Monthly Archives: May 2012

Stratfor Geopolitical Weekly: 20120529

This is an important essay as George Friedman describes a consistent misunderstanding of events in the Middle east by Western media and intellectuals. It invites the reader to examine the current conflict in our streets from a more thoughtful perspective. If nothing else, it suggest we need to broaden our thought base.

The Egyptian Election and the Arab Spring

May 29, 2012 | 0905 GMT

Stratfor

By George Friedman

The Egyptian presidential election was held last week. No candidate received 50 percent of the vote, so a runoff will be held between the two leading candidates, Mohammed Morsi and Ahmed Shafiq. Morsi represented the Muslim Brotherhood’s Freedom and Justice Party and received 25.3 percent of the vote, while Shafiq, a former Egyptian air force commander and the last prime minister to serve in Hosni Mubarak’s administration, received 24.9 percent. There were, of course, charges of irregularities, but in general the results made sense. The Islamist faction had done extremely well in the parliamentary election, and fear of an Islamist president caused the substantial Coptic community, among others, to support the candidate of the old regime, which had provided them at least some security.

Consensus and Anthropogenic Global Warming

Consensus and Anthropogenic Global Warming

***The following is a guest post for Save The Environment by Jim Vanne***As Blaise Pascal once noted, once science is divorced from ethics, scientists will use their skills to pursue power, not truth.  Much of what is being reported today about anthropogenic (man caused) global warming is exactly a case in point for this. And why will scientists (some, not all, of course) do this? Simply due to an underlying worldview, as best evidenced by the 1974 Club of Rome report titled, Mankind at the Turning Point, which stated, “The real enemy then, is humanity itself.”  Their solution, as Canada’s Free Press reports, was simple – engineer a massive reduction in population and utterly change the socio-economic system through centralized planning via total government control. This explains there very obvious reason why global warming is invariably associated with the left, and why, for example,  Nancy Pelosi famously claimed that  Every aspect of our lives must be subjected to an inventoryof how we are taking responsibility.” George Orwell could not have phrased this dystopian un-vision better!

What’s Going On Here?

When the Fed structured QE1, it resulted in the acquisition of approximately $1.2 trillion in Mortgage-Backed Securities (MBS) for the Fed’s balance sheet. (see WSHOMCB)

In this graph we see the rollover and decline of the total holdings beginning in 2010 after QE1 ended and as securities matured. However, in early 2011, the decline slowed and ceased at the end of the year. Since then, we have begun to see new purchases of MBSs. We wonder what strategy or policy the Fed is pursing here.

Uncle Sam Has a PROBLEM

So much of our attention is on Europe that we forget others have problems to. So it was helpful of The Washington Times to give us a succinct update of the US’s problem in Congress staring over edge of ‘fiscal cliff’. Not that they don’t have many problems but that they have only one fundamental PROBLEM.

This problem is the size of the government deficit and debt. All other problems may actually lead back to this problem. We could … (insert the statement of any other problem here) if only we had more money! Unlike Europe, the problem is not front-page – yet. But coming this winter to a theater near you …

The nature of the crisis is that the can consisting of spending cuts and tax increases reaches the end of the road Dec. 31. Congress has two options, allow the deferred spending cuts and tax increases to go ahead or roll them over. According to the Post:

That decision was put in stark terms Tuesday by the Congressional Budget Office, which in a new analysis said the economy will plunge into a recession early next year if Congress lets taxes rise and spending be cut, as called for under the law.

But if Congress changes the law to keep taxes low and spending high, it could add more than half a trillion dollars to the deficit in 2013, marking a fifth straight year of trillion-dollar deficits and risking the patience of the country’s creditors.

Nothing is likely to be achieved until after the presidential election. That in turns leaves little time for thoughtful action. And with the recent history of intransigence and deadlock, it will be an interesting winter in the US – warmer than usual we predict.

Every Man for Himself?

Stratfor just put out a short news item:

Each eurozone country must prepare an individual contingency plan in case Greece decides to leave the zone, eurozone officials decided May 21, Reuters reported May 23. The agreement was reached during a Eurogroup Working Group conference. Two officials confirmed the agreement, and Reuters saw a memo that details some of the elements that eurozone countries should consider. A eurozone-level plan has not yet been prepared, an official said.

Granted every smart country will have a contingency plan – for the breakup of the eurozone and the EU. But a contingency plan for Greece’s exit? Isn’t this primarily an issue to be addressed by the EU and particularly the ECB? Is this in anticipation that all the common defence mechanisms put in place will fail?

Explain to us how this is not a loud call: “every man for himself?”

David Rosenberg on Greece

Right now Greece has center stage. In a report of Rosenberg’s latest comments (see Zero Hedge: On Growing Tensions, Spreading Global Downturn And A Dead-End Greek Resolution), the following statements appear:

Well, look at the bright side. At least we’ll know whether Greece decides to stay or go within the next month since the second-round election in June is being widely viewed as a referendum on continued euro area membership. Incredibly, the polls show that 80% of Greek citizens want to stay in. The problem is that they also want more bailout money with fewer stipulations.

The country would likely need a 30-40% devaluation to put its economy on a more competitive footing. The financial disruption, based on many estimates I have seen, would cost Europe something in the order of 2-2.5% of lost output. Greek’s total public and private external liabilities amount to $540 billion U.S. dollars — the ECB, the IMF, banks and a swath of other foreign creditors would suffer deep losses.

Nigel Farage

Nigel Farage is the founder of the UK Independence Party and member of the European Parliament. For years he has been speaking out against the idiotic policies of the European Parliament and the other central institutions of the EU. He has slowly moved from a voice speaking in isolation to one gaining recognition of the veracity and wisdom of his position. We have decided to post what videos we find in an easy to access format. Here is the most recent in chronological order.

December 15, 2012: interview with King World News. (12:50 minutes)

  • He gives an outlook for the British economy.
  • Southern Europe is being driven towards social dissolution.
  • China views the eurozone as a high risk place to invest.
  • The authorities in Brussels are more in control than ever.
  • He doesn’t think the breakdown of the eurozone will occur in 2013 but it might and will be a major event when it does.

Reality Check: 20120522

Here is Gary’s article, Memory Hole: Socialist Failures. For more by Gary, visit his website at http://www.garynorth.com/.

In this essay, Gary outlines the the failure of socialism. It is an important read in the ‘Occupy’ era. Key points are:

  • Indian reserves are the longest-running [failed] socialist experiment.
  • The Soviet Union lasted as a socialist worker’s paradise from 1917 until 1991. As a direct result of that experiment, at least 30 million Russians died. It may have been twice that. China’s experiment was shorter: 1949 to 1978. Perhaps 60 million Chinese died.
  • He outlines the colossal failures of socialist experiments and their costs in human lives (85-100 million killed).
  • He notes that College students are not informed of either the theory of socialism nor the magnitude of its failures, both economically and demographically. This in part has lead to the emergent socialist and communist rhetoric from our student protesters of today.

Stratfor Geopolitical Weekly: 20120522

Australia’s Strategy

May 21, 2012 | 2020 GMT

By George Friedman

Australia is one of the wealthiest countries in the world, ranked in the top 10 in gross domestic product per capita. It is one of the most isolated major countries in the world; it occupies an entire united continent, is difficult to invade and rarely is threatened. Normally, we would not expect a relatively well-off and isolated country to have been involved in many wars. This has not been the case for Australia and, more interesting, it has persistently not been the case, even under a variety of governments. Ideology does not explain the phenomenon in this instance.

A Glimmer of Substance?

Ambrose Evans-Pritchard wrote a thought-provoking article today: Germany isolated as Latin Bloc calls the shots. The theme:

The eurozone’s ‘Latin Bloc’ is in full revolt. The trio of French, Italian, and Spanish leaders – backed by world powers – are to push for a radical shift in Europe’s economic strategy at crucial summit on Wednesday.

There are key issues that would be addressed that would forestall, at least fore a time, the downward slide of the EU towards dissolution. We discuss these below.

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