Category: Global economics

Obama’s report card

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By Jonathan Power

Will the real Barack Obama be allowed to stand up? The New York Times’ columnist and Nobel Prize winner for economics, Paul Krugman, writes in “Rolling Stone, “Obama has emerged as one of the most consequential presidents in American history”.

You wouldn’t know this if you observed the swing towards the Republicans in the recent Congressional elections – the same Republican Party that has implemented a scorched-earth policy against many of Obama’s initiatives.

The truth is he’s made more of a go of it than much of the media has reported.

He came into power inheriting the worst financial crisis since the Great Depression of the 1930s. He has emerged as the only full-bloodied KeynesianRead More »

TFF PressInfo # 292: Brisbane – A show of Western weakness

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By Jan Oberg

Jan Oberg

No matter what you may think of Putin and Russia this is simply not the way international politics should be conducted, particularly not at the personal level. If it wasn’t an offence to children, one would aptly characterise it as childish behaviour.

Western leaders ignored a brilliant opportunity to meet face-to-face with Vladimir Putin and move forward towards mutual understanding instead of signalling that they want a new Cold War.

Western leaders tell us that Russia is a ”threat to the world”. That obviously serves other purposes because you don’t bully someone you genuinely fear.

The G20 Brisbane should be remembered for its show of Western leaders’ personal display of weakness and conflict illiteracy.

Pummelled Putin punching bag

CNN reports that, during the meeting, Putin took ”pummelling” and was treated as a ”punching bag” by Western leaders from he set foot on Australian soil where his Australian host had sent a deputy minister of defence to receive him.

The Guardian reports that the Russian president approached Canadian Prime Minister Harper with his hand outstretched. Harper reluctantly shook it, then said “Well I guess I’ll shake your hand, but I only have one thing to say to you: you need to get out of Ukraine.” ”Bold words” – media called it.

Footage shows Putin sitting alone at a lunch table – like a naughty school boy put in the corner as by his teachers.

President Obama said that we are ”opposing Russia’s aggression in Ukraine which is a threat to the world as we saw in the appalling shoot down in the MH-17”.Read More »

Christianity between Jewish and Islamic banking

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By Johan Galtung

Johan Galtung

Protestant Liechtenstein recently held a conference on making banking shariah compatible, to attract capital from Muslim countries. And no doubt also because the big survivors of the 2008 crisis were China and Muslim countries; China because the focus is not only growth but lifting the bottom up – increasing domestic demand and less dependence on trade in 1991-2004 – Muslim countries because of Islamic banking.

A common Western misunderstanding is that Islam forbids interest; what is forbidden are relations that are only monetary; they should be economic, social, more human, in a broad sense. Just to make money available against interest is out. Purely financial deals selling and buying financial objects–derivatives at any level–for commissions are also out. Banks and other companies have to be in it together.

There is more to it. A bank has to be trustworthy, not at the brink of collapse. A leading Islamic banker in Malaysia said that his capital was 60% debt–deposits, 20% securities, 20% liquidity; he felt confident that he could survive future crises with that portfolio and the solidity of “being in it together”. Calculations for the big banks in the USA indicate operating 95% on debt and 5% on liquidity: highly vulnerable to going down, with depositors in the wake.

As Timothy Geithner points out in his book Stress Test: Reflections on Financial Crises: Crises will reappear and the “too big to fail” banks have to Read More »

End Game in Ukraine?

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By Jens Jorgen Nielsen

Written September 25, 2014

It should never have come to this horrible situation in Ukraine. The local population of Donetsk, Lugansk, Slavyansk and other eastern Ukrainian cities is living through a true nightmare. Residential areas are being bombed, shelled and burned. Non-combatants i.e. elder, women and children are lying dead in the streets. We’re talking about thousands of deaths. No water supply, no heating, no security – this is the grim reality for the population.

700.000 Eastern Ukrainians have already escaped from the war scene, most of them are living in refugee camps in Russia. It is worth noting that they have not fled to Kiev or elsewhere to the west.

Surprisingly the Western media hardly pay any attention to the horrors in Eastern Ukraine.

But that is not all. Ukraine is in total disruption socially, politically and not least economically and financially. Furthermore, the mental scars in Ukraine will continue for at least one generation ahead.

But again that is not all. The European Union suffers as well – in several ways. Read More »

From Third World to First World – Brazil’s election

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By Jonathan Power

Brazil has long lived out its personal fantasy as the archetypal relaxed, tolerant and gregarious country with Copacabana beach, the samba, the carnival and a great deal of sexual freedom. It is now living out in real time its almost forgotten societal dream, an economic-cum-social revolution.

The retired president, Luiz Inacio “Lula” da Silva, bequeathed the nation a vibrant capitalist economy with a human face – an economy that has raised income per head quite substantially (it is now four times that of China), has almost abolished daily hunger and given the large majority of the poor an income supplement in return for families sending their children to school.

Still, after 8 years of Lula and 4 years of his hand-picked successor, Dilma Rousseff, the country struggles to stay ahead of its burgeoning population, the inequities of the feudal land system that cast millions into shanty towns and a murder rate in the slum favelas that is more akin to a war zone than a normal society.

Brazil remains one of the most Read More »

BRIC(K)S for a New World Economic Order!

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By Johan Galtung
28 Jul 2014 – Kuala Lumpur

Johan Galtung

They made it, with constructive alternatives – the New Development Bank and the Contingency Reserve Agreement–to the US-dominated World Bank and International Monetary Fund. Those two parts of Bretton Woods were basic pillars in the economic infra-structure of the US Empire in the hands of the US Congress. Loans were disbursed in return for “structural adjustment” –privatization, budget cuts, devaluation, repatriation of profit, also against BRICS countries. US companies were commissioned for huge jobs serving local elites. Untold damage was done in spite of some recent changes in rhetoric.

The USA used them to export the US economic–and with it the social, political, cultural, military–order through loans, grafting it upon social bodies that after some time rejected the implants as foreign and incompatible. Even a decaying order however brilliant it may have looked to the untrained eye as late as the 1990s.

What remains today of that US “order” is the military part Read More »

China is not going to be a miracle

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By Jonathan Power

The Nobel-prize winning economist, Robert Fogel, believes that China will grow at an average rate of 8% until 2040, by which time it will be twice as rich as Europe in per capita terms. His model is based partly on so-called geometric growth. An example: If my ancestors had invested a penny in 1800 at a compound interest rate of 6% a year above inflation it would now be worth $280,000.

Sounds good, but it isn’t. The chances of this happening are nil. Indeed I would go as far as to say that China remains a classic case of hope over experience, reminiscent of de Gaulle’s famous comment about Brazil: ”It has a great potential and always will”.

In the 1970s it was Brazil, Read More »

Do Russia and China threaten the West?

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By Jonathan Power

In recent months the scare-mongers have been at it again – Russia’s foray into Ukraine and China’s behaviour in the South China Sea have set their alarm bells ringing. But why?

Big power politics is not back. Indeed in the round it is rather subdued. Take the Russian-EU-US fracas over Ukraine at the moment. Does this compare with the Cold War when the West prepared itself for a Russian invasion of Europe, nuclear missiles were targeted on each other, and when the Soviet Union along with the US stirred up proxy civil wars in Central America and Africa?

Do the US and NATO fear such threats as these today? Of course not. Critics of President Barack Obama and denigrators of President Vladimir Putin badly need a sense of perspective.Read More »

TFF PressInfo: EU elections – To perform rather than live democracy

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By Jan Oberg

Lund, Sweden, June 3, 2014

Fears has been expressed in Europe about the recent EU parliament voting pattern. Instead of the fear and denouncing the winners we should ask: What causes such an outcome?

My short answer is this: Democracy itself is in deep crisis. It has become performance or ritual rather than something genuinely lived.

Two things stand out – one, the increase in votes going to nationalist, populist, right-wing and anti-Muslim parties as well as Euro-skeptics – particularly in Denmark, France, Greece and Britain.

Secondly, the voter turnout has fallen from 62 per cent in 1979 to 43% in 2009 and this year it increased only 0.09% in spite of the EU Commission’s attempt to increase it.

So while people struggle around the world for democracy, only 43% of the EU citizens find it meaningful to go and vote every 4th year. How tragic for an EU that tries to promote democracy everywhere, even by military force.

It is understandable that the two mentioned factors is a combination that make many in Europe – the seat of two world wars, NATO and some of the most armed and two nuclear-weapons states – concerned. Perhaps the rest of the world should be at least as concerned? Other countries such as Hungary and Spain have, on different dimensions, moved in a worrying authoritarian political direction.Read More »

Keeping Africa going up

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By Jonathan Power

Black Africa long went deeply down. Now it is rushing headlong up. But “up” brings problems of its own. A country’s policy makers have to work as hard in successful, speedy, times as they did when they moved painfully from the first rung of the ladder to the second and third.

Take today’s news – according to the Financial Times, Kenya, one of the poster boys of the African revival, is now financially strong enough to make its debut on the sovereign bond market in a deal worth $2 billion. But it has become entangled in a decade-old corruption scandal that cost Kenya $770 million. The government has decided to take on the responsibility for paying off the $770 million in order to get the $2 billion (and future bond market loans).

In Mozambique last week Christine Lagarde, the managing director of the International Monetary Fund, warned that the planned issuing this year of a total of $11 billion worth of sovereign bonds around Africa could overload economies with too much debt. (This is up from $6 billion a year ago and $1 billion in 2000.)Read More »