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G&M: EU - From superpower to impotence
Doug Saunders
Helsinki — From Thursday's Globe and Mail
Published on Wednesday, Feb. 10, 2010 10:31PM EST
Only a few months ago, it could call itself the United States of Europe: 27 countries forming the world's largest economy, backed by the world's strongest currency, with a newly minted constitution establishing a permanent president and foreign minister and, with a few bold moves, the foreign-policy clout of a true superpower.
This week, a series of shocks, humiliations and failures is threatening to reduce the European Union to little more than the trading bloc of 20 years ago, unable to deal with its gravest problems on its own, or to exercise major influence on the larger world.
The spiralling financial emergency in Greece has become a continent-wide crisis as members realize that neither the European Central Bank, guardian of the euro currency, nor the EU itself, headquartered in Brussels, is able to come to the rescue.
Instead, Greece's salvation will come either from Germany acting largely alone – a return to the old days of single economies – or from the International Monetary Fund, a product of the 1944 Bretton Woods conference, which saw the United States step in to save Europe's economy.
For the IMF to rescue one of the earliest members of the united Europe would be an embarrassing repeat of history, a badge of impotence.
That humiliation by itself is telling enough, but it follows a sequence of political emasculations that has rendered Europe all but invisible beyond its own shores.
When U.S. President Barack Obama announced last week that he wouldn't bother attending a major U.S.-EU summit in Madrid in May, it was more than a passing snub.
To many Europeans, it seemed the multipolar era had come to a symbolic close and the world had reverted to a two-superpower dynamic, this time pitting the United States against China, with Europe in the sort of supporting role it played during the Cold War.
“The Americans don't love the European Union the way they used to,” said Finnish Foreign Minister Alexander Stubb, one of the EU's most ardent supporters. “We have common values, a common history, but the love has been lost. … We are being left out.”
The leaders of Europe, despite representing 450 million people and a third of the world economy (the United States represents about 20 per cent), have been visibly excluded from many major events of the past months, in large part due to the failure of their own elaborate structure of unity.
December's Copenhagen Summit on climate-change policy, though it was a European-initiated project taking place within the EU, turned into a three-way showdown between the United States, China and a body of poor countries, with Europe's carefully forged ideas left on the cutting-room floor as the plot veered into tragedy.
Similarly, Europe has had almost no influence over diplomatic efforts to bring Iran's nuclear program under control, improve relations between Israel and the Palestinians, or revalue China's currency – arguably three of the biggest issues in the world today.
Yet these failings have all occurred since the EU ratified its new constitution and installed its new “permanent” president and foreign minister in their Brussels posts last year. Those two figures, Herman Van Rompuy of Belgium and Catherine Ashton of Britain, have been utterly invisible on the international scene and remain unknowns.
That's largely because the EU's Byzantine internal workings have cast them into even further irrelevance by creating a situation in which the continent has two competing presidencies, neither of them powerful enough to assume control over the financial crisis or the affairs of the world.
In January, Spain assumed the rotating six-month presidency of the EU – a system that existed before the permanent leadership was created, but which, through a quirk of the rules, left one member-nation EU presidency remaining after the new constitution took effect.
Instead of passing the baton to the new figureheads, Spanish Prime Minister Jose Luis Rodriguez Zapatero opted to complete his country's presidential term, turning it into a major foreign-policy platform and organizing a dizzying series of high-profile summits.
The U.S.-EU summit in Madrid was part of that program, but Mr. Obama, apparently bewildered by the two competing command structures and the seeming irrelevance of both of them, decided to travel to Asia instead.
Part of the problem is that there are several factions within Europe which are quite happy to keep the dual structure: countries like Finland, which are interested in the internal workings of the EU and the elaborate structure of fairness they represent; and countries like France and Britain, which still believe they can project their foreign-policy interests independently, and resent competition from Brussels.
The EU's lack of international clout could be explained, perhaps, with the argument that the bloc is turning inward, devoting attention to its own complex affairs. But this week's crisis has produced the shock of realization that Brussels is by itself incapable of dealing with a financial cancer in its midst.
That cancer is threatening to metastasize beyond Greece and into the stagnant and debt-encrusted economies around Europe's southern and western borders, a circle of countries rather rudely known as the PIIGS – Portugal, Ireland, Italy, Greece and Spain – as well as those on the eastern flank, including Hungary and Latvia, that have already been subject to complete collapses and painful bailouts.
Unable to face the world outside or deal with the most serious problems within, Brussels has fallen into disarray, without a language to describe its own condition.
Leaders quietly remind one another that the union has kept all of its 27 member countries democratic and at peace with each other.
But beyond the comforts of peace and good government, there is the shocking knowledge that, by its own rules, none of the EU's major states would currently qualify for membership. It increasingly resembles a beautifully tooled timepiece lacking either hands or a face.
http://www.theglobeandmail.com/news/world/from-superpower-to-impotence/article1463767/
UKT: Weight Watchers clinic floor collapses under dieters
The floor of a Weight Watchers clinic in Sweden collapsed beneath a group of 20 members of the weight loss programme who were gathered for a meeting.
Published: 7:35PM GMT 14 Jan 2010
As the dieters queued to see how many pounds they had shed, the floor beneath them in the clinic in Växjö, in south-central Sweden, began to rumble, according to a report in The Local, Sweden's English-language newspaper.
"We suddenly heard a huge thud; we almost thought it was an earthquake and everything flew up in the air.
"The floor collapsed in one corner of the room and along the walls," one Weight Watchers participant told the Smålandsposten newspaper.
Soon, the fault lines spread around the room, and other sections of the floor gave way.
Luckily, all of the dieters escaped uninjured and managed to move the scales to the corridor, which was not damaged in the accident, and were able to complete their weekly weigh in.
The cause of the floor's collapse remains under investigation.
UKT: Cat predicts 50 deaths in RI nursing home
A cat with an uncanny ability to detect when nursing home patients are about to die has proven itself in around 50 cases by curling up with them in their final hours, according to a new book.
By Tom Leonard in New York
Published: 7:42PM GMT 01 Feb 2010
Dr David Dosa, a geriatrician and assistant professor at Brown University, said that five years of records showed Oscar rarely erring, sometimes proving medical staff at the New England nursing home wrong in their predictions over which patients were close to death.
The cat, now five and generally unsociable, was adopted as a kitten at the Steere House Nursing and Rehabilitation Centre in Providence, Rhode Island, which specialises in caring for people with severe dementia
Dr Dosa first publicised Oscar's gift in an article in the New England Journal of Medicine in 2007. Since then, the cat has gone on to double the number of imminent deaths it has sensed and convinced the geriatrician that it is no fluke.
The tortoiseshell and white cat spends its days pacing from room to room, rarely spending any time with patients except those with just hours to live.
If kept outside the room of a dying patient, Oscar will scratch on the door trying to get in.
When nurses once placed the cat on the bed of a patient they thought close to death, Oscar "charged out" and went to sit beside someone in another room. The cat's judgement was better than that of the nurses: the second patient died that evening, while the first lived for two more days.
Dr Dosa and other staff are so confident in Oscar's accuracy that they will alert family members when the cat jumps on to a bed and stretches out beside its occupant.
"It's not like he dawdles. He'll slip out for two minutes, grab some kibble and then he's back at the patient's side. It's like he's literally on a vigil," Dr Dosa wrote.
Dr Dosa noted that the nursing home keeps five other cats, but none of the others have ever displayed a similar ability.
In his book, "Making rounds with Oscar: the extraordinary gift of an ordinary cat", Dr Dosa offers no solid scientific explanation for Oscar's behaviour.
He suggests Oscar is able - like dogs, which can reportedly smell cancer - to detect ketones, the distinctly-odoured biochemicals given off by dying cells.
Far from recoiling from Oscar's presence, now they know its significance, relatives and friends of patients have been comforted and sometimes praised the cat in newspaper death notices and eulogies, said Dr Dosa.
"People were actually taking great comfort in this idea, that this animal was there and might be there when their loved ones eventually pass. He was there when they couldn't be," he said.
http://www.telegraph.co.uk/news/newstopics/howaboutthat/7129952/Cat-predicts-50-deaths-in-RI-nursing-home.html
UKT: Iran's mullahs are desperately trying to pick a fight with the West to save their own skin
By Con Coughlin Defence Last updated: February 9th, 2010
What are we to make of the increasingly hysterical outpourings from Iran’s hardliners as they approach the 31st anniversary of the Islamic revolution – which will be celebrated throughout the country on Thursday?
First we had Iranian President Mahmoud Ahmadinejad boasting that he was planning to deliver a “telling blow” to the world’s leading powers when Iran marks the creation of the Islamic republic by Ayatollah Ruhollah Khomeini, the regime’s founding father, following his return from exile in France in February 1979.
Now Ayatollah Ali Khamenei, Khomeini’s successor as the country’s spiritual leader, is at it, promising that Iran is about to deliver a “punch” that will stun world powers during the anniversary celebrations.
What can the deranged old mullah mean? Is Iran about to launch one of the nukes it claims not to have at the infidel West? Are they going to send the Revolutionary Guards to close the Straits of Hormuz and strangle the West’s oil supplies?
I think not. Au contraire, I think we should treat this bluster with the disdain it deserves for, far from posing any realistic sort of threat to the West, these rambling outbursts should be seen for what they are – a desperate attempt by the ruling hardline conservatives to distract attention from their domestic travails.
Eight months after Mr Ahmadinejad rigged the ballot to secure himself another four year term as president, the pro-reform movement shows no sign of abating. As I have written in today’s edition of the Daily Telegraph, the anti-regime protesters refuse to be cowed, despite the brutal tactics the regime has employed to suppress the demonstrations.
And millions of anti-government demonstrators will be out again in force on Thursday to show their contempt for mssrs Khamenei and Ahmadinejad, and to demand a more accountable form of government than the Islamic dictatorship they currently have to endure. I wish the protesters every success.
And I sincerely hope the only people who will be on the receiving end of any “punch” on Thursday are the mullahs, not the West
http://blogs.telegraph.co.uk/news/concoughlin/100025521/irans-mullahs-are-desperately-trying-to-pick-a-fight-with-the-west-to-save-their-own-skin/
COMMENTS
Just because they’re a bunch of nutcases doesn’t mean they can’t / won’t do something nasty.
tanker21 on Feb 9th, 2010 at 1:26 pm
Report commentCon
So two weeks ago you were a hardliner and now you agree that Obama’s approach is working and we may not have to take military action?
elwisty on Feb 9th, 2010 at 1:31 pm
Report commentTell the mad mullah his mother was a hamster and his father smelled of elderberries.
Sheumais on Feb 9th, 2010 at 1:35 pm
Report commentThey are obviously pretty sure that they are going to do something.
This probably has a lot to do with the rising of the terror threat recently..
Michael Carr on Feb 9th, 2010 at 1:43 pm
Report comment‘…desperately trying to pick a fight … to save their own skin
Now what low level political pygmies would do a thing like that?
JunkkMale on Feb 9th, 2010 at 1:53 pm
Report commentClassic ‘foreign adventure’diversion from domestic troubles.
Usually works every time with the great unwashed.
In the case of Iran though the momentum seems to be with the opposition.Dozens of dead at the coming demonstration should kick it all off big time.
Davidjay on Feb 9th, 2010 at 1:54 pm
Report commentMaybe they’ll commit mass suicide?
barryobarma on Feb 9th, 2010 at 2:01 pm
Report commentIran, which certainly has no nuclear weapons programme and has started no war in modern times, has submitted to indignity after indignity in her perfectly legal, and indeed praiseworthy, pursuit of civil nuclear power.
But nothing will ever be good enough. She should refuse to play any more of the games dictated by a heavily militarised, nuclear-armed state and by several others that are not exactly noted for holding elections, for reserving parliamentary seats for Christians and Jews, or for having more women than men at university.
Iran could then sit back and watch as nothing happened. It matters not one jot who is the President of the United States. War against Iran is financially, strategically and logistically impossible. Even Dick Cheney manifestly understood that, in that he never actually launched any such war.
As of last week, there are only two extant threats of nuclear action by any state against any other. Until then, there was only one. In both cases, the victim is the same state, itself non-nuclear and with no desire to change that status, indeed with an explicit policy against any such change. How much longer are we going to treat the victim as the aggressor?
David Lindsay on Feb 9th, 2010 at 2:30 pm
Report commentI think Mr. Coughlin is absolutely right.
It would be suicide for Iran to go to war.
Their real enemy is now is the Iranian people themselves. I met many Iranian students when I was in college (oh so long ago) and while they hated the Shah,
they weren’t fooled by the Ayatollah.
This regime only stays in power by brute strength, and it is running out of time. The nuclear option solves nothing, and they don’t want to give up power that easily. And if they are nuts, we nuke ‘em.
AcePilot101 on Feb 9th, 2010 at 2:46 pm
Report commentWell if they are trying to take their own skins, let us save them the trouble and skin them – take their nuclear facilities out before they develop them further.
incensed on Feb 9th, 2010 at 2:49 pm
Report commentNobody wants nuclear war (unless they are insane), so I pray the Iranian people have plenty of courage in these troubled times. It’s no joke over there, the regime is arresting, beating, torturing and killing their political opposition.
And that’s practically everybody in Iran.
AcePilot101 on Feb 9th, 2010 at 2:50 pm
Report commentNobody wants nuclear war (unless they are insane). I pray that the Iranian people have courage, stay the course and overthrow this hated regime. It’s no joke over there with the Mullahs arresting, torturing and killing the opposition.
And the opposition is now just about everybody.
God bless the people of Iran!
AcePilot101 on Feb 9th, 2010 at 2:51 pm
Report comment@barryobarma – “Maybe they’ll commit mass suicide?”
Brilliant! Nearly knocked me off my chair. Got any more?
warden on Feb 9th, 2010 at 2:53 pm
Report commentWordPress keeps dropping my posts … so sorry if there is another like the following that pops up later. Maybe it will post this time.
If they are trying to save their skins, why don’t we simply skin them by nuking their nuclear facilities first.
incensed on Feb 9th, 2010 at 2:54 pm
Report commentDavid Lindsay,
You need to wake up. Thy may not have gone to war in the traditional tanks rolling across the border way. But they do sponsor terrorism and have caused havoc around the world.
You may not like that as you see the Iranians as victims but it is true and they are aggressors.
Michael Carr on Feb 9th, 2010 at 2:54 pm
Report commentI think it’s more sinsiter
When the leaders get their bomb they’ll have effectively made themselves permanent rulers of Iran – no question.
That’s it. Student’s revolt? So what?
No, even the west will be forced to stop encouraging the overthrow of the Iranian regime just in case it decides to go out with a big bang should their position become terminally threatened.
Of course, all this assumes the regime are only after nuclear weapons to augment their arsenal, and not to strike a devastating blow at the heart of their sworn enemy.
Anyway, summer time 2010 is the time to put all you’ve got into gold.
.
Phil Kean on Feb 9th, 2010 at 3:01 pm
Report comment@Phil Kean
http://www.newsweek.com/id/215529
warden on Feb 9th, 2010 at 3:05 pm
Report comment“Your comment is awaiting moderation” (again). Apparently anti-war opinions require censorship at Telegraph blogs.
warden on Feb 9th, 2010 at 3:17 pm
Report comment“Your comment is awaiting moderation”
More censorship of anti-war sentiments at Telegraph blogs.
warden on Feb 9th, 2010 at 3:19 pm
Report commentUS’s ‘administrators’ are also desperately trying to pick a fight with the West to save their own skin and pockets…
http://japan-russia.jimdo.com/democracy-for-free/
May Iraq case be called as ‘the same’ ?
senekaross on Feb 9th, 2010 at 3:29 pm
Report commentHow can anyone in their right mind support the Iranian regime? The vast majority of Iranians hate them.
I haven’t even bothered to mention Iran’s support for terrorism – or that the Chinese and Russians continue to sell weapons to this wretched government.
AcePilot101 on Feb 9th, 2010 at 3:44 pm
Report commentI don’t like it, that my government sells not enough weapons to Iran. IMO, these Islamic freedom fighters must have all the arms they may wish in their fight against evil imperialist crusaders from the West.
a Russian on Feb 9th, 2010 at 3:51 pm
Report commentAcePilot101 on Feb 9th, 2010 at 3:44 pm
“How can anyone in their right mind support the Iranian regime? The vast majority of Iranians hate them.”
Quite simple, AcePilot101.
Nobody in their right mind does.
Unfortunately, there are still many silly immature Left-wing ideologues about, and the murderous, insane, perverted Iranian regime are implacable in their hatred of Jews, Americans and Western society and culture in general. Just look at some of the posters here for evidence of that.
So the silly, immature Left-wing ideologues support the Mad Mullahs.
Catweazle on Feb 9th, 2010 at 4:00 pm
Report commentWhat’s this “punch” that will stun world powers during the anniversary celebrations? Well, it’s something that they’ll unveil, of course, or something that they say they’ve got. Perhaps short-range or battlefield nuclear weapons to defend themselves from the desperadoes who’d go storming in to liberate their oil, erm sorry “repressed population” should they be able to whip up the enthusiasm.
ryeatley on Feb 9th, 2010 at 4:09 pm
Report commenta Russian – are you enjoying iran’s interference in russia by supporting chechnya? thought not.
don’t you get it, not even after 31 years of islamic aggresion around the world? who do you think it was that prompted this bunch of 5th century morons to cause havoc everywhere they could? it wasn’t the usa, donut.
the iranian regime is just a bunch of trouble makers. and remember, according to the prophet it is quite okay to use deceit to further the cause. so lying to the world about nukes is okay, the prophet said it was.
neil on Feb 9th, 2010 at 4:17 pm
Report commentCon,
as an expert on the Middle East can you not shed any better light on the comment about “Now Ayatollah Ali Khamenei, Khomeini’s successor as the country’s spiritual leader, is at it, promising that Iran is about to deliver a “punch” that will stun world powers during the anniversary celebrations.” Your commentary seemed rather crude and crass. Don’t get me wrong I’m not saying you are wrong, I just would have hoped you would have something more to say about whether the context of the comment was spiritual or dealt with morality. There’s certainly scope to be stunned in those terms. If the comment was suicidely miltaristic as you alluded, does that mean that the remainder of Ayatollah Ali Khamenei’s speech was dressed in those terms and this was abnormal phraseology. Can we have more next time please?
astrowolf on Feb 9th, 2010 at 4:21 pm
Report commentPersonally, I don’t trust Iran. Come what may, at the end of the day, they are still muslims.
What I do like is the Arabs have never been able to erase the Persian identity out. They have been successful in other countries and it irks them that the Persians remember who they are.
It is like they have maintained a cult to remember that they are Persians with their own different history. Gotta give them credit for that.
bonnie on Feb 9th, 2010 at 4:32 pm
Report commentNeil
I never heard about Iran supporting Chechen terrorists. This is because of mullahs’ policy: back in USSR times, they considered USSR an evil regime oppressing Muslims, just like America or Britain. Now that USSR is no more and Soviet Muslim Republics are independent states, Iranian mullahs consider Chechen question the internal matter of Russia. They are very, very reasonable chaps.
a Russian on Feb 9th, 2010 at 4:41 pm
Report commentStill awaiting moderation – this place is worse than CiF. All I’ve done is link to some Telegraph and Guardian articles explaining how America has been conducting black ops by funding terrorist groups in Iran.
@bonnie,
“Personally, I don’t trust Iran. Come what may, at the end of the day, they are still muslims.”
I wonder how long that comment would have lasted had it been made about Jews! Still, you obviously aren’t aware of the 40,000 Jews living in Iran.
warden on Feb 9th, 2010 at 4:47 pm
Report commentThe usual trick at the Telegraph is to keep the comment awaiting moderation until the article has dropped off the bottom of the ‘blogs home’ list. Then they publish it, by which time much fewer people are visiting the blog.
warden on Feb 9th, 2010 at 4:52 pm
Report commentIt saddens me to see so many cretins clamouring for war against a country with no nuclear weapons when 1.2 million people died the last time we did that.
You blocks, you stones, you worse than senseless things.
warden on Feb 9th, 2010 at 4:59 pm
Report commentI don’t take it too seriously, they’re all talk and no trousers. Make a big noise but if it came down a showdown with the West, they’d wouldn’t last a day and they know it. As has been said earlier above, it’s all for internal consumption, the distraction of a foreign enemy to make the authorities look better in the eyes of their own people. By buying into the “big Iranian threat” you just give Ahmedinejad and his gang of thugs more power and credibility. They’re years off a nuke anyway, it’s all just bluff and shadowplay, we went through all this with Iraq and look where that got us? Nowhere, worse off in fact. They’re skint and unpopular, and if we just leave them alone and ignore them, they’ll fall apart soon enough.
Even if the unlikely happened and they got a nuke, so what? Who are they going to use it against? The Israelis would wipe them out, and the Yanks would obliterate Tehran. Ahmedinejad might talk like a crazy man but he really isn’t, I don’t think that he gives a stuff for his countrymen but I’m sure that he doesn’t want to go up in a mushroom cloud. And they wouldn’t give it to “terrorists” for all the same reasons, the finger would point straight back to them and again, they’d be radioactive dust in not time at all. Stop fretting about scare stories, and start worrying about the sh1t that’s going on at home!
Cyril Blake on Feb 9th, 2010 at 5:00 pm
Report commentI have to say this is a very unbalanced piece of journalism.
‘Eight months after Mr Ahmadinejad rigged the ballot’: As an Iranian who passionaltely hates the islamic government of Iran, the truth of the matter is that there is still no evidence to prove this. Obviously since Iran will not allow independent observers during elections, we will never know if the election was rigged. However I do know Ahmadinejad does have a large following especially in poorer areas of Iran because he uses Irans oil revenues to give handouts to the poor. In fact he increased these subsidies just before the election to gain further support however straight after he reversed this policy and did not deliver on many other promises.
Also, when the Iranian government use rhetoric such as ‘blow’ and ‘punch’ against the west, yes this is clearly an indication that they want to show the west that the people of Iran back the government no matter what the western media try and portray. However don’t forget that the government feels extremely threatened by the west since the invasion of Iraq and Afganistan? How would the UK feel if two European countries right next door to them got invaded? Also as much as many people, including myself, don’t trust the Iranian government, you must look at Irans history of military aggression towards other countries, and the truth there is that Iran has never attacked another country in the last 100 years (unfortunately the same cannot be said for the US and UK). The one time Iran got into a war was during the Iraq-Iran war when saddam tried to invade Iran and guess who the west backed then? yes it was saddam, supplying weapons for him to invade Iran with. It is these facts that makes Iran feel threatened and hostile to the west.
m0500752 on Feb 9th, 2010 at 5:07 pm
Report commentYou are determined to have this war Aren’t you Con, we don’t want a war,
They are a Sovereign Nation, they are allowed to build rockets and Nuclear weapons, I’d rather they didn’t but it’s their choice.
Why don’t we try friendship, trade, tourism.
We can upgrade Trident if you wish, Iranians are not stupid.
Couldn’t we all just chip in for the air fair, body armour and an Sa80 and Parachute him into Tehran, he does seem quite keen.
I assume we will only have to pay one way and we can share out the airmiles.
Aaron Russo
Reflections and Warnings
http://www.youtube.com/watch?v=YGAaPjqdbgQ
britishpatriot on Feb 9th, 2010 at 5:12 pm
Report commentCatweazle on Feb 9th, 2010 at 4:00 pm
As a white, Christian, British citizen I have spent a lot of time in Iran and never experienced anything but kind hospitality, respect and a keen interest in our culture. And I’m not even a “left-wing idealogue”. Mad mullahs in charge maybe, but they’d be quick to point to the mad maniacs Tony Blair and George Bush in response.
warden on Feb 9th, 2010 at 5:14 pm
Report comment@m0500752, 5:07 pm,
Excellent comment. Please read everyone.
warden on Feb 9th, 2010 at 5:21 pm
Report commentWe need to remind ourselves of just who is terrified of whom, here.
It is hard to image the terror of the liberating effect of American culture and civilisation on the Muslim masses that must be felt by the their religious dominants, who don’t want to be relegated to the same irrelevance as, say, the present Archbishop of Canterbury. Similarly, Muslim men must be viewing liberated western women and the political consequences of the liberation of their own women with something like panic.
These two factors alone are sufficient to create a strong anti-west feeling throughout the male Islam world, regardless of any other rallying points, such as the insult (to some) of the existence of Israel, or the minority grievances of individual tribes.
Like all established dominants who feel a threat to their power, the ruling classes have turned nasty and are moving to protect their position, with widespread support amongst Muslim males. There are many similar examples in the history of the Roman Catholic church pre-reformation.
Unfortunately for us, the solution in their eyes appears to be either to destroy western Christian civilisation, or to convert it to Islam, or both. And they really mean it. This, they appear to think, would make the problem go away. Naive it may be, but they are an implacable foe while thus motivated, no matter how misguided. Overcoming Israel is their next step to the conquest of Europe.
Matters have not been helped by half-cocked western military actions in the Middle East, which merely frightened Iran, who is now taking drastic steps to protect itself – the old awakening of the sleeping sword thing again..
The USA and Britain invaded Afghanistan in search of Osama Bin Laden. But Pakistan, which is right next door, and hardly with clean hands in the matter was not attacked. Why not? It occurs to me – if I were in charge of Iran, and a nation as powerful and unpredictable as the USA invaded the country next door and then screwed up spectacularly, how would I set about safeguarding my nation? I would be open to suggestions about an alternative to acquiring nuclear weapons and missiles – it is difficult and costly – but what other deterrent could prevail against the threat of American conventional might?
Maybe it’s me, but it seems obvious that we need a change of national strategy to counter this threat. However, I greatly fear that the posers in Parliament can’t see the elephant in the room, or are incapable of admitting past mistakes.
Some thunder from the pulpit would be nice, even if five decades too late. Alternatively we could give up and start converting to Islam now, but our women voters wouldn’t like it. Not only that, but I’m in two minds as to whether multiple wives in burkas would be a blessing or not.
The best that Bottler seems to be able to do to frighten our enemies is to mothball another frigate. Would that our leaders had spines.
Scott on Feb 9th, 2010 at 5:47 pm
Report commentLet us hope for President Mahmoud Ahmadinejad’s sake that nobody is contemplating pre-emptive measures.
Pragmatist on Feb 9th, 2010 at 7:05 pm
Report commentIran has enough land launchable sea-skimmer missiles to sink every ship in the Persian Gulf. They are Chinese copies of the silkworm, no Ship out there can protect itself against a barrage of these missiles. Iran could wreck the global economy in a matter of hours with their sea-skimmers alone. Who needs Nukes?
Steve Lee London on Feb 9th, 2010 at 8:01 pm
Report comment@ britishpatriot and others
This comment isn’t any sort of demand that we attack Iran, but you are quite wrong in believing that Iran has any right to do enrichment of fuel like this, carry out research of this nature or build nuclear weapons.
Iran is a signatory of the IAEA’s Non Proliferation Treaty. This restricts their right to do what they are now openly boasting about doing. Nobody forced them to sign that treaty. They did it themselves because it brings with it benefits; namely that other countries are allowed to help them with their nuclear power program – but they aren’t allowed to enrich fuel to this level in these amounts or do weapons research. Iran signed the treaty and they are not allowed to do any of those things. They are in breach of the treaty they signed, end of story!
This is why the Russians are allowed to build power stations for the Iranians, because Iran is a signatory.
The bottom line is that Iran is blatantly breaking a treaty they have signed and thumbing their nose at the world in doing so.
Why would anyone feel happy, or smug, or secure at a regime that would do this? All it does prove is that they are unreliable, can’t be taken at their word and absolutely cannot be trusted.
For those of you who say they aren’t building nuclear weapons, why are they enriching uranium to these levels when they don’t have the ability to manufacture that enriched uranium into fuel rods. Why were they found in possession of plans from AQ Kahn for nuclear weapons? Why were they hiding some of their enrichment facilities from the IAEA? Why have they been researching ablative heat shields for re-entry vehicles for warheads? Why have they been researching multi-point high speed explosive techniques whose only use is as a trigger for an atomic bomb? Why are they pressing ahead with multi-stage orbital and sub-orbital missile delivery systems? Do you know what the difference is between such a missile and an ICBM…..precisely NONE!!
I’ll give those of you who don’t understand this stuff the benefit of the doubt by assuming you are just ignorant of how these things stack up. However all of this can only mean one thing, which is that if not actively manufacturing an ICBM with a nuclear warhead just now, Iran is taking all the steps and doing all the research so that they can take that last step very very quickly, before anyone can stop them. Is this really the world in which you want to live and which you want your children to live in?
Trying to propose this as some sort of counterbalance to the US, as justified by the fact the US used two atomic bombs during WW II, or just because you like to see the US thwarted in some way, is just childish, plain dumb and bordering on the suicidal.
The fewer countries that have these weapons, the better. If just one of these gets into the hands of terrorists you can kiss it all goodbye!
No matter what you might think about Tony Blair he had one thing right; after 9/11 let no one be in any doubt that if terrorists get their hands even on a small fission bomb (as opposed to a much more powerful enhanced fusion device) they will use it in any city that they can smuggle it into and which suits their purpose.
Iran must be stopped in its nuclear endeavours. Please note I didn’t say attacked or destroyed.
alant on Feb 9th, 2010 at 9:29 pm
Report comment@ Steve Lee “Who needs Nukes?” The Iranians do, ideally submarine launched and targetted on Qom, Natanz and Isfahan. Anyone who thinks Iran is developing fissile material for peaceful purposes is a weapons grade bell end.
Call me Infidel on Feb 9th, 2010 at 10:16 pm
Report commentBiological? Nuke? A computer virus to knock out the power grid system? Stop the sell of oil in Europe? No! They just want a “Snow-Bama” Bow-A-Thon again! Deja vu Jimmy Carter!
marys on Feb 10th, 2010 at 1:54 am
Report commentDisdain and sanctions will not stop the Islamic Republic of Iran’ Mullahtocracy to fabricate nukes.
Only the bombing of all its nuclear facilities will stop the Mullahtocracy regime ambitions and efforts to fabricate nukes .
Those who say :
A military strike on Iran could have the unintended consequence of stirring nationalist sentiment to the benefit of Tehran’s hard-line government,
(U.S. General David Petraeus )
And
We can’t possibly destroy completely Iran’s nuclear project, and they will simply start up again what we did manage to destroy, so all we are buying is a few years. And therefore, it’s just not worth it (Secretary Gates)
Are a blatant case of appeasement* and acceptance of a development# that cannot be allowed .
[appeasement* . proven to be a failed diplomatic policy
against the prospects of development# . nukes]
The reality shows that the bombing of Iraq-Osirak prove both Petraeus and Gates to be wrong on all counts.
The bombing of Iraq-Osirak did not have the (Petraeus- fiction)of stirring nationalist sentiment to the benefit of Saddam-Bagdad’s hard-line government .
And
The bombing of Iraq-Osirak did not have the (Gates-fiction)of start up again, neither bought a few years.
Iraq-Osirak case was stylishly worth every bomb destruction .
Saddam Gov’t and supporters became so morally devastated , so deterred to the point that any ambition and effort to mumble the nuclear word was off Iraquis lexicon .
Moreover , years later , The U.S. led allies liberation of Iraq did not have to deal with any nuke related problem nor any deterrence factor of the long dusted to smithereens Iraq-Osirak nuclear facility.
Joseph.E
Givatayim-Israel
josephe on Feb 10th, 2010 at 2:58 am
Report commentOnce the Iranians prove that they have nuclear weapons, the Arab states of the Persian Gulf (forget the Arabian Gulf conceit, forevermore) will have to fall into line behind Iran’s leadership in OPEC. Those who believe that the Arabs will immediately become best friends with the USA because of America’s defensive shield (like this strategist: http://www.nytimes.com/2010/02/09/opinion/09lowther.html ) are sadly overestimating the willingness of the Arab rulers to risk an Iranian attack. People like Lowther assume the Arab leaders believe that the USA will stop 100 percent of Iran’s missiles and that if it doesn’t, the USA will avenge them and their incinerated populace by annihilating Iran.
In the 1991 Gulf War, the US anti-missile defenses didn’t take out all of Saddam’s SCUDs aimed at Saudi Arabia or Israel. And the notion that President Obama would actually order the nuclear annihilation of Iran, even in retaliation for an Iranian nuclear first strike, is belied by everything the Arab leaders know of Obama.
So the Gulf Arab leaders will have no choice but to comply when Iran tells them to expel the US military from their countries. And then Iran will be able to dictate to those leaders to whom they can sell their oil and at what price. I wonder how well the USA and the UK can get along on $300-a-barrel oil.
stuiec on Feb 10th, 2010 at 3:59 am
Report commentWell, I suppose the only appropriate rational response to the mullahs’ stated intention is: “I wave my private parts in the face of their grandmothers while farting in their general direction.”
Please don’t sue me for copyright infringement, Mr. Cleese, but for today’s world, they are the only words which can pass muster as possessed of Churchillian defiance.
stuiec has the proper grasp of the political dynamic in play. I think also to have stated their intentions is a feeble attempt to provoke the Israelis to attack on their timetable, which simply is not on. You’ll see a couple of IAF overflights to set off the Iranian antiaircraft response regime so the IAF can get a reading of what to expect, then the Israelis will adjust their order of battle appropriately.
With any degree of luck, the lady Israeli flyers should be back to their bases safely in time to catch the noon soap operas over lunch. Hopefully, also, Antek Zuckerman’s granddaughter will get her first battle star this time out to continue the family tradition unbroken.
Walt OBrien on Feb 10th, 2010 at 6:28 am
Report commentWell, I suppose the only appropriate rational response to the mullahs’ stated intention is: “I wave my private parts in the face of their grandmothers while farting in their general direction.”
Please don’t sue me for copyright infringement, Mr. Cleese, but for today’s world, they are the only words which can pass muster as possessed of Churchillian defiance.
stuiec has the proper grasp of the political dynamic in play. I think also to have stated their intentions is a feeble attempt to provoke the Israelis to attack on their timetable, which simply is not on. You’ll see a couple of IAF overflights to set off the Iranian antiaircraft response regime so the IAF can get a reading of what to expect, then the Israelis will adjust their order of battle appropriately.
With any degree of luck, the lady Israeli pilots should be back to their bases safely in time to catch the noon soap operas over lunch. Hopefully, also, Antek Zuckerman’s granddaughter will get her first battle star this time out to continue the family tradition unbroken.
Walt OBrien on Feb 10th, 2010 at 6:29 am
Report commentAlmost forgot: may Sirocco the Parrot have a go at Ahmineedofaleftjab’s moustache.
Walt OBrien on Feb 10th, 2010 at 9:25 am
Report commenthttp://blogs.abcnews.com/theblotter/2007/04/abc_news_exclus.html
warden on Feb 10th, 2010 at 11:48 am
Report comment@Walt O’Brien
“You’ll see a couple of IAF overflights to set off the Iranian antiaircraft response regime so the IAF can get a reading of what to expect, then the Israelis will adjust their order of battle appropriately.”
All in good time, Walt.
http://www.google.com/hostednews/afp/article/ALeqM5juqbIIJhcXbu98-XqOahZ-aDmW5A
warden on Feb 10th, 2010 at 11:58 am
Report commentAs an additional rider to stuiec’s post, we mustn’t forget the position of the Russians. They can still threaten a general nuclear exchange with the USA, not to mention threaten European cities. In addition, their influence over Iran in this context (leaving aside their desire to control our oil supplies) is powerful, not only because they have less concern about the consequences of absorbing a few hits from Iranian fission bombs, but also because their nuclear arsenal and counterstrike capability greatly exceeds anything that Iran will be able to field for the foreseeable future. Russia therefore calls the shots.
A second point is a lesson from history. During the Suez campaign Khrushchev threatened to rocket London and Paris. The USSR had nuclear warheads at that time so it was essentially a threat of nuclear attack on Britain and France unless we stopped. Since the USA refused to guarantee a nuclear response on our behalf and only sent a strongly worded ‘warning’ not to arm the rockets with nuclear warheads to the USSR, Eden decided that we had no option but to stop and withdraw.
One direct consequence was the creation of the British and French independent nuclear deterrents. As a result the Americans were concerned that if we started something off our own bat, then the USA and the USSR might have to finish it whether they wanted to or not. It gave us worthwhile influence during the cold war and helped to ensure that the Americans stayed on-side in NATO.
In addition, some say that another consequence of the Suez withdrawal was that the French blamed the British for the humiliating cave in, and that our subsequent treatment at the hands of the French-controlled EU was the result.
The Americans, with their anti-imperial hang-ups, also thought it a good idea to persuade Labour’s Harold Wilson (who didn’t need a second approach) to pull the British military presence out of the Middle East. That led to the oil price hike of the early 1970s, the three day week, and all the other consequences. The USA is now faced with having to clear up the resulting mess.
Since the USA has previous form over abandoning allies who are under threat of nuclear attack, and given the diplomatic relationship between Teheran and Moscow, we must be cautious before assuming that the USA would back middle-eastern states with positive deterrence directed at Iranian nuclear ambitions once Iran had a nuclear strike capability.
It seems unlikely to me that Britain after Blair now even has the military capability credibly to threaten Iran with nuclear strikes notwithstanding of the threat of a response from Russia. Trident’s function was to threaten a second strike final nation effort in the event of a total nuclear exchange with the USSR during the cold war. It is still a powerful weapon of last resort, but it is not much use at anything else. Not much remains of Britain’s independent long-range theatre and tactical nuclear capabilities after Blair/Bottler.
I don’t know anything about the French posture.
That leaves Israel. It would be shame if a few Iranian fission bombs aimed at Israel led to an Israeli retaliation which was then trumped by Moscow. What would the USA do? Most likely nothing, but who wants to risk it? And we would all have to live with the resultant radioactive debris in the atmosphere and on the ground.
Can we trust the Iranian Mullahs with nuclear weapons, or should we stop them? What do you think?
Scott on Feb 10th, 2010 at 12:04 pm
Report commentI hate to be the one to tell you guys but Iran already has Nuclear bombs in the US and has had them for a few years. We all might get a wake up call on the 11th. I just pray im wrong!!!
bruceski007 on Feb 10th, 2010 at 10:47 pm
Report commenta Russian on Feb 9th, 2010 at 3:51 pm
Aw, I bet you tell that to all the girls. Next time your underwear catches on fire, remind me to bring a bucket of petrol to put you out.
The noive of these guys. Sheesh. Sicorro the Parrot has a beak full of love for you, too, this Valentine’s day.
Walt OBrien on Feb 11th, 2010 at 12:35 am
Report comment
>>Will Obama Play The War Card?
by Patrick J. Buchanan
Published: Feb 10, 2010
Republicans already counting the seats they will pick up this fall should keep in mind Obama has a big card yet to play.
Should the president declare he has gone the last mile for a negotiated end to Iran's nuclear program and impose the "crippling" sanctions he promised in 2008, America would be on an escalator to confrontation that could lead straight to war.
And should war come, that would be the end of GOP dreams of adding three-dozen seats in the House and half a dozen in the Senate.
Harry Reid is surely aware a U.S. clash with Iran, with him at the president's side, could assure his re-election. Last week, Reid whistled through the Senate, by voice vote, a bill to put us on that escalator.
Senate bill 2799 would punish any company exporting gasoline to Iran. Though swimming in oil, Iran has a limited refining capacity and must import 40 percent of the gas to operate its cars and trucks and heat its homes.
And cutting off a country's oil or gas is a proven path to war.
In 1941, the United States froze Japan's assets, denying her the funds to pay for the U.S. oil on which she relied, forcing Tokyo either to retreat from her empire or seize the only oil in reach, in the Dutch East Indies.
The only force able to interfere with a Japanese drive into the East Indies? The U.S. Pacific fleet at Pearl Harbor.
Egypt's Gamel Abdel Nasser in 1967 threatened to close the Straits of Tiran between the Red Sea and Gulf of Aqaba to ships going to the Israeli port of Elath. That would have cut off 95 percent of Israel's oil.
Israel response: a pre-emptive war that destroyed Egypt's air force and put Israeli troops at Sharm el-Sheikh on the Straits of Tiran.
Were Reid and colleagues seeking to strengthen Obama's negotiating hand?
The opposite is true. The Senate is trying to force Obama's hand, box him in, restrict his freedom of action, by making him impose sanctions that would cut off the negotiating track and put us on a track to war - a war to deny Iran weapons that the U.S. Intelligence community said in December 2007 Iran gave up trying to acquire in 2003.
Sound familiar?
http://www.postchronicle.com/commentary/article_212283815.shtml
AFP: Iran leader says Israel's destruction 'imminent'
(AFP) – 3 days ago
TEHRAN — Supreme leader Ayatollah Ali Khamenei said on Sunday the destruction of Iran's arch-foe Israel was "imminent," and called for continued resistance against the Jewish state, state media reported.
"I am very optimistic about the future of Palestine and believe Israel is on the steep path of decline and deterioration," Khamenei told Ramadan Abdullah, the secretary general of Palestinian militant group Islamic Jihad.
"God willing, its destruction will be imminent," the Islamic republic's all-powerful leader said. "Continued resistance and hope for victory should be taken into consideration."
Iran does not recognise Israel, and is a staunch backer of Palestinian Islamist militants.
Tensions have soared between Iran and Israel over the past five years since hardline President Mahmoud Ahmadinejad came to power.
Ahmadinejad has drawn international condemnation by repeatedly predicting that Israel is doomed to disappear and dismissing the Holocaust as a "myth."
Israel, the sole if undeclared nuclear power in the Middle East, has called for tougher action against Tehran over its controversial atomic programme and accuses it of seeking nuclear weapons, a charge Iran denies.
http://www.google.com/hostednews/afp/article/ALeqM5hAJ9NlRXyFhGo6nlof1keJVIaH5g
U.S. freezes assets of Iranian general, 4 companies
Posted Wednesday, Feb. 10, 2010
WASHINGTON -- The Obama administration slapped new sanctions Wednesday on several affiliates of Iran's Revolutionary Guard Corps amid stepped-up efforts to get U.N. penalties against Tehran because of its nuclear and missile programs.
The Treasury Department said it is targeting one person and four companies for penalties over their alleged involvement in producing and spreading weapons of mass destruction.
The agency said it is freezing the assets in U.S. jurisdictions of Revolutionary Guard Gen. Rostam Qasemi and four subsidiaries of a previously penalized construction firm that he runs.
The sanctions made public Wednesday expand existing U.S. unilateral penalties against elements of the Guard Corps, or IRGC, which Western intelligence officials believe is spearheading Iran's nuclear program. The step is in line with statements from administration officials that they want sanctions to target Iranian elites responsible for such activity and not the Iranian people in the hope of changing the government's behavior.
The administration is pushing to make such penalties international so they will have greater impact, and the announcement came as U.S. officials lobby for similar action at the U.N. Security Council, which has already hit Iran with three sets of sanctions over Tehran's failure to prove that its nuclear program is peaceful.
Qasemi commands the Guard Corps' Khatam al-Anbiya Construction Headquarters, which Treasury described as an engineering arm that is involved in the construction of streets, tunnels, waterworks, agricultural projects and pipelines. Its profits "are available to support the full range of the IRGC's illicit activities, including WMD proliferation and support for terrorism," Treasury said in a statement
http://www.star-telegram.com/279/story/1961206.html
PM: What Is Iran Planning for Thursday?
February 8th, 2010 8:50 pm
Khamenei, whose public statements should be taken seriously, is promising some sort of devastating “punch” against the West on Thursday the 11th, the same day as the Green Movement is calling for a monster protest against his regime.
What might he have in mind? I don’t know; they say a lot of things just for effect, but threats/promises from the supreme leader have a certain standing. If I were an Israeli official, I’d recheck my information on Iran, Hamas, Hezbollah and Islamic Jihad.
Some think he’s preparing some kind of attack against Israel. Surely there has been no shortage in recent weeks of nasty language against the Jewish state. Here’s Foreign Minister Mottaki a day ago:
“Iran is facing a mad nation led by insane people. This is the reason why all of us in the region – in Syria, in Lebanon, and the Palestinians – must be prepared constantly for any crazy operation against us.”
Other Iranian leaders have spoken of the “inevitability” of Israel’s destruction. Maybe they have something in mind.
The other obvious possibility is that he’s ordered a massive, Chinese-style crackdown on the opposition. Since he believes that the opposition is foreign-based and foreign-controlled, a devastating massacre might count as a big “punch” to the West.
He’s totally obsessed with bringing an end to the protests, and the nightly chants of “Death to the Dictator” that haunt him so. In the last few days he’s been telephoning opposition journalists and intellectuals, telling them to give it up, and the preparations for the crackdown have gone so far as to replace the traditional plastic garbage cans in Tehran — in which demonstrators have been setting fires to combat tear gas — with metal ones. I don’t understand the point of that, but I’m sure it annoys the sanitation workers, who will now have to hoist much heavier containers.
Meanwhile, the purge of journalists and activists continues. Since June 12th, the regime has arrested slightly more than 11,000 people, more than 3,000 of whom are still in those nightmare cells. Executions continue at a regular tempo, as does torture.
The Greens expect the regime to go all out on Thursday. The leaders believe they will be arrested on Friday, and are prepared for it. In his recent interview Mousavi remarked that a large number of his best friends were in prison, and he was sad not to be with them.
He also said that the Green Movement did not depend on his leadership, or anyone else’s.
That theory may be about to be tested by Ali Khamenei, starting Thursday.
http://pajamasmedia.com/michaelledeen/2010/02/08/what-is-iran-planning-for-thursday/
>>OIL $74.85 +0.229%, DXY 79.925, EURO: 1.3778, GOLD: $1,078 +0.2%, COPPER $3.0495 +2.1266%, PLATINUM: $1,509
(DIG/DUG/USO) Crude Oil Climbs a Fourth Day on Improved Outlook for Demand
By Ben Sharples
Feb. 11 (Bloomberg) -- Crude oil rose for a fourth day in New York after the U.S. Energy Department increased its forecast for global oil consumption this year.
Oil climbed as the department raised its demand projection to 85.3 million barrels a day from 85.18 million, according to its monthly Short-Term Energy Outlook. Prices also gained on prospects that Germany and France will help Greece overcome its crippling budget deficit.
“Oil rose after a bullish outlook” from the department, said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “There are definitely more optimistic signs that Greece will be bailed out.”
Crude oil for March delivery gained as much as 36 cents, or 0.5 percent, to $74.88 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $74.87 at 12:15 p.m. in Sydney. Yesterday, it rose 77 cents to settle at $74.52.
The Organization of Petroleum Exporting Countries yesterday also increased its forecast for the amount of crude its members may be called on to supply in 2010, by 150,000 barrels a day.
Germany and France are leading talks to help Greece as long as it sticks to a program to reduce the European Union’s biggest budget deficit, officials said yesterday. The euro’s slide to a nine-month low and a slump in bond prices prompted leaders to hold talks on assistance for Greece.
The dollar traded at $1.3771 per euro at 12:12 p.m. Sydney time, from $1.3737 yesterday.
Crude Stockpiles
Oil futures prices increased yesterday as the U.S. Treasury Department announced restrictions on four companies and one individual with links to Iran’s Islamic Revolutionary Guard Corps. The U.S. has accused the Guard of developing weapons of mass destruction and supporting terrorism.
The U.S. has been trying to rally countries to sanction Iran, OPEC’s second largest oil producer, as the government in Tehran resists pressure to scale back its uranium enrichment work. Secretary of State Hillary Clinton has signaled the U.S. wants to target the Revolutionary Guard, an elite military branch with extensive business interests.
Oil dropped as much as 1.6 percent yesterday after an industry report showed a larger-than-expected increase in crude stockpiles and Chairman Ben S. Bernanke said the Federal Reserve may raise the discount rate “before long” as it moves to normalize Fed lending.
The industry-funded American Petroleum Institute reported this week that U.S. crude inventories climbed to the highest level since October. Stockpiles gained 7.2 million barrels to 337.6 million last week, according to the Washington-based group.
An Energy Department inventory report scheduled for yesterday was delayed until tomorrow because of the government shutdown in Washington cause by a snow storm. The report may show stockpiles of oil grew by 1.6 million barrels, according to a Bloomberg survey of 16 analysts.
Brent crude oil for March settlement added 41 cents, or 0.6 percent, to $72.54 a barrel on the London-based ICE Futures Europe exchange yesterday. The March contract expires today. The more actively traded April contract rose 0.6 percent to $73.12.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
Last Updated: February 10, 2010 20:18 EST
FT: A Greek crisis is coming to America
By Niall Ferguson
Published: February 10 2010 20:15 | Last updated: February 10 2010 20:15
It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.
There is of course a distinctive feature to the eurozone crisis. Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.
That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.
Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.
What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect
For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.
Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.
Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.
The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.
Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.
Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.
But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.
The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.
Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”
On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.
The writer is a contributing editor of the FT and author of The Ascent of Money: A Financial History of the World
.Copyright The Financial Times Limited 2010. You may share
http://www.ft.com/cms/s/0/f90bca10-1679-11df-bf44-00144feab49a.html
(VALE) Vale Will `Struggle' to Meet Iron Ore Demand as China's Economy Expands
By Helder Marinho
Feb. 11 (Bloomberg) -- Vale SA, the world’s biggest iron- ore producer, said it will “struggle” to meet demand for the steelmaking raw material this year as China’s economy expands.
“In 2010, Vale faces a tight situation, as even running its iron ore mines and pellet plants at full capacity we will struggle to satisfy client demand,” the Rio de Janeiro-based company said late yesterday in a regulatory filing. “Our largest projects are scheduled to come on stream from 2012 onwards, with a very small capacity increase in the near term.”
Vale is taking “the final steps” to resume full output at its iron ore mines after China’s economy expanded at a rate of about 11 percent in the fourth quarter, increasing steel demand from construction companies and appliance manufacturers. Vale’s shipments to China, the world’s largest iron-ore buyer, accounted for about 44 percent of iron ore sales in the quarter.
“Volumes will improve in the first quarter,” said Raphael Biderman, analyst at Bradesco Corretora in Sao Paulo, in a telephone interview. “In the second quarter there will be a positive impact of the increase in iron ore prices.”
Fourth-quarter net income rose to $1.52 billion, or 28 cents a share, from $1.37 billion, or 26 cents, a year earlier, the company said late yesterday in a regulatory filing. The company was expected to post profit of 31 cents a share, the average estimate of 13 analysts in a Bloomberg survey.
“Excluding non-recurring items, results were in line with our expectation,” said Biderman. He expects the company to conclude “soon” the negotiations on iron ore contracts with an increase of as much as 50 percent in prices.
‘Main Beneficiaries’
Vale will likely “be one of the main beneficiaries of persistently higher-than-expected iron ore prices during the upcoming years,” Leonardo Correa, a Sao Paulo-based analyst with Barclays Capital, said in a Feb. 8 report. “We’re bullish on iron ore.”
Vale said in a separate statement yesterday that it agreed to buy Mosaic Co.’s 20.3 percent stake in Fertilizantes Fosfatados SA, or Fosfertil, for $1.03 billion. Vale, which also acquired stakes from Bunge Ltd. and Yara International ASA, will hold 79 percent of total Fosfertil shares after the transaction.
Vale fell 0.1 percent to 42.20 reais in Sao Paulo trading yesterday. The stock is unchanged this year, compared with a 5.2 percent loss in the Bovespa index of traded companies.
To contact the reporter on this story: Helder Marinho in Rio de Janeiro at hmarinho@bloomberg.net
Last Updated: February 10, 2010 20:05 EST
SA: Why Germany Won't Bail Out Greece
by: Edward Harrison February 10, 2010 | about: EWG
In my view, there is little chance the Germans are going to allow the EU to ride to the rescue of the Greeks. All of the bailout chatter does not really consider the domestic political constraints in Germany.
First, a bit of quick background. Germany was traumatized by two world wars and an intervening period of irrelevance and hyperinflation. As a result, the German national psyche is very much geared toward preventing anything resembling these outcomes in future. First and foremost, that has meant integration with the rest of Europe and a weak military in order to prevent economic nationalism from becoming militaristic in Western Europe’s largest country. Second, this has meant an extreme aversion to high rates of inflation or anything that could lead to inflation or currency revulsion.
As a result, the Germans entered into monetary union with the likes of Italy and Greece despite these nations' perceived fiscal profligacy, high inflation and weak currency policies. The thinking at the time was that the stability and growth pact (SGP) would rein in any excesses. However, when France and Germany both breached the magic 3% federal government deficit hurdle of the SGP during the Schroeder government, all bets were off; now Italy and Greece could deficit spend and point to core Europe’s biggest nations as an excuse – and this is exactly what has transpired.
Now, it has to be remembered that the Euro was adopted in Germany without any democratic vote by the German electorate. It was imposed by fiat from the Federal Government unlike in Denmark where the Euro was put to vote before the electorate and rejected. In fact, there was a lot of concern in Germany at the time that the Germans would have rejected the Euro had it been voted upon – and this is the very reason a vote was not held.
Many ordinary Germans feel their good money is now being trashed. They already had a currency union between Ostmark and Deutsche Mark, with Western Germans submitting to a “solidarity tax” in order to finance the upgrading of Eastern Germany’s infrastructure. So, to this day, many German look at larger Euro notes to determine if they were printed by the Germans, Italians, or Greeks – sometimes rejecting notes printed in countries viewed with suspicion like Italy (see the Telegraph’s 2008 story on this here).
With this as background, you should see the 2009 election of the CDU/CSU/FDP coalition as a signal that the German government is unlikely to submit to a bailout. With the FDP replacing the SPD in government, the likelihood of a Greek bailout decreases. The FDP is the libertarian junior partner in this new coalition (the same coalition which produced the SGP, by the way) and they are under enormous pressure from their constituents not to permit any bailouts. If Germany allows German tax dollars to go to the EU in order to bailout the profligacy of Italy or Greece, there would be riots. Spain is another story – but Greece is known as fiscally profligate in Germany – so bailing them out is unacceptable politically. Let’s not forget that Germany has its own problems in banking as well.
That’s the politics of the issue in Germany. And I see this as important now that Greece is the country under pressure in Europe instead of, say, Austria. This is one reason I have predicted the IMF would likely be used as a ‘bailout’ vehicle.
However, Marshall Auerback has pointed me to a recent NYTimes article which gives more direct evidence of the thinking of German policy makers. The article reports:
If Greece needs a bailout, it would be far better for it to seek one from the International Monetary Fund than from other euro-zone countries, Otmar Issing, a former top official of the German and European central banks, said Friday.
“I don’t think that the E.U. can impose the kind of sanctions that would be needed, and it would make Brussels too unpopular,” Mr. Issing said during an interview by telephone from his office near Frankfurt. “A better way is for Greece to approach the I.M.F. It is the only institution that can impose strict enough conditions.”
Mr. Issing was chief economist of the European Central Bank from 1998 to 2006 and one of its most influential executive board members. Previously he spent eight years as a board member of the Bundesbank, an institution that expressed doubts about the wisdom of expanding the euro zone beyond core West European economies.
Bailing out Greece would involve “a more or less disguised transfer of taxpayer money,” he said, “and I don’t see any support for that from the people in Germany or elsewhere.”
Bottom line: The Germans will not support a bailout of Greece via the EU. Those who see this as a remedy are not watching the internal politics in Germany.
See The European problem from February 2009 for a more comprehensive Europe-wide view. These issues are all still at play.
Update: Reuters has now confirmed the speculation about a bailout is premature. See FT Alphaville’s piece “Oh yes they will… oh no they won’t!” Marc Chandler of Brown Brothers Harriman sent out a note Tuesday afternoon saying:
Greece and the EU have only just agreed to a strategy to address the deficit. They have also worked out a review schedule as the program is implemented. Additionally EU aid to Greece carries with it moral hazard and opens the door for aid to other countries, notably Spain and Portugal. In related news, the German-based Spiegel On-Line has an article that is attracting market attention. It claims that a large US investment house helped arrange a cross currency swap for Greece that helped to conceal another $1 bln in debt. Although this amount seems relatively small given the huge debt and deficit problems, many suspect it could be just the tip of the iceberg. It is not unusual for sovereigns, including Greece, to borrow in foreign currencies, like dollars, yen and Swiss francs and swap back into euros. The article claims that the US investment house arranged a cross currency swap for Greece back in 2002 but gave exchange rates that in effect created for Greece an extra billion dollars. Of course, the swap will have to be unwound, but likely was in effect off-balance sheet and was not picked up by the stats office. Many observers have already noted problems with the Greek accounting methods which have sometimes not included defense spending in the budget calculations and have also sometimes not included the debt owed to hospitals under its social programs. Greek bonds as well as the other weaker credits in the euro zone are rallying, but this could very well prove to be a one day wonder if we are right and no EU bail out will be forthcoming. Market attention will focus on the Thurs EU summit, and euro vulnerable to disappointment.
I see it as unlikely that any deal – bailout via the EU, IMF bailout or backdoor help via quasi-fiscal measures from the ECB – can be reached unless Greece agrees to austerity measures. While this is the Eurozone – and that makes a difference – countries like Latvia will be looking to determine if Greece gets differential treatment. And Spain, Portugal or Ireland would then be next in line. Any agreement must take these factors into account.
http://seekingalpha.com/article/187699-why-germany-won-t-bail-out-greece
EURO: Real Threat From Far-Right Extremists in Europe
Forget Greece, The Coming Surge Of Right-Wingers Will Pose The Real Threat To The Euro
Joe Weisenthal | Feb. 10, 2010, 6:19 AM | 1,856 | 26
The latest word is that some official form of aid to Greece will be hammered out today, and as the economic ballast of the EU, it's on Germany to make it happen.
So let's say it does happen, then what next.
Well, first of all, it will raise all sorts of future questions about what to do with other intransigent nations going forward.
But then there will be political ramifications. A certain faction will argue that the only way to prevent these crises going forward is to further integrate EU nations, and start harmonizing economic policy.
But there will be a countervailing force: Europe's nationalist right-wing.
Politicians like Germany's Udo Voigt of the National Democratic Party of Germany will seize on the moment and surge on anger over bailouts to "Club Med" (the Mediterranean nations that are the weak members of the union).
In the European regional elections that happened this past year, the big surprise was the failure of the far right to make big gains despite the bad economy.
But add bailouts to the mix, and the desire among some on the periphery to further erode national sovereignty, and the conditions are in place for a serious surge from the right
http://www.businessinsider.com/this-german-right-winger-and-several-others-are-about-to-pose-the-real-threat-to-the-euro-2010-2
TBI: Europe's Choice: Dismantle The Euro, Or Cede All National Sovereignty To Brussels
Joe Weisenthal | Feb. 9, 2010, 6:12 AM | 2,701
We said in early December that the Euro breakup would be the story of 2010, and just over a month in that prediction has shown to be right on. It's even overshadowing (by far) concerns over a China bubble, or at least a China slowdown.
A piece in Der Spiegel highlights the real problem that Europe faces. It's not just debt. It's politics.
As the early euro-skeptics warned, coordinating a single monetary authority across nations with their own political systems and economic objectives wouldn't work. The founders of the euro actually knew this, but they they thought they could cheat by imposing deficit limits on each country, which were stipulated in the Maastricht Treaty.
The (wishful) thinking was that as long as countries weren't allowed to run up ginormous deficits on their own, then it didn't much matter what policies they took on their own. Everything else would be fine.
That's obviously not proven to be the case. There are other kinds of bad decisions a country can go in besides merely running up big debts.
So that leaves Europe with two real solutions:
1.Breakup.
2.Turn Brussels into a seat of real centralized authority that mandates uniformity of economic policy across Euroland.
Neither, obviously, is politically appealing.
But for big-time Euro-skeptics, like UK journalist Ambrose Evans-Pritchard (pictured), who warned about dire consequences for British sovereignty if it joined the union, now is the time for big-time vindication.
http://www.businessinsider.com/europes-choice-dismantle-the-euro-or-cede-all-national-sovereignty-to-brussels-2010-2
UKIN: Two Labour gains and UKIP second place surge
By Chris Mead, Press Association
Friday, February 5, 2010
Uk Independent
Labour made two gains in the latest council by-elections but a Ukip surge served a warning to major parties amid the latest revelations in the MPs' expenses scandal.
Liberal Democrats surrendered a Holmewood and Heath seat they had taken at North East Derbyshire District in 2008 when they failed to field a candidate.
Labour's Lee Stone easily won in a straight fight with Tories.
The second gain came at Blackburn with Darwen Borough when Mustafa Desai triumphed at Queen's Park where the previous councillor had been elected as a Lib Dem but later became independent.
Labour won another seat in the ward in the 2008 main polls.
Ukip shot from fourth place to second as Tories held on at Newchapel, Newcastle-under-Lyme Borough, Staffordshire.
Earlier in the week Liberal Democrats scored a landslide victory at Whyteleafe, Tandridge District, Surrey.
They defended a seat in a ward in which Tories have another councillor.
RESULTS
Blackburn with Darwen Borough - Queens Park: Lab 638, Lib Dem 366, C 174. (May 2008 - Lab 756, Lib Dem 722). Lab gain from Ind. Swing 10.3% Lib Dem to Lab.
Newcastle-under-Lyme Borough - Newchapel: C 208, Ukip 148, Lab 138, Lib Dem 127. (May 2008 - C 416, Lab 220, Lib Dem 180, Ukip 127). C hold. Swing 10.4% C to Ukip.
North East Derbyshire District - Holmewood and Heath: Lab 373, C 209. (May 2007 - Lab unopposed; April 1O 2008 by-election - Lib Dem 382, Lab 356, C 165). Lab gain from Lib Dem.
Tandridge District - Whyteleafe: Lib Dem 444, C 236, Ukip 99. (May 2008 - C 526, Lib Dem 407, Lab 45). Lib Dem hold. Swing 19.4% C to Lib Dem.
UKT: The 27 mediocrities who will rule Europe
Daniel Hannan is a writer and journalist, and has been Conservative MEP for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the EU is making its constituent nations poorer, less democratic and less free.
By Daniel Hannan Politics
Last updated: February 9th, 2010
UK Telegraph Blog
46 Comments
As predicted, the European Parliament has voted overwhelmingly for an underwhelming European Commission. Twenty-seven bureaucrats will exercise extraordinary powers, being responsible both for the initiation of legislation and the execution of policy. Yet the closest they get to a democratic mandate is being approved en bloc by MEPs.
UKT: Time for a British Tea Party
Daniel Hannan is a writer and journalist, and has been Conservative MEP for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the EU is making its constituent nations poorer, less democratic and less free.
By Daniel Hannan Politics
Last updated: February 10th, 2010
77 Comments
Simon Jenkins raises a question that has been nagging at me for some time. Why is there no British Tea Party?
Where are the crowds of revenue slaves flocking to London to demand redress for the squandering of their money? Marginal tax is rising to 50%, VAT to 17.5% and state spending towards half the national product. The Treasury has lost control of public finance. So why no furious blue-rinses, bail-out haters, bonus-bleaters and embittered VAT victims storming Parliament?
Yeah: why? Some of my US readers believe that anti-tax rebellions are an American speciality, but we’ve had plenty of them in this country, from the Poll Tax Riots of 1381 (the Peasants’ Revolt) to the Poll Tax Riots of 1990. The doctrines that inspired the Boston mutineers – above all, the idea that taxes should not be levied without parliamentary process – were borrowed from English political theory.
Indeed, as Hugh Brogan drily observed in his History of the United States, the taxpayers’ revolt which sparked the American Revolution began on this side of the Atlantic: the Seven Years War had pushed taxes up to 25 shillings a year for the average Englishman as against sixpence for the average colonist, and MPs were determined to export part of that cost to North America.
Of course, there was an extra dimension to the Boston Tea Party: “No Taxation without Representation!” Taxes in the UK may be excessive but they have, so far, been set by our own government. This, though, is changing. If there was one theme that came out of the hearings for the new European Commissioners, it was their determination to create a direct revenue stream for the EU. Herman Van Rompuy, a declared enthusiast for the global managament of our planet, maintains that “recent developments in the euro area highlight the urgent need to strengthen our economic governance,” (hat-tip, Stephen Castle). “Whether it is called coordination of policies or economic government, only the European Council is capable of delivering and sustaining a common European strategy for more growth and more jobs.”
Britain, in other words, has all the conditions necessary for a popular anti-tax movement. Not only are levies high and rising; they are being imposed by rulers over whom we have no control. We need our own Tea Party Movement. Who will help me run one?
Tags: European Commission, herman van rompuy, Hugh Brogan, New York Times, Simon Jenkins, Stephen Castle, tax, The Guardian
http://blogs.telegraph.co.uk/news/danielhannan/100025633/time-for-a-british-tea-party/
COMMENTS
“why no furious blue-rinses, bail-out haters, bonus-bleaters and embittered VAT victims storming Parliament?”, because the British people are indolent and don’t believe they can have an effect.
Good luck though.
Damocles on Feb 10th, 2010 at 10:35 am
Report commentTime for a British Tea Party?
Then the best of luck starting one, Daniel Hannan. But be warned that there is a lot of hard graft involved, burning the midnight oil, boring administrative stuff that someone has to do. It will not all be the life of glamour you are used to, doing the round of the media circus, all TV interviews, blogging, writing books and giving lectures.
You might even have to take off your Savile Row tailored jacket, roll up your sleeves, get your fine hands dirty. Think on.
Junius on Feb 10th, 2010 at 10:36 am
Report commentTea Party, written Constitution, Bill of Rights – give all that and I’m with you!
coltek on Feb 10th, 2010 at 10:36 am
Report commentwhat about a popular ‘Anti conspiracy to impose an open door immigration policy’ movement? That’s the topic of the day.
Davidjay on Feb 10th, 2010 at 10:37 am
Report commentThe Tea Party movement is without leaders. Don’t try to sell us something that isn’t the real thing.
We are taxed, and a large part goes to the EU, where we aren’t represented. We aren’t represented in Westminster because there sits a collaborative movement to disenfranchise the British by stealth. And that’s before we get Cast-Irons full blown green taxes.
What you need to do is to join UKIP, matey. A British Tea Party movement isn’t going to solve the essential problem of EU membership, and will be a distraction. Somehow I think that you know that.
watttyler on Feb 10th, 2010 at 10:40 am
Report commentIt’s too early. We haven’t yet got taxes that are obviously being charged by a body that we didn’t choose; we have a government that doesn’t represent the people, we think, but soon there’ll be an election and then should all be corrected.
Until a government stands up and says, “We are imposing this tax because the EU tells us to.”, there won’t be enough popular support for us to reclaim our democracy. And what was Hannan’s First Law?
ianslad on Feb 10th, 2010 at 10:41 am
Report commentGreat idea. The left in this country have always been far better organised than the right. No matter what the issue is, the left can muster a crowd with pre-printed placards in jig time. The libertarian tradition is this country has not achieved anything credible since the Countryside Alliance.
Of course, it has always been the case that the productive members of society have far more to lose than the recipients of government largesse in taking time off work to protest, engaging in civil disobedience, and provoking brushes with our increasingly authoritarian state. If this doesn’t change, then we will continue being the victims.
Effective protest can achieve a great deal. How quickly would we get our EU referendum if every motorway in the country was blocked by thousands of cars that had unexpectedly run out of fuel on a daily basis?
David Hannah on Feb 10th, 2010 at 10:43 am
Report commentMaybe it’s just that as Brits, we can’t stand the thought of throwing away all that lovely tea. Much better to drink the stuff and complain about the weather; if we can do so while standing in a queue, so much the better.
Neil on Feb 10th, 2010 at 10:50 am
Report commentTea Parties rely on cohesive communities with shared ideas which naturally come together when placed under threat to those common values and the “glue” that holds them together.
Labour and the Left has criminalised many of our traditional values and/or made lepers out of those who hold them, effectively destroying social cohesion and sense of community.
What part of “divide and rule” do you not understand Daniel?
Rocky on Feb 10th, 2010 at 10:56 am
Report commentNo rebellion – why its obvious – the tax is stealthed away.
.
Transparency is needed: Ideally PAYE would be scrapped, but in the meantime payslips would be altered to show all tax clearly and as a percentage of total payroll cost (taxes on jobs included).
.
Perhaps this could be printed this:
“The government has taken x% of your pay – Have a nice day”
followed by a strapline in big black capitals:
“Government Wealth Warning – Voting Socialism is criminal”
.
It might also be possible to print the economy basics on each payslip too:
Government debt (on and off balance sheet) and its change over time
Government interest bill
Expenditure on failure – social problems, benefits & health
All in simple clear figures.
.
Then of course shops could also display a breakdown in their prices showing the VAT, corporation, NI etc component in their goods.
Daniel Hannan: What's wrong with the European Commission
Daniel Hannan is a writer and journalist, and has been Conservative MEP for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the EU is making its constituent nations poorer, less democratic and less free.
By Daniel Hannan Politics
UK Telegraph Blog
Last updated: February 10th, 2010
56 Comments
Prenez garde! Je vais parler français!
BBC: Former Thatcher aide to run UKIP election campaign
Page last updated at 15:28 GMT, Tuesday, 19 January 2010
UKIP described the hiring of James Pryor as a "fantastic coup"
The UK Independence Party has appointed a former adviser to Conservative prime ministers Margaret Thatcher and John Major to run its election campaign.
James Pryor said it was an "exciting time" to join UKIP, which came second in last year's European election.
He promised a "robust" campaign ahead of polling, expected to be on 6 May.
Mr Pryor previously advised former South African President FW de Klerk during the country's 1994 general election, won by Nelson Mandela.
He was head of presentation for the Conservative Party under Mrs Thatcher and Mr Major, from 1990 to 1994, later working for Sir James Goldsmith's anti-EU Referendum Party.
'Credible alternative'
UKIP leader Lord Pearson of Rannoch said: "Having come second at the European election, beating both Labour and the Lib Dems, we have already demonstrated that UKIP is now a major force in British politics.
"The general election is an opportunity for UKIP to cement the party's credentials and former electoral success, once again providing voters in Britain with a credible alternative to the major political parties at the ballot box."
He said Mr Pryor had an "undisputed pedigree in electioneering, both here in the UK and overseas, as well as a wealth of understanding of the structures and mechanisms of modern political campaigning".
"Having James join us is a fantastic coup for the party and he will begin work in shaping UKIP's election campaign immediately."
Mr Pryor said: "The next few weeks are going to an exciting time, not only in terms of mapping out the shape of the campaign ahead, but also in defining the campaign's key platforms and ensuring every aspect of the party's structure is fully integrated into the campaign effort."
Mr Pryor has also worked in Sierra Leone, Ghana, Lesotho and the Bahamas.
UKIP, which wants the UK to withdraw from the EU, took 13 seats at the European elections but has no MPs at Westminster.
Former leader Nigel Farage is running for the seat of Buckingham at the next election, where he hopes to oust Commons Speaker John Bercow.
http://news.bbc.co.uk/2/hi/uk_news/politics/8468298.stm
UKT: Britain may be forced to bail out Greece
Britain could be forced to help bail-out some of Europe’s crisis-hit economies with tens of billions of pounds, it is feared.
By Andrew Porter, Political Editor
Published: 10:00PM GMT 10 Feb 2010
Gordon Brown is under mounting pressure from MPs on all sides to ensure that only eurozone countries contribute to a bail-out of Greece, whose economy is teetering on the brink of collapse.
The Prime Minister will this morning arrive in Brussels for a crucial European leaders’ summit amid fears that the UK could get dragged into a full European Union bail out plan.
Downing Street, however, insisted that the focus of responsibility should fall on the eurozone countries and, failing that, a G20 group of leading nations solution.
Last night European officials were involved in furious efforts to try and complete a €20 billion rescue package, designed to halt the looming crisis in Greece before it spreads to other countries. France and Germany were at the forefront of the eurozone negotiations.
However, Mr Brown - when challenged in the Commons over Britain’s position - was unable to rule out Britain's involvement in a a Greek rescue package.
The package would involve credit assurances being given to Greece to enable to start borrowing money again at affordable rates – something that has been impossible because of its credit rating.
But the issue of other countries needing urgent help, as well as Greece, is also pressing. The economies of both Spain and Portugal are in serious trouble and their deficits spiral.
It means a total rescue package for the so-called PIGS – Portugal, Ireland, Greece and Spain – could be as high as €60 billion.
Britain contributes 20 per cent of the EU budget and any EU-wide bail out of either Greece - or the other threatened economicies - could, as a result, fall heavily on British shoulders.
Any solution involving all 27 EU nations, which is a possibility under the EU’s treaty arrangements, is likely to be resisted by Mr Brown, Downing Street sources indicated.
Instead, Mr Brown yesterday pointed to new G20 commitments to the International Monetary Fund which will enable it to intervene. An intervention by the IMF would be considered almost a last-gasp solution as some senior Brussels officials fear it is an instrument of American foreign policy.
Instead an official remarked that the solution would be similar to what the IMF does, but from within the eurozone.
Mr Brown told MPs that a G20 emergency fund – which Britain has contributed to – could also be used to prop up Greece. There are fears that the Greek government, under pressure from unions, will not keep to the stringent austerity plan it has agreed.
Mr Brown told MPs: "Greece should stick by the commitments it has made to the European Union and to the world.
"At the G20 conference in London in April we put in place arrangements that could help countries if they were in difficulty. These arrangements are still in place and have been used by some countries.”
But he added: "It's up to the euro area to decide what they wish to do in relation to euro area countries but there is international support available if Greece wishes it."
Mr Brown who will spend all day in Brussels with EU leaders will hope that any deal does not include the full 27 members of the EU.
Douglas Carswell, a Conservative MP, urged Mr Brown to rule out any bail out for Greece in “any circumstances.”
He said: "Britain wisely stayed out of the euro. There is now a strong possibility that Greece will default on her debts, something that is not our immediate problem.”
Herman Van Rompuy, the EU’s President, has seized on the crisis to push for a quantum leap in the level of EU integration, using new powers in the Lisbon Treaty to create an "economic government" or EU fiscal authority.
Mr Brown also came under pressure from Labour MPs to use Britain’s position outside the Eurozone to ensure any rescue package hits British taxpayers.
Gisela Stuart, a former Labour Europe Minister, asked Mr Brown: "Could you confirm that any negotiations involving a bail-out for the Greek economy will be completely confined to eurozone countries and will have no impact on the UK?"
Mr Brown said support was available at an "international level" under the G20 agreement and added: “If the euro area wishes to move ahead with a proposal, that is for the euro area," he added.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7207536/Britain-may-be-forced-to-bail-out-Greece.html
UKT: China orders retreat from risky dollar assets
China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets.
By Ambrose Evans-Pritchard
Published: 1:31PM GMT 10 Feb 2010
A Communist Party directive leaked to the Chinese-language edition of the Asia Times said dollar reserves should be limited to US Treasuries or agency mortgage debt such as Freddie Mac that enjoys Washington's implicit backing.
BNP Paribas said the move has major implications for global risk assets. "The message from Beijing is that we don't like this environment," said Hans Redeker, the bank's currency chief.
"When the world's biggest investor turns risk-averse, that is something you take notice of. We think this could become the new theme for the markets in the medium-term," he said.
The directive covers both the State Administration of Foreign Exchange (SAFE) and China's state-controlled commercial banks. Together they have an estimated $3 trillion (£1.9 trillion) of foreign holdings.
The exact break-down of China's holdings are a state secret but it is understood that SAFE bought large amounts of corporate debt as well as municipal and state bonds during the boom years of 2006 and 2007. Any move to liquidate holding of California debt at this crucial juncture could have serious implications.
The exact motives for China's shift of strategy are unclear. Analysts say the authorities may fear that the end of quantitative easing by the US Federal Reserve could cause risk spreads to widen sharply, triggering heavy losses. The shift in policy appears unrelated to the US spat with China over Taiwan.
SAFE has some very sophisticated economists. The chief investment officer of its reserve management department is Changhong Zhu, until recently head of derivatives for the hedge fund operations of the giant US financial group PIMCO, and viewed as one of the 'rock stars' of the global hedge fund industry.
The move by Beijing comes at a time when China's current account surplus is falling. This reduces reserve growth, reducing the supply of global liquidity.
Mr Redeker said this will have the paradoxical result of boosting the dollar. Flight from risk can lead to an automatic rise as hedge funds, banks, and investors across the world cut back leverage on dollar balance sheets.
David Bloom, head of currencies at HSBC, said the explosive dollar rally over the last six weeks has been the reversal of the dollar carry trade. "It has been short, sharp, and vicious. People borrowed in US dollars to invest in places like Brazil, Turkey, and New Zealand and now it is unwinding."
"We don't think the dollar rally is going to last much beyond the first quarter because we're in a new world of rotating sovereign crises where politics matters again. It's Greece right now but it could be the UK next, and then US which has yet to take any steps at all to tackle it fiscal deficit," he said.
http://www.telegraph.co.uk/finance/china-business/7205110/China-orders-retreat-from-risky-assets.html
BL: Iran Shuts Down Access To Google/Gmail
Google Confirms ‘Sharp Drop’ in Iran’s Gmail Traffic (Update1)
By Ryan Flinn
Feb. 10 (Bloomberg) -- Google Inc. said users in Iran are having difficulty accessing its Gmail e-mail service at a time when clerical rulers face the biggest protests in the Islamic state’s three-decade history.
“We can confirm a sharp drop in traffic and we have looked at our own networks and found that they are working properly,” Google said in an e-mail. “Whenever we encounter blocks in our services we try to resolve them as quickly as possibly because we strongly believe that people everywhere should have the ability to communicate freely online. Sadly, sometimes it is not within our control.”
Iran announced what it called a permanent suspension of Google’s e-mail services, promising to offer a national e-mail service for citizens instead, the Wall Street Journal reported on its Web site.
The protests in Iran were sparked by allegations that the June presidential election that returned Mahmoud Ahmadinejad to power was rigged. Opposition leader Mehdi Karrubi and opposition candidate Mir Hossein Mousavi have alleged that the result of the vote was fraudulent.
At least 44 people have been killed during demonstrations since the June 12 election, according to official figures. London-based Amnesty International says the number is at least twice as high. Protesters have used social networking sites such as Twitter to organize gatherings.
About 30 percent of the country’s Internet services were disrupted last week because of a cut cable, the Iranian government has said. Political opposition alleged authorities caused the shutdown to limit communication by groups that plan protests tomorrow, on the 31st anniversary of the Islamic revolution.
To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net
Last Updated: February 10, 2010 19:13 EST
http://www.bloomberg.com/apps/news?pid=20601080&sid=asVY39EpfdY8
(BHP) BHP Profit More Than Doubles, Beating Estimates (Update2)
By Rebecca Keenan and Jesse Riseborough
Feb. 10 (Bloomberg) -- BHP Billiton Ltd., the world’s largest mining company, said first-half profit more than doubled, beating analyst expectations as demand for commodities surged in China and India.
Net income was $6.1 billion, or 109.8 cents a share, in the six months ended Dec. 31, from $2.6 billion, or 47 cents a share, a year earlier, Melbourne-based BHP said today in a statement. That compares with the $5.5 billion median estimate of eight analysts surveyed by Bloomberg News.
Global economic conditions have improved over the past six months as the United States and Europe lifted industrial output and China returned to double digit growth, BHP said today. Xstrata Plc reinstated its dividend this week and said the outlook for commodities demand was “very promising.”
“Mining companies are on a much firmer footing than what they were last year,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. including BHP shares. “Overall, an excellent result and cash-flow wise it was at the top end of expectations.”
BHP shares rose 3.2 percent to A$41.11 at 10:01 a.m. Sydney time. They gained 24 percent for the half-year ended Dec. 31.
The company approved a $1.93 billion iron ore expansion last month after reporting a strong recovery in the fourth quarter in commodity prices, driven by China. Citigroup Inc. commodity analyst Alan Heap said last week demand may turn positive in coming months.
Global Conditions
“Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.”
Chinese regulators, aiming to stem rising inflationary pressures, moved last month to slow a credit boom with measures to restrict lending. Their efforts to stem inflationary pressures came as the nation’s economic growth accelerated to a 10.7 percent year-on-year pace in the last three months of 2009. China is the world’s largest consumer of all industrial metals.
BHP will pay a first-half dividend of 42 cents, up from 41 cents a year earlier. That’s lower than the projected dividend of 44 cents, according to Bloomberg data.
BHP booked $2.7 billion in charges in the first half of 2009 after metal prices slid because of the global financial crisis.
Cash Flow
First-half sales decreased 18 percent to $24.6 billion, the company said in the statement. Profit, excluding one-time items, fell 7 percent to $5.7 billion. That compares with the $5.1 billion average of 20 analyst estimates supplied by BHP.
Cash flow from operations fell 56 percent to $5.7 billion. The weaker dollar against BHP’s main operating currencies cut underlying earnings by $1.5 billion, the company said. The Australian dollar averaged 87 cents in the first half, compared with 78 cents a year earlier, it said.
Underlying earnings before interest and tax at BHP’s iron unit dropped 50 percent to $2.09 billion after the global recession forced miners to slash prices by 33 percent in 2009, the first reduction in seven years. The unit was last year the company’s biggest earner and has now become the third-biggest behind base metals and petroleum. BHP’s output of ore increased 6 percent to a record 62.5 million metric tons.
Contract prices may climb 31 percent to the second highest on record for the year starting April 1, according to the mean estimate of 17 analysts surveyed by Bloomberg last month. The demand revival will benefit BHP, Rio Tinto Group and Vale SA, the three largest suppliers of iron ore.
Rio and BHP in December agreed to an Australian iron ore joint venture that they say will save them at least $10 billion. The plan, announced in June, will combine mines, rail, ports and workforces in the Pilbara region. The venture is expected to be completed in the second half, Rio said last month.
The year-earlier charges included costs for closing the Ravensthorpe nickel mine in Western Australia and the Pinto Valley copper plant in the U.S. as well as for abandoning the proposed Rio Tinto takeover.
To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.netJesse Riseborough in Melbourne at jriseborough@bloomberg.net.
Last Updated: February 9, 2010 18:20 EST
(FXE/EUO) Fate of Euro Hinges on Aid to Greece
Euro May Extend Decline on View Europe Will Fail to Aid Greece
bloomberg.com
By Ben Levisohn
Feb. 11 (Bloomberg) -- The euro may extend its losses against the dollar after a German government official said the European Union will probably stop short of announcing an aid package for debt-stricken Greece.
The greenback yesterday gained against most of its major counterparts after Federal Reserve Chairman Ben S. Bernanke said the central bank may raise the discount rate “before long” as part of the “normalization” of Fed lending. The euro on Feb. 9 posted its biggest gain in more than five months as EU officials held out the prospect of aiding Greece if the country made progress repairing its balance sheet.
“We’ve had headline risk after headline risk weighing on the euro,” said Camilla Sutton, a Bank of Nova Scotia currency strategist in Toronto. “Even if there is a package or statement, it won’t necessarily answer the questions market wants answered.”
The euro traded at 1.3735 at 7:37 a.m. in Tokyo, after falling 0.4 percent yesterday. It rose as much as 1.4 percent on Feb. 9, the most since Sept. 8. The yen was at 89.97 per dollar, from 89.94, and changed hands at 123.56 per euro, after rising 0.2 percent.
Germany and France are leading talks to provide help for Greece under “tough pre-conditions,” said Markus Ferber, a member of German Chancellor Angela Merkel’s bloc in the European Parliament, citing discussions his group had with the federal officials in Berlin. He said they prefer a bilateral approach over an EU plan.
Greek Airspace
Prime Minister George Papandreou’s drive to get Greece’s ballooning budget under control was yesterday being challenged in the streets as striking labor unions shut down schools, hospitals and flights.
Air-traffic controllers and civil-aviation workers are effectively closing down Greek airspace as part of the 24-hour work stoppage by ADEDY, the umbrella group representing about 600,000 civil servants. Some 483 international and domestic flights have been canceled, a spokeswoman for Athens International Airport, Greece’s biggest, said by telephone.
“Even if we do see a plan, you have to see it through,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “Any unrest is negative for the euro.”
Greece’s civil servants union ADED will join a 24-hour strike called by Greece’s private-sector union group on Feb. 24, ADEDY Chairman Spyros Papaspyros said.
Extended Period
Bernanke, in testimony prepared for the House Financial Services Committee, yesterday said a move in the discount rate won’t signal any change in the outlook for monetary policy. He repeated the Federal Open Market Committee statement that low rates are warranted “for an extended period.”
The Fed may also temporarily replace the federal funds rate as a policy guide with interest it pays on banks’ deposits should fed funds become a “less reliable indicator than usual,” Bernanke said.
“The dollar seems firmer on the testimony,” Ron Leven, a New York-based foreign-exchange strategist at Morgan Stanley, said yesterday. “It was a little more definitive than anyone expected. The Fed is starting to work towards an exit strategy from quantitative easing and they definitely seem further along in the tightening process than Europe, the U.K. and Japan.”
Futures trading in Chicago yesterday showed a 22 percent chance that the Fed will raise its target lending rate by at least a quarter-percentage point by its June meeting, up from 19 percent on Feb. 9.
Bullish, Bearish
Investors are the most bullish on the dollar since November 2008 on concern that weakening government finances in European nations will hurt the global economic recovery, a survey of Bloomberg users showed.
The world’s reserve currency will rise over the next six months, according to respondents in the Bloomberg Professional Global Confidence Index. Confidence about the outlook for the global economy among the 2,486 participants in the survey, taken before European Union officials said on Feb. 9 that they may aid Greece, dropped from the highest level since the series began two years ago.
The dollar rose last week to its strongest level against the euro since May as Greece struggled to convince investors the government can cut its deficit below the European Union’s ceiling of 3 percent of gross domestic product. Spain and Portugal are also trying to control widening deficits, prompting investors to drive the euro down 3.8 percent this year.
To contact the reporter on this story: Ben Levisohn in New York at blevisohn@bloomberg.net.
Last Updated: February 10, 2010 17:43 EST
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aPM_Mrhf7b6U
(CAL puts) U.S. Airlines to Face Millions in Costs on Weather Disruptions
By Mary Schlangenstein and Mary Jane Credeur
Feb. 10 (Bloomberg) -- U.S. airlines face millions of dollars in costs from a blizzard that blanketed much of the Northeast and left the industry grappling with what may be its worst flight cancellations on record.
Revenue will fall with planes on the ground while expenses rise for vouchers issued to stranded travelers, said Michael Derchin, an independent airline analyst in New York. More than 5,959 flights were scrubbed today, and at least 1,100 have been dropped tomorrow, based on data compiled by Bloomberg.
“I don’t recall a storm of this magnitude, much less a back-to-back one that hit an area where most of the flights happen to be in this country,” Derchin said in an interview. “Airlines are going to have millions and millions of dollars in costs for this.”
Today’s cancellations built on at least 2,700 flights idled yesterday across the northern U.S. Continental Airlines Inc. cut a third of its flights, including all service at its Newark Liberty International hub in New Jersey, and US Airways Group Inc. halted 55 percent of its daily schedule.
FlightStats.com, which tracks flight movements, estimated the U.S. daily flight total at 50,000, meaning the cancellations reported by airlines were 12 percent of the total.
Carriers haven’t begun projecting the financial fallout from the storm, which dumped snow on New York and Philadelphia and was the second in less than a week for Washington. The city’s Dulles and Reagan National airports were closed today, with US Airways and United Airlines among those affected.
Storm Effect
In the fourth quarter of 2006, snowstorms that forced United to cancel 3,900 flights cost the Chicago-based airline $40 million in revenue. JetBlue Airways Corp.’s struggles to recover from a 2007 storm cost $41 million.
“Airlines will have visited upon them some rather extraordinary costs” from the latest cancellations, said Aaron Gellman, a professor at Northwestern University’s Transportation Center in Evanston, Illinois. He said one carrier has had a jet used on trans-Atlantic flights stuck at Washington Dulles since Feb. 5.
“That’s a very expensive opportunity cost,” he said. “That airplane could be making money flying.”
Carriers also must pay crews who can’t work and, in some cases, fly planes empty to get them in the right cities to restart operations. The Bloomberg U.S. Airlines Index of 12 carriers fell 3 percent, as major stock indexes also declined.
“This storm has walloped air travel,” said David Castelveter, spokesman for the Air Transport Association, which lobbies for major airlines. “I cannot recall any one time where there has been this much disruption.”
‘Unique Situation’
The storm triggered the largest wave of cancellations since FlightStats.com began gathering data in 2004, said Meara McLaughlin, vice president of business development.
“It’s every carrier at more than half of the nation’s largest airports,” McLaughlin said in a telephone interview from Portland, Oregon. “It’s really a unique situation.”
US Airways halted 1,682 flights today and will drop 478 more tomorrow, said Valerie Wunder, a spokeswoman. The Tempe, Arizona-based airline has hubs in Philadelphia and Charlotte, North Carolina, as well as a shuttle operation among Washington, New York and Boston.
Delta Air Lines Inc., the world’s largest carrier, scrubbed 960 flights today, or 17 percent, and expects operations in Washington and Philadelphia to be almost shut down through midday tomorrow. At least 460 flights are canceled for tomorrow, said Trebor Banstetter, a spokesman for Atlanta-based Delta.
Continental canceled 900 flights, or more than a third of its daily total. The Houston-based airline plans to resume operations in Newark at about 4:30 a.m. tomorrow local time, said Mary Clark, a spokeswoman.
UAL Corp.’s United halted 750, or almost a quarter, of its flights today and AMR Corp.’s American Airlines scrapped 540, the companies said. Fort Worth, Texas-based American already has canceled 180 flights tomorrow, said Tim Wagner, a spokesman.
JetBlue eliminated 364 flights, or 60 percent, according to an e-mail from Mateo Lleras, a spokesman for the New York-based airline.
To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net
Last Updated: February 10, 2010 18:02 EST
WSJ: Greek Aid Is Tough Sell in Germany
By DAVID CRAWFORD AND BRIAN BLACKSTONE
FEBRUARY 11, 2010
BERLIN–Germany's greatest challenge in crafting a European rescue package for Greece could come in winning the support of those expected to pay the biggest share of the bill—its own citizens.
Germany's longstanding commitment to fiscal rectitude and stringent anti-inflation policies are deeply ingrained in the national psyche, leaving many Germans with little sympathy for euro-zone laggards that have spent beyond their means.
Bundesbank President Axel Weber has warned against bailouts.
If euro-zone countries abandon the no-bailout principle, they would "sever the anchor line securing a stable euro," Germany's influential Frankfurter Allgemeine newspaper warned in an editorial on Wednesday. "Germans will wish they had their Deutsche Mark back," the paper added, referring to the currency that was a symbol of Germany's post-World War II revival until it was subsumed by the euro.
Many Germans worry that Greece's problems could spill over to the rest of the currency union. Last weekend, Germany's conservative Die Welt newspaper called on Greece to exit the euro zone altogether.
That makes any bailout of Greece a tough sell to the German public, says Jörg Krämer, chief economist at Frankfurt-based Commerzbank. "You need good arguments to convince the public" that helping Greece is in Germany's interest, Mr. Krämer says. That includes aid in the form of loan guarantees as opposed to cash assistance, he says, and tough conditions.
In Germany, memories linger of the destructive inflation that followed World War I. Such fears made many Germans wary of monetary union from the outset. Former Chancellor Helmut Kohl and other German politicians sold the euro to a skeptical German public in part on the premise that weaker European economies such as Greece and Portugal would adopt the best practices of Germany and France, and make their economies more productive while keeping inflation at bay and their finances in order.
That hasn't happened. Since the euro was launched—as an accounting currency in 1999 and as cash in 2002—countries in Southern Europe and Ireland have instead allowed the low interest rates and stable currency that came from euro membership to fuel housing and consumption binges.
It was good for growth until the financial crisis, but their economies haven't become as competitive as they need to be, economists say, leaving them vulnerable to financial shocks.
Germany's central bank, the Bundesbank, an institution revered by many Germans, has long warned against making Germany the euro zone's bank of last resort.
"Politically, it would not be possible to tell voters that one country is being helped out so that it can avoid the painful savings that other countries have made," Bundesbank President Axel Weber told a German newspaper last month. "Such aid, whether it is conditional, or—even worse—unconditional, is counterproductive."
http://online.wsj.com/article/SB10001424052748703455804575057670849236994.html?mod=WSJ-Markets-LEFTTopNews
You would never hear an idiot proposal like that in Canada coming from the Prime Minister...and they are 'greener' and more left of center than we are
But they do like their tax revenues, and they know which side their bread is buttered on. They are not about to do anything to seriously cripple the shale oil business in Alberta, or make Canada less competitive for companies undertaking energy exploration...
Fck me!
Sometimes I think the US electorate were dropped on their collective heads as babies
Dang, sometimes it just makes zero sense, unless someone were trying to deliberately sabotage the us, but I can't even go there...there has got to be another answer, though for the life of me I can't figure out what it is
I was listening to a conference call with the CEO of a small exploration company, and he emphasized what's at stake in Obama's budget, so I had to go back and re-read the news from last week
Why would we want to shut down or cripple our domestic producers of oil? I thought the idea was to get weaned off foreign supplies.
Sure 'clean energy' is all fine and well, but oil and gas have a place in that equation
This seems insane to me, and anyone invested in O&G stocks should be aware of this possible time bomb ticking away in their portfolios
just my uninformed .02c!
"..The U.S. produced nearly 44 percent of its oil supply in 2008, according to the U.S. Energy Information Administration. That figure rose to nearly 49 percent in the second quarter of 2009.
"Not a lot of people realize that,” Hamm said. "It’s a little known fact.”
http://www.newsok.com/obama-budget-brings-worries-to-oklahoma-oil-industry/article/3437246
>>Obama Plan Could Devastate US Oil & Gas Industry
Oklahoma Oil Industry Worried by Obama Budget
Plan to eliminate subsidies would affect Oklahoma, experts say
BY JAY F. MARKS The Oklahoman Comments 18
Published: February 5, 2010
Enid oilman Harold Hamm doesn’t hesitate when asked about the potential impact of President Barack Obama’s budget proposal.
"I think it would be devastating for the industry, and it would be devastating for the country as a whole,” he said.
Hamm, president of Enid-based Continental Resources, said the industry has made significant strides in the last several years, without much credit for its successes.
"We’ve actually been able to crack the code on natural gas and crude oil production from the shales, which has basically ... given us almost an unlimited supply of natural gas in this country,” he said. "By the same token, we’re on the upswing in this country with oil production.
"A lot of people didn’t think that was possible, but it certainly is.”
Hamm said the growth in domestic oil production has caused a dip in the amount of oil the U.S. imports from other countries.
On the upswing
The U.S. produced nearly 44 percent of its oil supply in 2008, according to the U.S. Energy Information Administration. That figure rose to nearly 49 percent in the second quarter of 2009.
"Not a lot of people realize that,” Hamm said. "It’s a little known fact.”
That progress could go out the window if lawmakers approve Obama’s proposed budget, which includes the elimination of fossil fuel subsidies.
"We don’t consider these subsidies,” Devon Energy Corp. spokesman Chip Minty said. "These are normal business expenses the industry has been allowed to deduct for decades.
"This would be a tax increase that would reduce exploration and production activity, increase energy prices and eliminate jobs.”
Administration officials estimate the loss of those subsidies could cost the oil and gas industry as much as $40 billion over the next decade. Other parts of the president’s budget plan could harm the industry as well.
That loss could be especially noticeable in Oklahoma, Oklahoma City University economist Steve Agee said, because the state is so reliant to tax income generated by the oil and gas industry.
The industry accounts for nearly $14 billion in payroll and 98,000 jobs in Oklahoma, according to 2007 study by accounting firm PricewaterhouseCoopers.
That equals about 5 percent of the state’s labor force.
Agee said the proposals in Obama’s budget are like tax increases that likely will leave less money for producers to drill for oil and gas and curtail supply.
More investments
The targeted subsidies encourage more investment in the oil and gas industry rather than areas of the economy that could be more productive, according to the administration’s budget plan. Eliminating the laws that allow companies to amortize intangible drilling and development costs would prevent the overproduction of oil and gas.
Minty said he doesn’t understand that argument.
"We believe by increasing our production of domestic energy we can reduce our dependency on oil from outside of the United States and provide the energy our economy needs to grow,” he said.
Reduced drilling likely would have an adverse effect on the economy and job market.
"You saw it last year: when you reduce your drilling activity ... you eliminate a lot of jobs, which is counter to what we’re trying to do in this country,” Minty said. "We account for 9 million jobs in the United States.”
Devon will join other oil and gas company and industry groups to fight the proposed tax increases.
"It’s our responsibility to make sure that policymakers understand how these measures will affect the industry,” Minty said.
"That’s important not only to our business, but ... to consumers and the economy.”
Read more: http://www.newsok.com/obama-budget-brings-worries-to-oklahoma-oil-industry/article/3437246#ixzz0fBbYNLqv
Hearst Energy: Obama budget bad news for oil, gas
by Houston Chronicle
Midland Reporter-Telegram
Published: Tuesday, February 2, 2010 3:13 PM CST
WASHINGTON -- President Obama took direct aim at the U.S. energy industry Monday, saying his newly released 2011 budget proposal seeks to end "costly" incentives for oil, natural gas and coal producers because "we just can't afford it."
The president made the remarks as part of his formal unveiling of a $3.8 trillion budget with the largest projected deficit in U.S. history.
For energy producers, the Obama proposals mark the second consecutive year in which the president tried to eliminate tax breaks for energy exploration and add new fees on energy producers. The administration says that the changes would reduce the federal deficit by $40 billion over 10 years.
Obama said that the tax breaks -- created as incentives for domestic drilling -- had "outlived their usefulness."
The administration's targets for elimination include deductions for intangible drilling costs such as hauling supplies and preparing sites, domestic manufacturing deductions by oil and natural gas companies and the percentage depletion claimed for extracted oil and gas. Industry leaders say the initiatives are essential to trim the cost of doing business and soften some of the high capital costs of drilling and refining.
The White House also has proposed a new federal excise tax on oil and gas produced in the Gulf of Mexico and asked Congress to end a research and development program aimed at offsetting some steep costs of producing in ultra-deepwater fields.
Energy producers immediately announced their opposition to the plan.
"With America still recovering from recession and one in ten Americans out of work, now is not the time to impose new taxes on the nation's oil and natural gas industry," said American Petroleum Institute President Jack Gerard. "New taxes would mean fewer American jobs and less revenue at a time when we desperately need both. A robust U.S. oil and gas industry is essential to the recovery of the nation's economy."
Barry Russell, president of the Independent Petroleum Association of America, called the taxes "punitive."
The tax hikes "would reduce investment in new U.S. production by 20 to 40 percent," he said. "And it could drive down U.S. oil production by 20 percent and natural gas production by 12 percent, potentially killing thousands of jobs."
Russell added: "If the president is sincere in his efforts to encourage responsible American energy production" and promote job growth, "these damaging tax hikes must be taken off the table."
A study released Monday by the Texas Alliance of Energy Producers estimated that approximately 71,000 of the 209,900 Texans working in oil and gas businesses will lose their jobs if the tax provisions become law.
About 1.1 billion barrels of crude oil would be prematurely plugged in the U.S., the study predicted, resulting in more than $79 billion going to foreign countries to pay for additional petroleum imports. The state of Texas would lose more than $3 billion in sales, property and severance taxes, the alliance stated.
While the regional economy could get a jolt from the energy proposals, it also could get a boost from the administration's wide-ranging increases in research and development spending. Texas is a leader in alternative-energy research, which would receive a $6 billion increase if the administration's plans are adopted.
The proposal represents the administration's second attempt to do away with more than a half dozen tax provisions used by the industry. The president's first set of energy tax proposals received a cool reception on Capitol Hill last year. Although some Democratic lawmakers tried to advance legislation that would impose new fees on leases to produce oil and gas from public lands and waters, the only significant action on the tax changes was a Senate Finance subcommittee hearing in September.
But Obama insisted that "we're not simply photocopying last year's budget."
Read more: http://www.mywesttexas.com/articles/2010/02/02/news/top_stories/hearst_obama_budget_oil_gas.txt#ixzz0fBbFWpOe
IOGA: PRESIDENT OBAMA BUDGET REQUEST INCLUDES DEVASTATING TAX PROPOSALS
If you are invested in an oil or gas exploration stock, this could well affect you as well
http://www.ioga.com/PDF_Files/IOGA%20-%20April%2009%20Issue.pdf
Depends what happens overnight...and SOOOOO much could, if you've been reading the articles I've posted AH
Obama Budget Punishes US Oil & Gas Producers:
Texas lawmakers on Obama budget | Main | White House touts education spending hikes in Texas »
February 01, 2010
Obama says U.S. 'can't afford' oil industry tax breaks
President Obama this morning took direct aim at the U.S. energy industry, saying his newly released budget seeks to end "costly" incentives for oil, natural gas and coal producers because "we just can't afford it."
The president made the remarks as part of his formal unveiling of a $3.8 trillion budget with the largest projected deficit in U.S. history.
For energy producers, the Obama proposals mark the second consecutive year in which the president tried to eliminate tax breaks for energy exploration and add new fees on energy producers. The administration says that the changes would reduce the federal deficit by $40 billion over ten years.
Today, Obama said that the tax breaks — created as incentives for domestic drilling — had "outlived their usefulness."
The administration's targets for elimination include deductions for intangible drilling costs such as hauling supplies and preparing sites, domestic manufacturing deductions by oil and natural gas companies and the percentage depletion claimed for extracted oil and gas. Industry leaders say the initiatives are essential to trim the cost of doing business and soften some of the high capital costs of drilling and refining.
The White House also has proposed a new federal excise tax on oil and gas produced in the Gulf of Mexico and asked Congress to end a research and development program aimed at offsetting some steep costs of producing in ultradeep-water fields.
Energy producers immediately announced their opposition to the plan.
"With America still recovering from recession and one in ten Americans out of work, now is not the time to impose new taxes on the nation's oil and natural gas industry," said American Petroleum Institute President Jack Gerard. "New taxes would mean fewer American jobs and less revenue at a time when we desperately need both. A robust U.S. oil and gas industry is essential to the recovery of the nation's economy.
Congress did not approve the administration's energy proposals last year. But Obama insisted that "we're not simply photocopying last year's budget."
• • •
To read Houston delegation reaction to the White House budget proposal, click here.
http://blogs.chron.com/txpotomac/2010/02/obama_seeks_to_end_costly_oil.html
WSJ: Wild Texas GOP Primary Gets Wilder
Texas Melee
Texas Tea Partier Debra Medina is giving Senator Kay Bailey Hutchison trouble
OPINION: POLITICAL DIARY
FEBRUARY 10, 2010, 2:32 P.M. ET
By ALLYSIA FINLEY
A wild Texas GOP primary is getting wilder. A new poll out Tuesday shows Tea Partier Debra Medina trailing Senator Kay Bailey Hutchison by a mere four points, within the poll's margin of error.
The Public Policy Poll shows Governor Rick Perry leading the field for the Republican gubernatorial nomination with 39% of GOP voters. But he would need a majority of the vote on March 2 to secure an outright victory -- any less and he's headed toward a run-off. Not only is such a run-off looking more likely with the rise of Ms. Medina, formerly the Wharton County GOP chairwoman. But if Ms. Hutchison doesn't move quickly to shore up her support among conservatives, the candidate who once polled as Texas's favorite politician may end up the odd woman out.
The PPP poll shows Ms. Hutchison at 28% and Ms. Medina at 24% -- up from 16% in last week's Rasmussen poll, and up from 4% since November. A former nurse and state coordinator for the Campaign for Liberty, Ms. Medina is appealing to voters with populist rhetoric that takes aim at incumbents of both parties. "We Texans are undoubtedly unhappy with how this state has been run for the past decade, which includes having unfunded federal mandates shoved down our throats. The polls demonstrate that dissent loud and clear," says Ms. Medina.
Not only does Ms. Medina lead among those GOP voters who say they disapprove of Washington; ironically, she leads among those who consider themselves liberal Republicans. Ms. Medina's pitches to eliminate property tax, protect gun ownership and secure the border overlap most with Mr. Perry's populist platform. Yet Ms. Medina still seems to be drawing voters away from Ms. Hutchison, not Mr. Perry. Since September, Ms. Hutchison has fallen 11 points in the polls, while Mr. Perry has gained six points and Ms. Medina has catapulted by 20.
Mr. Perry would be heavily favored in a run-off with Ms Hutchison since he's leading her overall and also leading her with Medina voters (albeit in slimmer fashion) by four points. He likely would best Ms. Medina in a run-off too, but her rapid growth and apparent strong appeal for Hutchison voters (especially those angry over Mr. Perry's attacks on Ms. Hutchison) could make for a closer race than anyone would have expected a week ago.
Ms. Medina's biggest problem now is a lack of funding. As of Jan. 21, she had only $68,000 in the bank compared to the $10 million that Mr. Perry and Ms. Hutchison each have socked away.
To read more stories like this one, please subscribe to Political Diary.
http://online.wsj.com/article/SB10001424052748704140104575057534009055808.html?mod=WSJ_Opinion_LEFTTopOpinion
TBS: Israeli attack on Iran could be disaster for U.S. economy
By Louis Galambos
January 18, 2010
Israel will not be complicit in a second Holocaust. If Iran or any other nation that has called for the destruction of Israel is about to acquire nuclear weapons, the Israelis will attempt to destroy that nation's uranium-enrichment facilities. In June 1981, Israel launched a successful air attack on an Iraqi nuclear reactor, and in 2007 it bombed a Syrian factory suspected of producing plutonium warheads.
But Americans should be aware that when Iran becomes the next target, it will be a blow to the U.S. economic recovery.
In an effort to prevent a military resolution to the problem, the nuclear club has tried to persuade Iran to stop its weapons program. But President Mahmoud Ahmadinejad responded recently by threatening to build 10 new enrichment sites. There is no evidence that sanctions will persuade Mr. Ahmadinejad to abandon the opportunity he foresees to destroy his hated enemy. That leaves Israel with no choice.
The economic repercussions of an attack will be far reaching and painful. The price of oil will quickly shoot through the roof. Judging by what happened in 1973, the price could easily go above $300 a barrel in the short term. There will be long lines at U.S. gas stations again and probably a rationing program. The long-term outcome will depend to a considerable extent upon what the Saudi position is, but in the short run, the lack of oil will be a severe and immediate shock to the U.S. economy. Unemployment would quickly exceed the post-World War II high of 1980-81. Financial institutions that have barely recovered from the Great Recession will again sink toward the crisis level.
The immediate impact on the European economy will be traumatic. More dependent than the United States on Middle Eastern oil supplies, the European Union will very quickly see output sag and unemployment increase again. In France, where unemployment sparked riots in 2009, the social and economic crisis will deepen and could threaten the stability of the current government. Germany is especially vulnerable to anything that closes off the country's export markets, a change that will very quickly take place.
Europe's decline will send those American companies dependent upon foreign markets into a new downward spiral. U.S. exports to Europe remained relatively steady in 2009. They are substantially below the figures for 2008, but they have hovered in the $19 billion to $23 billion range through this difficult year. A sudden fall-off in Europe's capacity to buy American goods and services would provide a second shock to many American firms and communities.
That blow will be all the more telling if Russia responded to the crisis by cutting back or cutting off the gas and oil that it supplies to the EU economies. It is difficult at this point to predict how the Russian government would respond to an Israeli attack, but there is no reason to believe that its leaders will fail to take advantage of this opportunity to strengthen Russia's position in the world.
If U.S. output shrinks and unemployment shoots up, the economy will once again experience stagflation. In the 1970s, two oil crises undercut American prosperity and left business vulnerable to the deficit financing of the 1960s. Recall: The 1960s were when President Lyndon Johnson announced grandly that the United States could afford both guns and butter. It didn't work then, and it won't work now.
The "stimulus plus" is hanging over the economy today. The stimulus worked, but then Congress added an incredible array of earmarks and other measures designed to please well-defined groups of voters and financial friends. When the Republicans controlled Congress, they did the same thing. Now they all have to figure out how to get out from under the avalanche of debt hanging over the country's economy. The next stage of America's economic recovery will be a difficult passage, even under normal circumstances. Following an Israeli anti-nuclear attack, the circumstances will be anything but normal.
Given the potential for another economic collapse, voters and their interest groups should be clamoring for more decisive action. But they're not. Focused on domestic issues -- almost always the first priority in the United States -- they aren't paying much attention to Iran.
The administration and Congress need to move quickly -- before the fact -- to alert Americans to this latest threat to their economic security. The people, as well as their leaders, need to understand that the clock is ticking on this crisis.
Louis Galambos is an economic historian and editor at Johns Hopkins of President Eisenhower's papers. He has just written a study of "The Creative Society -- and the price Americans paid for it." His e-mail is galambos@jhu.edu.
Copyright © 2010, The Baltimore Sun
http://www.baltimoresun.com/news/opinion/oped/bal-op.israel18,0,3817363.story
Tomorrow could be a GREAT day for DIA puts...I have some in my back pocket, fwiw
TRUMPET: White House Shuns EU
February 8, 2010 | From theTrumpet.com
U.S. foreign policy is becoming increasingly isolationist.
Ron Fraser The gloss is rapidly fading from the image of the current U.S. administration in the eyes of the European public. Following President Obama’s July 2008 euphoric greeting by Berliners, it now appears that Europe’s high expectations for a rosy relationship with Washington are rapidly turning into extreme disappointment.
Back then, commenting on what it described as a “wildly successful public appearance,” the Local commented that “The presumptive Democratic nominee’s speech in front of over 200,000 adoring supporters near the city’s Victory Column memorial on Thursday cemented his status as a political pop star in Germany” (July 25, 2008).
On the foreign-policy front, Eckhart von Klaeden, spokesman for the German government at that time, said that the presidential candidate had broadcast from Berlin “the clear message … that Europe and the United States could only confront the world’s problems together” (ibid.).
Perhaps Herr von Klaeden has now changed his view as a result of President Obama’s snub of the EU by rejecting an invitation to attend the annual EU/U.S. summit in May. Under the headline “EU summit scrapped after Obama ‘snub,’” the bbc declared, “The event in Madrid in May was to have been the highlight of Spain’s six-month EU presidency, and the cancellation is seen as a humiliating blow. … bbc European affairs correspondent Oana Lungescu says many see Mr. Obama’s decision as a snub to the EU’s hopes of boosting its global role” (February 3).
Symbolism is a vital component of European thinking. It seems this is hard for the average American politician to grasp, let alone those who advise the president. Apparently it is difficult for a nation as young as the United States to understand the power of the influence of centuries of Holy Roman imperial heritage on European politics as it is played out, especially behind closed doors, by the real movers and shakers influencing the latest resurrection of the vision of a united Europe—the aristocratic bankers, businessmen, industrialists and influential churchmen.
Such a snub as the Obama administration has dished out to the European Union, so early in its newfound role as the largest duly constituted federal power in the world (courtesy of the Lisbon Treaty) will bode ill for the future of U.S./EU relations. This is another profound foreign-policy error by this novice, year-old U.S. administration. One can only assume that those who advise the president on these matters are grossly ignorant of history.
Observing that “the summit was to focus on strengthening the ties between the United States and the 27-member bloc of nations that make up the EU,” TransWorldNews noted, “Obama’s decision not to attend was being perceived as a major snub by Spain, even more so due to the fact they learned of his decision through press reports” (February 3). Such treatment shows the poorest of protocol practiced by presidential aides responsible for communication between the White House and its embassy staff in such matters. But it is beginning to fit into a pattern of similar gaffes over the past year in the White House’s interaction with foreign powers and dignitaries.
Seeking to cover the administration’s diplomatic missteps, National Security Council spokesman Mike Hammer replied to European criticism of the snub with a degree of sophistry, stating, “The president is committed to a strong U.S.-EU partnership, and with Europe in general” (Deutsche Welle, February 2). The same source noted that U.S. Assistant Secretary of State Philip Gordon “stressed that the U.S. president remained committed to close transatlantic ties ….” Such statements seem to fly in the face of the observation that “Obama’s absence at the summit would likely be regarded as a blow for Brussels. The new president of the European Council, Herman van Rompuy, has yet to formally meet with Obama” (ibid.).
At a time when the U.S. has repeatedly gone public over the past year seeking greater commitment from the EU to the war in Afghanistan, this all seems to be an odd way to curry favor with America’s continental allies sharing in fighting that war. This is especially the case coming so soon after a number of EU member nations have increased their commitment to what they see as a very unpopular, U.S.-initiated conflict in which they are sacrificing the lives of their own nationals. This thoughtless high-profile snub is in fact bound to increase the already low esteem in which the U.S. is already held in the minds of many a European.
In a further demonstration of the arrogance of current U.S. foreign policy, according to the Wall Street Journal, after the refusal by President Obama to attend the May summit, a State Department official glibly declared, “We don’t even know if they’re going to have one [a summit]. We’ve told them, ‘Figure it out and let us know’” (February 1).
Any junior diplomat ought to have understood that this first EU/U.S. summit since the EU formally became a federal global power, via implementation of the Lisbon Treaty/EU constitution on January 1, would hold particularly high importance for the European Union, its newly appointed president and Foreign Ministry. Inevitably the U.S. president’s refusal to attend this first EU summit since what European leaders see as the legitimization of the EU as a global power—a power striving to hit at the same political weight as its transatlantic “partner”—will be to the detriment of both this presidency and America’s standing in the eyes of the global community.
There will be a price to pay for such arrogance. Ultimately it will be a far, far higher price than anything the average U.S. citizen can imagine. •
For more understanding of what is really going on within the world scene today, and the incredible hope that lies beyond this time of increasing global disorder, read our book The United States and Britain in Prophecy. Ron Fraser’s column appears every Monday.
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