of McClatchy's Nov. 1-4 series on how Goldman Sachs had bundled bad debt, bet against it and won.
"The McClatchy story on synthetic CDOs is riddled with factual inaccuracies and lacks a fundamental understanding of the instruments, the market conditions at the time and the intent of investors entering into the trades. There is nothing to be taken away from the story other than the fact that reporter fails to comprehend the subject matter."
Van Praag added: "Mr. Gordon appears to have been inspired by a New York Times story on synthetic CDOs that was published on December 24."
McClatchy stands by its reporting, and rejects as untrue Mr. Van Praag's allegations that the story "is riddled with factual inaccuracies" and that the reporter "fails to comprehend the subject matter."
As flattering as it is, Mr. van Praag's assumption that Greg Gordon produced his Dec. 30 story in six days is incorrect. In fact, he had finished reporting and writing the story, and it was being edited on Dec. 24 when The New York Times published "Banks Bundled Bad Debt, Bet Against It and Won," that paper's variation on the theme of McClatchy's Nov. 1-4 series on how Goldman Sachs had bundled bad debt, bet against it and won.
The imposition of the euro, and the rigid economic policy a single currency implies, is having socially catastrophic effects across much of Europe on a scale that dwarfs Britain's suffering in the 1990s. Consider the facts. In Spain, unemployment has already reached a gut-wrenching 19.3%. But unemployment for those between 16-24 is a catastrophic 42%. In Greece, youth unemployment is 25%, in Ireland 28.4% and Italy 26.9%. Marginal eurozone countries such as Greece, Spain and Ireland are not just in recession. They are in depression - and so long as they remain inside the euro there is no exit.
Consider the facts. In Spain, unemployment has already reached a gut-wrenching 19.3%. But unemployment for those between 16-24 is a catastrophic 42%. In Greece, youth unemployment is 25%, in Ireland 28.4% and Italy 26.9%. Marginal eurozone countries such as Greece, Spain and Ireland are not just in recession. They are in depression - and so long as they remain inside the euro there is no exit.
nb the author is the Economics Editor of the Daily Mail keep to the Fen Causeway
And yet, only two decades later, the European left has made the identical calculation. The imposition of the euro, and the rigid economic policy a single currency implies, is having socially catastrophic effects across much of Europe on a scale that dwarfs Britain's suffering in the 1990s.
So the euro is a plot of the "European left"? Like Helmut Kohl? And the european left is in power in all eurozone countries today, as we well know...
Before their decision to abandon economic sovereignty and sign up to the euro...
Yeah, eurozone countries have no control over their budet - at all!
Britain, mercifully outside the euro thanks mainly to John Major's brave, far-sighted and universally denounced decision to opt out of monetary union when he signed the Maastricht Treaty in 1992.
Yeah, I'm sure the Telegraph and the Sun were all in favor of joining the euro then...
There is a universal belief among the European political and economic elite that the euro will continue, no matter how much damage it inflicts or how many jobs it costs. George Papandreou, the socialist prime minister of Greece, insists that a return to the drachma will never happen. So does Jean-Claude Trichet, president of the European Central Bank. So do Angela Merkel and Nicolas Sarkozy, Goldman Sachs, Morgan Stanley, the US Treasury, the Bilderberg group and, for what it is worth, the British foreign office.
Ooooh - Bilderberg, Goldmans, and evil bureaucrats everywhere...
Economically, the euro can be spotted a mile off: it is a classic bankers' ramp. It is designed to do all the things that bankers have historically wanted: create efficient markets, drive down the cost of labour, impose price stability, eliminate trade barriers, confound national boundaries and maximise corporate profits. Bankers don't care much about youth unemployment in Madrid or home repossessions in Lisbon or riots on the streets of Athens.
Now this is suddenly interesting. A populist anti-neolib tirade from a violent euroskeptic. A sign of the things to come, as the mainstream left fails to express the disgust of the middle classes with the current fianncial shananigans (which have little to do with the euro, and a lot to do with City of London lobbying in Europe...)
There remains, however, that irritating little contradiction between the calamity that is hitting home on the streets, housing estates and industrial parks of Europe and the bourgeois comfort and intellectual certainty of the international capitalist class.
So, mainstream left = international capitalist class?
One problem is that if democratic parties such as the PSOE [Spanish socialist workers' party], with its profound popular legitimacy, are inhibited from engaging with the most burning question of our time they are creating space that will be filled by others. So it is unlikely to be a coincidence that in last summer's elections in Portugal, the hard left secured 11% of the vote or that riots are now endemic to the streets of Athens. Elite disengagement is a gift to extremist nationalist parties of the type that has flourished over the past 150 years. The political class is gambling that politics as we knew it during the 20th century has been negated by the postwar architecture of the EU. History teaches us they that they are certainly wrong. Elite constructions such as the EU may sometimes be able to treat the voters with disdain, but never the markets - and the brutal truth is that the crisis is about to get worse.
History teaches us they that they are certainly wrong. Elite constructions such as the EU may sometimes be able to treat the voters with disdain, but never the markets - and the brutal truth is that the crisis is about to get worse.
So, are European politicians going to be punished by the hard left, or by markets? This is getting a bit confusing...
The problem would still be just about manageable if there were political unity in Europe. Germany would then be ready to make the massive fiscal transfers necessary to bail Spain out of its difficulties - just as the City always does for disadvantaged areas of Britain during a recession.
Riiiight. It's the City that bailed out the rest of Britain in the past year...
In the medium term, economies like Greece and Spain are certain to break away from the euro. The refusal of the political elites to recognise this inevitability means that 2010 is going to be very painful, very bloody and very dangerous.
ok.
Quite a wild ride. Is this what passes as the intellectual left in the UK today? It's published in the Guardian, after all... In the long run, we're all dead. John Maynard Keynes
I guess they publish this stuff as an attempt at creating diverse views. Although it's more a sop to the US right wing who infest the guardian web pages. keep to the Fen Causeway
He kept on switching from a leftwing to a rightwing criticism and of course ended up with - anyway the markets won't be fooled, and it's the mainstream left that's to blame. In the long run, we're all dead. John Maynard Keynes
Latvia is a member of the EU and is expected to adopt the Euro, but it has not yet reached that stage. Meanwhile, the EU and IMF have told the government to borrow foreign currency to stabilize the exchange rate of the local currency, in order to help borrowers pay mortgages taken out in foreign currencies from foreign banks. As a condition of IMF funding, the usual government cutbacks are also being required. Nils Muiznieks, head of the Advanced Social and Political Research Institute in Riga, Latvia, complained: "The rest of the world is implementing stimulus packages ranging from anywhere between one percent and ten percent of GDP but at the same time, Latvia has been asked to make deep cuts in spending - a total of about 38 percent this year in the public sector - and raise taxes to meet budget shortfalls." In November, the Latvian government adopted its harshest budget of recent years, with cuts of nearly 11%. The government had already raised taxes, slashed public spending and government wages, and shut dozens of schools and hospitals. As a result, the national bank forecasts a 17.5% decline in the economy this year, just when it needs a productive economy to get back on its feet. In Iceland, the economy contracted by 7.2% during the third quarter, the biggest fall on record. As in other countries squeezed by neo-liberal tourniquets on productivity, employment and output are being crippled, bringing these economies to their knees. The cynical view is that that may have been the intent. Instead of helping post-Soviet nations develop self-reliant economies, writes Marshall Auerback, "the West has viewed them as economic oysters to be broken up to indebt them in order to extract interest charges and capital gains, leaving them empty shells."
Latvia is a member of the EU and is expected to adopt the Euro, but it has not yet reached that stage. Meanwhile, the EU and IMF have told the government to borrow foreign currency to stabilize the exchange rate of the local currency, in order to help borrowers pay mortgages taken out in foreign currencies from foreign banks. As a condition of IMF funding, the usual government cutbacks are also being required. Nils Muiznieks, head of the Advanced Social and Political Research Institute in Riga, Latvia, complained:
"The rest of the world is implementing stimulus packages ranging from anywhere between one percent and ten percent of GDP but at the same time, Latvia has been asked to make deep cuts in spending - a total of about 38 percent this year in the public sector - and raise taxes to meet budget shortfalls."
In November, the Latvian government adopted its harshest budget of recent years, with cuts of nearly 11%. The government had already raised taxes, slashed public spending and government wages, and shut dozens of schools and hospitals. As a result, the national bank forecasts a 17.5% decline in the economy this year, just when it needs a productive economy to get back on its feet. In Iceland, the economy contracted by 7.2% during the third quarter, the biggest fall on record. As in other countries squeezed by neo-liberal tourniquets on productivity, employment and output are being crippled, bringing these economies to their knees.
The cynical view is that that may have been the intent. Instead of helping post-Soviet nations develop self-reliant economies, writes Marshall Auerback, "the West has viewed them as economic oysters to be broken up to indebt them in order to extract interest charges and capital gains, leaving them empty shells."
leaving aside the toryspeak, the rest of the article has some points it would be good to hear debunked or explained. anyone? ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
