Adonis Diaries

Posts Tagged ‘Spain

Post-war Germany recovery? Any roles to Greece, Spain, and Turkey…?

Sixty years ago today, an agreement was reached in London to cancel half of postwar Germany’s debt.

That cancellation, and the way it was done, was vital to the reconstruction of Europe from war.

It stands in marked contrast to the suffering being inflicted on European people today in the name of debt.

Germany emerged from the WWII still owing debt that originated with the first world war: the reparations imposed on the country following the Versailles peace conference in 1919.

Many, including John Maynard Keynes, argued that these unpayable debts and the economic policies they entailed led to the rise of the Nazis and the second world war.

By 1953, Germany also had debts based on reconstruction loans made immediately after the end of the second world war. Germany’s creditors included Greece and Spain, Pakistan and Egypt, as well as the US, UK and France.

German debts were well below the levels seen in Greece, Ireland, Portugal and Spain today, making up around a quarter of national income.

But even at this level, there was serious concern that debt payments would use up precious foreign currency earnings and endanger reconstruction.

Needing a strong West Germany as a bulwark against communism, the country’s creditors came together in London and showed that they understood how you help a country that you want to recover from devastation.

It showed they also understood that debt can never be seen as the responsibility of the debtor alone. Countries such as Greece willingly took part in a deal to help create a stable and prosperous western Europe, despite the war crimes that German occupiers had inflicted just a few years before.

The debt cancellation for Germany was swift, taking place in advance of an actual crisis.

Germany was given large cancellation of 50% of its debt. The deal covered all debts, including those owed by the private sector and even individuals. It also covered all creditors.

No one was allowed to “hold out” and extract greater profits than anyone else. Any problems would be dealt with by negotiations between equals rather than through sanctions or the imposition of undemocratic policies.

Perhaps the most innovative feature of the London agreement was a clause that said West Germany should only pay for debts out of its trade surplus, and any repayments were limited to 3% of exports earnings every year.

This meant those countries that were owed debt had to buy West German exports in order to be paid.

It meant West Germany would only pay from genuine earnings, without recourse to new loans.

And it meant Germany’s creditors had an interest in the country growing and its economy thriving.

Following the London deal, West Germany experienced an “economic miracle”, with the debt problem resolved and years of economic growth.

The medicine doled out to heavily indebted countries over the last 30 years could not be more different.

Instead, the practice since the early 1980s has been to bail out reckless lenders through giving new loans, while forcing governments to implement austerity and free-market liberalisation to become “more competitive”.

As a result of this, from Latin America and Africa in the 80s and 90s to Greece, Ireland and Spain today, poverty has increased and inequality soared.

In Africa in the 80s and 90s, the number of people living in extreme poverty increased by 125 million, while economies shrank.

In Greece today, the economy has shrunk by more than 20%, while one in two young people are unemployed. In both cases, debt ballooned.

The priority of an indebted government today is to repay its debts, whatever the amount of the budget these repayments consume.

In contrast to the 3% limit on German debt payments, today the IMF and World Bank regard debt payments of up to 15-25% of export revenues as being “sustainable” for impoverished countries. The Greek government’s foreign debt payments are around 30% of exports.

When debts have been “restructured”, they are only a portion of the total debts owed, with only willing creditors participating.

In 2012, only Greece’s private creditors had debt reduced. Creditors that held British or Swiss law debt were also able to “hold out” against the restructuring, and will doubtless pursue Greece for many years to come.

The “strategy” in Greece, Ireland, Portugal and Spain today is to put the burden of adjustment solely on the debtor country to make its economy more competitive through mass unemployment and wage cuts.

But without creditors like Germany willing to buy more of their exports, this will not happen, bringing pain without end.

The German debt deal was a key element of recovering from the devastation of the second world war. In Europe today, debt is tearing up the social fabric.

Outside Europe, heavily indebted countries are still treated to a package of austerity and “restructuring” measures.

Pakistan, the Philippines, El Salvador and Jamaica are all spending between 10 and 20% of export revenues on government foreign debt payments, and this doesn’t include debt payments by the private sector.

If we had no evidence of how to solve a debt crisis equitably, we could perhaps regard the policies of Europe’s leaders as misguided.

But we have the positive example of Germany 60 years ago, and the devastating example of the Latin American debt crisis 30 years ago. The actions of Europe’s leaders are nothing short of criminal.

Note 1: While Greece, Spain and Turkey were bailing out Germany, their citizens were flocking to Germany to work under the recovery program.

Note 2: I guess the creditors were convinced that the hard working and law abiding Germans, under institutions still functioning, and an industrial know how… will generate the necessary profit to pay back the loans. I guess France and Germany do not believe that the other EU States, crumbling under their debts, are good enough people with sane institutions to generate any profit.

Najat Rizk shared a link.
Nick Dearden: Sixty years ago, half of German war debts were cancelled to build its economy. Yet today, debt is destroying those creditors

 

 

Austerity, Democracy, left and right wing parties, Greece (Syriza) and Spain (Podemos, we can)

In extended time of austerity due to after war conditions or financial default problems, people feelings swing to extremes: either the people opt for a left-leaning social reforms or they retract to their cocoon of right wing tendencies that lead to authoritarian political systems.

It may be odd to use a Roman metaphor to describe a Greek political event, but in this case, it’s apt.

Just as Julius Caesar crossed the Rubicon river because he could, in spite of the warnings of the Roman Senate not to, so Alex Tsipras, leader of the anti-austerity party, Syriza, has decided to try to end austerity in Greece, in spite of Europe’s leaders saying he shouldn’t.

Whether Tsipras will succeed is still unclear, but whatever happens, his victory represents a crucial turning point for Europe—a signal that time has run out on austerity policies.

Spain is following suit as Europe is facing an extended period of deflation and social unrest.

Give people jobs and they quiet down. How to reform a capitalist system so that worthy and honourable jobs can be created and sustained?

Austerity vs. Democracy in Greece

A “Tsipras” had to happen somewhere eventually, because there’s only so long you can ask people to vote for impoverishment today based on promises of a better tomorrow that never arrives.

If voting for impoverishment brings only more impoverishment, eventually people will stop voting for it—and the timing of “eventually” will depend on when people’s assets run out.

In the Greek case, backers of the incumbent New Democracy party and its austerity policies constitute that quarter of the electorate who still have assets (pensions, paper, and portfolios) after 5 years of depression and who want to preserve what they have.

The 36% that voted for Syriza were the young, the asset-less, and the unemployed—people who either lost what they once had or never had much to begin with.

Greece’s 1.9 percent of growth last year means essentially nothing to a society that has lost nearly 30 percent of GDP in a little over half a decade.

On the current course, it would take, by latest estimates, two generations for the country to get back above water.

Syriza’s victory presents two lessons for the rest of Europe.

First, no one votes for a 15-year-long recession.

Second, you can’t run a gold standard in a democracy. Either the gold standard goes, or democracy goes, and that is the choice Europe may face sooner than it thinks. (Why? Is the USA system truly a democracy after they flaunted the gold standard in 1968?)

The Euro is the gold standard that pretends that it’s not one—and therein lies the rub. While Europe has a plethora of national parliaments and free and fair elections, as well as a European parliament and multiple institutions with delegated power to represent the interests of citizens, once a country is a member of the eurozone, certain things happen that bypass any possible democratic checks.

On the upside, its credit history gets rewritten. Greece and Italy get to borrow like Germany (with predictable results). On the downside, when a eurozone country is hit with an economic shock, it cannot respond to it through the exchange rate (devaluation) or by using the printing press (inflation).  (Only Germany has the monopoly of printing the Euro money)

It must choose between default, which is not allowed, and balancing its books through internal devaluation (austerity).

And if that means a couple of constitutional coups d’état have to happen in the heart of democracy to get the policies through, as happened in Italy and Greece in 2011, then so be it.

So austerity becomes the only game in town. Although it may be rational for any one country to be austere, when multiple countries that share the same currency with no common fiscal policy do so, the result can only be a massive contraction of GDP and a corresponding increase in debt—which is exactly what has happened in Europe in recent years.

The boost in consumer and investor confidence that austerity was supposed to provide never materialized, and the eurozone as a whole slid into recession, and then, in the periphery, into depression and deflation. Now that all of this has occurred, however, the politics of sustaining the euro have changed, and changed utterly.

Until now, Eurozone policymakers’ obsession with fighting inflation has given them a one-sided understanding of politics. (Why Europe has to fight deflation too? It is good for the common people to survive their daily expenses)

In fact, Europe has not had an inflation problem of any magnitude since the 1970s. What it now faces is deflation—and since the politics of inflation and deflation are very different, the wrong policy choices produce Syrizas.

Inflation, after all, is not a general malaise that hurts all members of society equally, but a class-specific tax.

Those with assets, particularly paper assets, lose harder and faster than other groups that can pressure the state to accommodate them, which is why under inflation creditors suffer and debtors prosper. (Not in the USA)

Consequently, periods of inflation produce a type of politics where creditor interests come to the fore and the state is forced to retreat. The 1920s were one such period and the 1970s another—which is when Europe, and the euro, began to take their current form.

Deflation is different. Rather than creditors losing and debtors benefitting, in a deflation almost everyone loses, regardless of asset class.

Consider the choice of whether to work. A worker who decides to take a pay cut to price herself into a job is individually rational. But collectively, if all workers try this, the result is a collapse in consumption. (If the price of commodities drop commensurate to the pay cut, there is no problem. Common people will refrain from taking vacations abroad and patronize their own sceneries).

Employers get cheaper labor, to be sure, but also less demand for their products. Their logical individual responses are to cut prices to spur sales—but once again, the aggregate effect of such responses is to lower prices further. This increases real wages at a time when the economy is shrinking, which leads to more layoffs (Cannot comprehend this logic).

In such a world, with practically everyone losing, calls ring out for state intervention to stop the bleeding, and eventually, they are heard. It happened in the 1930s, and it is happening once again today.

This is what Tsipras and Syriza represent: the moment Europe drifted from ever-deeper and ever-wider open capital markets and institutionalized neoliberalism to a system in which the state comes back to reassert sovereignty over markets. (What if investors are reluctant to buy State properties as in Greece, on the assumption that the State will eventually lower its asking price?)

At that point, either democracy trumps markets, which need not be a progressive move, as Syriza’s immediate choice of coalition partners demonstrates, or markets undermine democracy to protect their asset values.

Which course European countries choose will be determined in the next few years, but a glance around the continent suggests that such a choice is indeed coming.

Greece may have crossed the Rubicon first, but due to its size in the European economy, Spain may be the game changer.

In Spain, Podemos is likely to form a winning left-wing coalition after that country’s general elections this fall, especially after the demonstration effect of Syriza.

In Ireland, Sinn Fein is cut from the same anti-austerity cloth and has risen substantially in the polls.

Although such parties are often called extreme, it is important to stress that their support bases, regardless of their leader’s dodgy connections, are democratic political forces whose core claims—­an end to self-defeating austerity and impoverishing wage policies—echo mainstream social democracy and the recommendations of many prominent economists on both sides of the Atlantic.

With regard to debt relief, these parties are merely restating the standard economic case that their countries’ debt overhangs are too big for investment to be resuscitated to levels that would permit high growth.  (The time of big countries waging wars against defaulting countries as during the colonial period is a tenuous alternative. Actually, big countries foment civil wars to buy very cheap State properties in exchange of the default debt)

Maturities can be extended indefinitely, but unless growth is restored, the game is over, and not just for Greece.

For those who fear Syriza and its left-wing counterparts, it is worth looking at the alternatives on the radical right.

From Britain to Hungary, political parties—whose ideology spans the spectrum from the explicitly Nazi (the Golden Dawn in Greece) to the nationalist–populist (the United Kingdom Independence Party and the French National Front)—are busy working to channel public anger in a different direction.

Harkening back to Europe’s darkest days, they translate negotiable conflicts over economic policy into non-negotiable conflicts over ethnic identity. They attack European integration even more than the left-wing parties, question the democratic rights of existing citizens, and fan the flames of xenophobia toward ethnic minorities and immigrants.

If Europe’s ruling elites want to save the European project, and the Euro at the heart of it, they need to start actively engaging with democratic left-wing parties such as Syriza and Podemos rather than shunning them.

If they don’t, they will drive some of these parties into volatile left–right alliances, or, if they fail in their mandates, leave the stage open to political forces whose goals will be far more radical than mere debt restructuring and opposition to austerity.

What is at stake now is not simply Syriza’s next moves or even a possible “Grexit.” These are symptoms, not causes.

The problem is that European authorities, driven by Germany, are enforcing a politics of deflation under a pseudo-gold standard, expecting citizens to vote indefinitely for their own impoverishment in order to save the asset values of creditors.

In such a world, both radical left- and right-wing forces can only stand to gain ground across many supposedly stable countries, and quicker than we think. To avoid that fate, the continent’s powerbrokers should make some sort of deal with Syriza now—because what may follow it may be far worse.

Animal Farm? Is Mankind about ready for a couple Animal Farm stories

Have you read or recall the Animal Farm of George Orwell?

Do you recognize the pig Squealers (the propagandist), the pig Napoleons (Stalin), the Snowballs (Trotsky), the pigs in our society, the watchdogs, the donkeys (Ben), the raven (Moses), the carthorse (Boxer), the pigeons… and the capabilities, limitations and functions in our midst?

The farm animals revolted against Master Jones.

The pigs are ruling the new community because of their superior knowledge and are assuming the running of the farm according to new system of equality among all.

Squealer is taking the podium:

“Comrades. You do not imagine that we pigs are drinking the milk and eating the apple harvest in a spirit of selfishness and privileged status. Many of us don’t even like milk or apples.

But milk and apples contain substances absolutely necessary to the well being of the pig brain to keep this farm well managed for all.

If we fail in our duty, master Jones would come back. Surely there is no one among you who wants to see Jones back…”

Snowball is of the opinion of sending out more pigeons to stir up rebellions among animals on the other farms

Napoleon is adamant that priority is to procure arms and get military training and  (rounding up the counter-revolutionaries)

Snowball is driven into exile. Napoleon is the new dictator.

A goose came forward and confessed to having secreted a few ears of corn from the last harvest.

A sheep confessed to have urinated in the drinking pool…

The slogan inscribed on the barn read “All animals are equal” and a new qualifier was added “But some are more equal than others

The carthorse represents the good natured common people, particularly the peasants.

The raven points to the priesthood class: They disappear in hard times and return as times are better

The donkey is the intellectual who normally rejects fuss and demonstrations, but clearly see what’s going on…

The Berlin Wall came down and the Soviet communist system crumbled, but Animal farm suits all kinds of political systems and is applicable to all of them.

Orwell was well placed to observe and analyse how the communists during the long Stalin reign functioned. He enlisted with the Republicans during the Spanish 1936 civil war and wrote Homage to Catalonia (published in 1938).

During his stay in Spain, Orwell was totally frustrated how the communists (Stalinists) turned their coats to the leftist Spanish parties and did their best to disunite the various factions and participated in the disintegration of the popular front and the victory of the fascist Franco..

Stalin had signed the partition of Poland with Hitler and in return, Franco had to take over in Spain.

So far, I read 6 of Orwell’s publications and extensively reviewed two of them: Down and out in Paris… and 1984.

A few of the publication of this awesome author:

1. Burmese Days, 1934: Orwell enlisted with the British army in Burma before the WWII

2. A Clergyman’s Daughter 1935

3. Keep the Aspidistra Flying 191936

4. Coming up for Air 1939

5. Animal farm 1945

6. The Road to Wigan Pier 1937: He witnessed very closely the life of the miners and their families in Birmingham

7. Homage to Catalonia 1938

8. Inside the Whale 1940

9. The Lion and the Unicorn 1941

10. James Burnham and the Managerial Revolution 1946

11 Critical Essays 1946

12. Shooting an Elephant 1950

13. England your England 1953

14. Down and out in Paris and London 1933

15. 1984

Note: Down and Out  https://adonis49.wordpress.com/2008/09/23/down-and-out-in-paris-and-london-by-george-orwell/

Liquidity is meant for the Internal market. Competitiveness is for External market?

Should the level of “Life-Style” be the same among the competitive and the challenged productive states within a Union?

This is not a fair condition to impose on States that managed to sacrifice and work hard for better life conditions.

States in financial crisis must have ready lists of 4 categories of enterprises:

1. The public institutions that are critical in the smooth transmission of liquidity to the various economic sectors

2. The mixed State/Private entities that have locations in many regions of the State and employ many citizens

3. The nationwide private companies

4. The medium and small productive companies that serve their local provinces

It is well know that medium and small productive companies constitute 70% of State production that cater for the internal market needs.

Any shortage in liquidity in these small private companies  and employment hit the roof and the citizens experience shortages in most commodities.

Giving priority to the local economies in the distribution (infusion) of liquidity is the first step in preventing mass unemployment.

There are public economic sectors that cater to the general public needs, such as energy, water and transportation… and the stabilization of these functional sectors in matter of maintenance is another urgent priority.

Before the internal market is reinvigorated and underway, it is of no use planning for the export sections to external markets in order to get the influx of “hard currencies”

Stability and security are the basis for a shift toward State development.

Having the autonomy to print money in period of liquidity shortage is the key for stabilizing the internal market.

The disadvantage resides in the society structure that favor the oligarchy and wealth disparity that eliminate the benefit of printing more money.

The crisis in Greece, Ireland, Portugal, Spain and Italy have demonstrated that it is a priority that a State has to reform its public service institutions to discard redundant and politically influenced service appointments.

Without a drastic realization that the political structure should be reformed, and for actually feel the pain associated with uneven equal rights to jobs and opportunities in the institutions, all the remaining reforms will be within the “patching” process.

The crisis in Greece was deep rooted because it lacked the two preconditions: Lousy political structure and not having the right to print money.

Ireland, Portugal, Spain and Italy had political structures that could remedy to the “unfairly” political conditions and to reform the system within the single Euro currency.

The EU has learned the lesson:

1. First, the State that asks to join the union zone must demonstrate that it is serious to undertake political reforms and the structure be designed to react in timely manners to situations of political reforms.

Many States have been included based on historical and ideological “myths” that didn’t match their current unstable realities.

The EU dominant responsibility is to gradually transform the States who applied to join the union into politically viable structure.

The States in waiting must acknowledge that it takes time to achieve stable and valid political structure.

How a poor and unstable State can become competitive in the external market? This is an impossible condition to withhold liquidity infusion that is meant to support local companies.

The “productively challenged States” in the Euro zone should not expect the same level of life-style as the most competitive among them.

And equal rights in life-style is not an equitable and sustainable demand on State basis.

 

Spain to ease naturalization of Sephardic Jews, who were expelled in the 16th century?

Spain has announced that it will ease the naturalization of Sephardic Jews whose ancestors were expelled 500 years ago.

And all the “Arabs” who dominated Spain and were expelled by the same Catholic monarchs and Church? Is their turn very soon for the easing up on their naturalization?

JTA in the Israeli daily Haaretz published on  Nov.24, 2012 “Change in policy to benefit descendants of Jews expelled 500 years ago; Jewish group urges legislating practice“.

Sephardic Jews already benefit from a preferential naturalization procedure that requires them to live in Spain for only two years before claiming citizenship.

But the change, which was announced on Thursday, means that Jews will have to present only a certificate confirming their ancestry to claim a Spanish passport. (Like what kind of certificates? And who is qualified to confirm the validity of certificates going 500 years back in history?)

The Federation of the Jewish Communities of Spain, an umbrella body, congratulated the government for “recognition of a right which does not depend on any government decree.” (Does this means that the Spanish Catholic monarchs and the Church violated recognition of rights?)

In its statement, the organization added that the announcement needs to “culminate in a legal text that will specify the conditions to be met to assume nationality.”

The government did not say how many Jews it expected to apply for citizenship, but it noted that a large number of Sephardic Jews lived in Turkey and across Latin America. (How many descendants in 500 years? Are we talking of 10 million who are still alive?)

While estimates differ, the number of Jews living in Spain – 25,000 to 45,000 people out of a total population of 47 million – is only a fraction of the number who lived in the country before 1492, when Jews were forced to convert to Christianity or go into exile.

If you can read ancient Spanish and decipher its calligraphy  read “The Alhambra Decree that ordered the expulsion of Jews from Spain”

The Alhambra Decree that ordered the expulsion of Jews.

Photo by Wikipedia Commons

The Euro of the European Union (EU) currency is witnessing healthy devaluation compared to the dollar and needs to be lower to arond 1.1 to the dollar.  The increasing difficulties experienced by many States in the EU result from initial weaker economies that could not compete efficiently in the European common market and then were buffeted by the US financial crisis.  The European and international financial and political medias are breaking the taboo of discussing whether maintaining the Euro is a viable alternative in the short term.

The arguments of the group that staunchly defends the Euro is mostly based on political reasons: To them it is becoming a matter of safeguarding dignity and sovereignty.  It beieves that the Euro is the major factor in the reconstruction of the European market and for the political stability and the cohesion of the European market.  This group would like you to believe that without the Euro there would be no EU.

The taboo breaker group believes that the EU is in dire difficulty because it prematurly created a common currency before ironing out and strengthening common politics.  Germany and its satellites States in the northern hemisphere benefited most from the Euro since their currencies were highly overvalued “stronger” than the Euro and thus, they managed to compete better and export more to the European common market. 

The other States in the Union could not deal with a Euro that was much overvalued compared to their national currencies and thus, had to suffer in market competition. The financial and economic commotions in Greece, Ireland, Portugal, and Spain are symptoms of the financial and economic imbalance with respect to the vaster and stronger economies in Germany, France, and Italy.  This group believes that the EU is heading toward a deflationary period within a couple of years if no structural institutions are installed.

The main source of imbalance is that the original six States in the Union had firmir and better tested administrative and political instituions that could apply regulations agreed on and the capability to supervise and monitor laws and regulations governing the union members.  The weaker States are at great disadvantage: The main powerful States in the union have no confidence in the resilient determination of the weaker States to effectively executing the agreed upon regulations and second,  the weaker States are prohibited to issuing (printing money) to satisfy liquidity in their internal trade and commerce.

It is not the Euro that created the common European market: the EU was already instituted and functioning well before the common currency was created on political grounds.  The Euro was mainly to be the material “symbol” of the Union and this symbol degenerated into a calamity at the first major problem.  The EU could have imagined much less costly symbols for its unification until political coherence was firmly established, tested, and thoroughly evaluated.

The Maastricht treaty set limits to budget deficit below 3% and public deficit below 60%.  Currently, only Spain has kept its public debt at 54% and Germany its budget debt at 3.3%.  The remaining States in the Euro have doubled and even tripled both limits. Joblessness is very bad all over the Euro zone averaging 10%; Spain has 20% and Ireland and Greece about 14%.

It seems to me that the Euro has encourage many mafia type “economies” to expand simply because it became much easier to transfer a unique currency and circumventing further money exchange regulations and constraints.

The financial institutions and the medias are sending waves of terrors claiming that there is lack of confidence in the Euro; they claim that this confidence is so low that investors are shirking the Euro zone States.  I believe that the Euro should stay but be restricted to the main large economies such as Germany, France, Italy, Spain, Holland, Danmark, and Norway where the same homogeneous spirit for taking seriously the application of financial and economic regulations among the member States.

The other weaker States should have an alternative common currency, far devalued from the Euro and backed by the Euro until political coherence and institutions are equalized in efficiency and modernity.  The weaker States should enjoy the privilege of pre-empting slow internal trade by issuing liquidity in the newer common currency within limits.

Currently, this Teutonic vital space of Germany is at work from an economical perspective after the fall of the Berlin Wall.  Germany export is mostly oriented toward the eastern vast States that recaptured their independence from the Soviet Union in 1990.  Germany would have rather have its own European Union formed of Holland, Danmark, Sweden, Poland, Tchekoslovakia, Austria, and Ukraine. The western European States and Greece are just added burden that Germany feels it was pressured to supporting.  Probably, the European Union might adopt a second currency (alongside the Euro) just for internal trade purposes among the European States.  The internal trade currency could be labelled “Euro E” referring to the eastern European States so that the current Euro, implicitely a “Euro W” referring to the western European States, be mainly used for external trades outside the EU boundries.

Counter shock upheaval: the earlier the better (Greece)

            A developing State deciding to default on external debts should default on all its debt; then, it can rest appeased and contented for several reasons: first, defaulting does not occur frequently in any single State; second, the bad credit rating is the same whether a State default on all or partial debts; and third, the State will generate immediate cash flow on unpaid interests that covers its budget deficit.   

            Before Greece, Lithuania, Hungary, and Spain suffered the same fate of a prematurely imposed Euro on States of weak economies. There are many articles analyzing the financial crisis in Greece. I thought that I can make sense in a short post for readers eager to know but would refrain reading lengthy erudite articles.

            There are two main factors for Greece financial problems; there are two resolutions available, equally painful, but one is far better in shortening the pain and healing faster. First, the common currency Euro forced weaker economies to relinquish their sovereignty over issuing money (printing money) in time of shrinking economy to re-launch the inner trade.  Second, the US financial multinationals before the crash infused too much credit in a small economy that did not correspond to normal credit rating behaviors; this quick infusion of money inflated the sense of economic boom and generated laxity in financial control and management.  Greece is awakening to new demands for harsher financial control and imposition of higher taxes to straighten the budget balance sheet.

            The first remedy is inviting the International Monetary Fund (IMF) to intervene and infuse $1.7 billions in the Greek coffer to pay the debts due this spring. This would be a bad decision. It is worse because even the EU is encouraging Greece toward that option. For example:

            Lithuania GNP shrank 18% in the first year the IMF intervened with its draconian conditions: jobless rate climbed to 20%, the high level in health, education, and retirement suffered greatly. Actually, retired persons are bleeding and the socialist political parties lost ground.

            In Hungary, the IMF intervention made sure that the people suffer and the socialist government be replaced by like minded anti-socialist government headed by the former minister of economy. If Greece ends up asking the “help” of the IMF, as the EU wishes too, then the socialist George Papandreou will start packing; a decision that will please Merkle PM of Germany.

            Greece with budget deficit reaching 13% of GNP and growing has a reasonable solution out of this mess if it wants to avoid 10 years of suffering and humiliation. Until the EU comes up with a financial recovery plan then Greece should revert to its national currency the drachma. Greece should regain its sovereignty issuing money in this difficult period: Internal and external trades should not be hampered for lack of liquidity.

            Since Greece imports amount to only 20% of its GNP then better competitive drachma should enhance exports and reduce the loan deficit. With the already strict financial control in place, Greece will be able to shorten the period of its pain.  The EU will accept Greece currency to revert to the Euro in due time in order not to let other Euro member States following Greece decision.

            Greece should learn how Argentina recovered.  After four years insisting of keeping the currency linked to the dollar the economy faltered entirely.  Argentina decided to float its currency and it devalued accordingly. Argentina was able to default on $100 billion of foreign loans. The government insured that bank deposits of consumers keep the same purchasing power by regular re-evaluation and re-fixing of the national currency.  People living in their own properties enjoyed the same financial facility at the rate of pre-devaluation.  Within a single semester, Argentina economy was back to normal and going strong.

            Greece has choices: either the MIF intervention accompanied by ten years of suffering or reverting to the drachma until the economy is back to normal within a semester. If Greece default on all its external debts then, suppose the interest rate on debts is 8% and the debt amount to 140% its GNP, defaulting will generate fresh cash of 9% of Greece GNP which is over its annual current budget deficit. What developing State would decline such solution?  Obviously, the US, Japan, China, Germany, France, and England would refuse to default on the ground that they are actually running world economy.

            Defaulting on bad credits that financial multinational encouraged developing States to taking does not hurt badly or disturb the multinational creditors: they were not supposed to pay taxes on interests as long as debtor governments did not restitute the original entire capital; the financial multinationals have then to pay taxes on the previous 20 years of lending the same capital, minus what they submit as expenses of doing businesses.

            The neoliberal financial ideology and “The Economist” are back on the offensive after the shameful financial crash: they are ordering indebted States to reducing public employment by 10%, reducing salaries, reducing retirement benefit, and elongating the age for retirement.  The financial institutions claim that all these hassles are none of its business, even if they caused the miseries.

            Unless people revolt now with a counter shock to what they are being submitted to then any delay to the next financial crash will hurt them more than the rich classes.  People should demand that taxes be raised and increased to all capitalist transactions, financial administrators and bonuses be taxed high, and dividends to shareholders be delayed until the economy is stabilized.  Waiting for another financial crash to get in action is tantamount to increasing social injustices with a maddening upheaval that runs amuck.

The European Union (EU): Modern Europe leading human rights; (Nov. 10, 2009)

 

The previous post “European Union (EU) describes Modern Europe” covered a few statistics and then a short description of the EU administrative and legislative institutions. This follow up post will cover what is working, then analyzing what need to be ironed out, and then how the world community is expecting modern Europe to lead.

The 27 European States forming the EU counts 6 States among the twenty leading economy in the world.  By deceasing rank we have USA, China, Japan, India, Germany, Russia, Britain, France, Brazil, Italy, Mexico, Spain, South Korea, Canada, Indonesia, Turkey, Iran, Australia, Taiwan, and the Netherlands. Actually, those six European economies constitute about 90% of the EU in economy and in populations.

As a block, the economy of the EU may surpass the USA with a twist: the three largest industrial multinationals in every sector are US.  For example, in aeronautics we have United Technology, Boeing, and Lockheed Martin; in medical materials we have Medtronic, United Health, and Alcon; in Medias we have Walt Disney, News Corporation, and Comcast; in pharmaceutical/biotechnology we have Johnson & Johnson, and Pfizer; in informatics we have Microsoft, IBM, and Google.  Besides, the US is the first military power in technology, Navy, Bombers, and aircraft carriers.  The EU is totally dependent on oil and gas energies imported from Russia and elsewhere.  France has adopted a policy of being sufficient in electricity via nuclear energy (60% of the total of France production of energy).  Denmark is 25% sufficient in Aeolian technology and Germany about 15%.

The EU is facing problems. First, the “community vision” is eroding: the decade after the fall of the Berlin Wall and disintegration of the Soviet Union sent the wrong message of jumping in the band wagon of US globalization; thus, the well to do citizens wanted to get rich fast by emulating liberal capitalism. Individualism overshadowed the need to resume a common culture of developing institutions that are trained to work toward the common interest and be reformed to keeping the EU spirit intact in human rights and human dignity.

Second, the fall of the Berlin Wall in 1989 took Europe by surprise.  The euphoric undertaking of uniting East Germany quickly exhausted West Germany with the multitude of social, economic and political problems of this unification and captured most of Germany’s resources and time and prevented it to ponder on the EU necessities.  The opportunity to deepen European consciousness for reformed institutions to expanding eastward was missed.

Third, the EU was discussing the two possibilities: either the strengthening the current union for the longer term expansion or hastily absorbing the many eastern European newly independent States.  The political decision was to go ahead and allowing these tiny states to adhere to the union.  I think that this was the appropriate decision because new States had to root their future into a tangible alliance or fall back into past habit, inclinations, and culture; thus, forming close alliances with Russia. The EU was the appropriate framework for ethnic communication and more democratic realization of social aspirations.  The problem is that these tiny States feel that they should aspire to the same standard of living in no times.  The latest financial crash has left al these States in bankrupt conditions and it is up to the rich EU States to salvage this predicament.  Maybe this fact should remind the EU that not all States should enjoy the same rights until they can show the same capability to shouldering responsibilities.

 

The actual challenges are many. First, there is a political space to reconstruct:  The budget of the EU institutions is merely 1% of the gross GNP while States allocate over 30% to re-distribute to collectivities, social protection, and welfare. The richer States are not that inclined to contribute heavily to the social stability of the poorer EU State members. Second, the EU has unified its currency (it overcame the States’ monopolies to issuing paper money) but is lacking a unified economic government.  For example, the EU lacks common public spaces, no political party or organization has been created or formed to focus on specific EU interests, and the EU Parliament has no power to raise taxes to finance common policies.  So far, the government chiefs are wary of relinquishing their interstates legitimacy and power.

As a block, the EU is still unable to challenge the US on crimes against humanity committed by the US and Israel;  it is fully cooperating with the US on taking Israel off the hook in the UN for daily crimes against human dignity, rights, and apartheid policies in the West bank and Gaza. There are a few States in the EU that are showing trends to opposing Israel’s apartheid practices and boycotting its products grown and manufactured in the occupied West Bank; it is the people in these States who have set the stage for human rights and dignity reversal toward the Palestinian endemic plight since 1948.

 

The world community is on its toes: will the EU refresh its initial objective of “community vision” or will it relapse in petty interstates interest of monopolies and idiosyncrasies?  We need the EU to be the caldron of community communication among ethnicities, languages, and cultures. We need the EU to be the social and political testing ground for viable alternatives in vision, institutions, ecological human survival, human rights and dignity. We need the EU to invent new reasons to living together and reducing man inequality.

The European Union is the most striking political and social achievement in the 20th century.  The backbones of most of the UN peace keeping forces around the world are European contingents; the EU is the highest contributor in humanitarian budgets and for reforming obsolete public institutions in the under-developed States. The EU needs a refresher community vision and the world community should raise its voices and aid Europe in its endeavors.

Islamophobia is anathema to rational thinking; (October 18, 2009)

 

            Islam is quickly becoming an integral religion in the Western world.  There is a growing sense of uneasiness for Islam devotees: they pray at least three times a day facing Mecca (the Kaaba) and take seriously the fasting month of Ramadan. The various Christian sects barely practice their religion; the “Christians” mostly use their religion as political platforms during voting seasons to discriminate among cultures for the “proper way of life”.  A recent scandal broke out in England: the government is wire taping the Moslems on ground of social study.  In France there was an attempt at disqualifying Arabs as carrier of any philosophical civilization that could have impressed on European Renaissance.  The Arabic media didn’t respond to “Aristotle on Mount St. Michelle” simply because the book talked of philosophical import and didn’t discuss the scientific aspects.

            The main confusion in Europe or in the Arab/Islamic world is about what Empires we are alluding to: Arabic Empires (culture) or Islamic Empires (civilization) and how to discriminate among the cultures of each one of the Empires.  The modern nationalistic models (brainchild of emerging Europe) could not correspond to ancient models of thinking and thus, the attempts to explaining past Empires with modern models of what constitute a nation is confusing research and biasing facts with awkward interpretations.

            In all periods, elites of Empires needed an ideology to assure the articulation of various heritages (Arab, Persian, Byzantium, Roman, Greek, and Aramaic).  The unstable structure of ancient Empires frequently pressed upon its elites to rethink the new culture of the emerging Empire and re-construct it via a mould where diverse elements were poured in (ethnicity, community, belief systems, and language).  Thus, social thinkers struggled to present a coherent understanding of the new Empire; the purpose was not an erudite analysis for posterity but to get the new Empire functioning properly.

            This post is meant to investigate the allegation that European civilization is fundamentally the heritage of ancient Greece civilization.  I have examined the contention that “Europe civilization is because of Christianism”, a proposal that I refuted in a previous post (read “The Barbaric Catholic Church of Rome”) where the centralized church prohibited the influx of “heretic” scientific manuscripts to Europe from the Near Eastern Byzantium Empire and later from the Islamic Empire till way the 16th century.

            The best route for this examination is to consider two civilizations that imbibed the Islamic Empires.  The first Umayyad Arabic Empire 650 to 800 AC had for Capital Damascus; the culture in the Near East in that period was principally Hellenistic in the sense that scholars and educated people wrote in two languages, the Greek and Syriac languages (Aramaic dialect developed in Edesse, current Turkey) ; the common people spoke the language of the land or Aramaic.  Aramaic is the root language for Hebrew and the various local languages, especially the two Arabic branches that were spoken in Mecca and in Yemen.  It is in this period that lasted 150 years that translation of Greek and Syriac manuscripts into Arabic received its impetus.  Translation of Greek works to Syriac continued way into the 9th century. The people easily assimilated the spoken Arabic of Mecca and gave Arabic its proper alphabet and grammar.

            The second period can be called the Islamic Empire when the Capital was re-located to the newly erected city of Baghdad (Baghdad was to become the largest metropolis in this Empire of over one million inhabitant); this Islamic civilization was marked by the Persian culture and language with high import from India: trade was cut off with Europe for many centuries first during the Mamluk Empires after kicking out the last remnant of the Crusaders and later the early Ottoman Empire as Constantinople fell in around 1450. 

            The Umayyad Dynasty exported to Islamic Persia the embryo of the current scientific works and the nascent Islamic philosophy (falsafa); the more developed scientific works were later mostly written in Persian language; the same scholars wrote the disciplines that were related to religion, philosophy, rhetoric, legal, mathematics, and algebra, in Arabic because they were needed for the proper function in the administration of the Empire.  Educated and cultured people who were familiar with Greek works met in “salons” (majalis) to discuss on various subjects, philosophical incursions into the possible, the intellect, the sensibility and the soul. 

            Schools of learning were erected and knowledge was no longer the prerogative of the initiation of master to disciple for rich people. By the first century of Islam (8th century), schools were exploding everywhere with targeted practical disciplines (algebra, geometry, arithmetic, trigonometry, jurisprudence, theology (kalam), science of tradition (hadith), history, linguistic, lexicography, math combinatorial analysis, cryptography, and grammar) mainly to support the functions of the Empire administration and train cadres for offices such as fiscal, heritage, religious calendar, and army logistics. The schools were inspired by different traditions such as Greek, Persian, Indian, and Syriac).  By the second century of Islam specialized schools in theoretical mathematics, medicine, physics, optics, and astronomy were booming.

            The first acknowledged Moslem philosopher Al Kindi (9th century) admitted that Aristotle was the most eminent Greek philosopher and wrote: “We have to thank the prior thinkers who shared with us what is right; they made it more accessible to us researching the truth and they provided the premises that leveled the way for what is true.  Offering reasons and demonstrations are part of the acquisition process in the sciences for veracity. Those strangers to scientific inquiries are trafficking in religion even though they have got no religion: indeed the one who sells one thing does no longer belong to him.”

            Personally, I tend to attribute the name of Islamic civilization for the import of scientific disciplines such as mathematics, astronomy, medicine, physics, optics, and chemistry.  Arabic civilization should be restricted to the Umayyad Dynasty period in matters of rhetoric, legal, practical mathematics, Kalam (reflection on the world according to the Koran paradigm), grammars, language, and the import of any outside scientific knowledge that the Old World reserved in Constantinople, Persia, India, and China.

            A follow up post will demonstrate that European Renaissance in the 16th century was fundamentally Islamic scientifically; the decentralization of the Christian power away from Rome was also inspired by the decentralization nature of Islam as a religion.  The title is “Europe’s Renaissance is Islamic”.  It is worthwhile for researchers not to confuse the recent period of Islamic radical decadence with early Islamic civilization that lasted from 650 to 1100 AC in the Orient and then re-surfaced in Andalusia (Spain) from 800 till 1400 AC.  After 1400 AC Christian Spanish monarchs chased out the Moslems and Jews from their kingdom; the Catholic Church in Rome instituted the Inquisition to harass the new converts to Christianity.

The funniest bull fight ever; (October 5, 2009)

 

            The quaint southern Spanish town of  Alcanon de la Sagrada Orden had three landmarks. There was the copper-green statue of the conquistador Juan Rodriguez de la Jara who marched from Tucson to Phoenix and reached Reno in Nevada where he died of some local plague; he was curious about the aborigine American Indians and his last words were “Por Espana y por Alcanon”.  There was the English poet Oliver Still who had decided to live in the town; he had published a slim volume in 1912 and the agony for a second volume of poems generated extravagant adulation. By the time a very short novel appeared in 1925 Oliver Still had become known the world over.  An eighty-page book published in the late thirty made Still a demigod.  Tourists from the USA flocked to Alcanon to meet the poet but Oliver shuns them. In 1948, Still published a volume of poems “Recuerdo de Alcanon” that was translated in Spanish which sealed the duo Still-Alcanon for future tourism attraction.  The third landmark was an old and maybe the first bull ring or toro arena dating from the Roman period; this ring was not used for centuries and it smelt of urine and beasts.

            At the instigation of an aging and fat Duchess, the corrida promoter Don Jesus decided to reopen the bull ring for a charity event for the benefit of the Society for the Prevention of Cruelty to Animals. The fiesta was to last ten days.  The company owner of bull breeding Dona Conception Morales Prado was to offer the bulls for charity; he had no intention of donating his best bulls to charity.

            A US sound recorder arrived to tape natural voices and sounds of beasts and savage events. Tourists from Europe, especially from well to do Germans and Swedes, crammed the town and the disturbed the nerves of mayor Villaseca and Oliver Still. Oliver ordered his wife to pack up. To his wife query if they are moving he fulminated “Trust you to ask an idiotic question.”

            The first bull was limping and the Spanish spectators shouted “fuera, fuera” (away with it; remove from the ring; another bull). The proud mayor of the town Villaseca had volunteered to be the first “rejoneador” or the opening horseman in the ring; the mayor fell from his horse; the bull approached him, sniffed him, and turned back. Mayor Villaseca turned livid from shame; he said “I failed to become martyr of the town”.

            The second toro was pretty cunning, cautious and barely accelerated. This bull snatched the seat off the green pants of the famous toreador Cordobano who drove a green convertible Pontiac as a sign of greatness. An American actress was impressed by Cordobano muscled buttock and ran away with him to Canne in the Riviera. 

            The third bull was crazy and never reflected for a second.  A strong wind blew and dispersed the tin foils, newspapers, and remnants of sausages of the German tourist campers into the ring.  Debris stuck on the bull horns and the spectacle became hilarious. Priest Don Evaristo was chased by the bull and fainted as he reached the “callejon” (a hiding small corner).  The representative of Dictator Franco, the extra obese General “Wolf of the Sahara”, wheezed: “It is fitting to see a friar turning his back on a creature with horns”.  The promoter commented: “This corrida is becoming like ancient Rome. In the absence of competent gladiators we have to sacrifice the Christians”. 

            The toreador Rafaelito was 24 of age and was dressed in mauve; he had already announced his retirement several times and returned to the ring; he visited Hollywood for a movie tryout and was dismissed because he could not speak English.  Rafaelito purchased a mauve convertible Cadillac to upset the green Pontiac toreador. A downpour cut the short on Rafaelito virtuosities.

            Suddenly, mistaking a distant motor horn for the sound of the trumpet the retired soldier Cabrera drove the old street-cleaning truck into the arena, its sprinklers turned full on.  The crazy bull charged the truck, destroyed it to pieces, and finished off with the steaming radiator.  Cabrera discharged his Mozer into the bull.

            Mayor Villaseca was still at it complaining nonstop about his loss of honor.  The priest patiently retorted “There are times when honor is impossible”. Mayor Villaseca replied: “It is the fault of the foreigners, los extranjeros, who come here polluted by dishonor and then taint us”.  The priest could take it no longer and exploded: “We, the Spaniards, must learn to be modern and be better than the foreigners; then they will no longer patronize us and come to our country in search of the picturesque, the out of date scenes.  We have become los Indios, the primitives, yes, the savages.  We are a zoo to los extranjeros”

            It dawned on Mayor Villaseca that if the Spaniards are to proud to modernize they could outperform the los extranjeros in daring and adventure as during the Conquistador period; he decided to cancel the fiesta and called up an entrepreneur to install a drive-in movie business in the arena. The first movie was “Blood and sand”.  Villaseca proudly said: “I did it por Espana y por Alcanon”

 

Note: This topic was taken from “A place in the shade”; it is a short story of the book “Add a dash of pity” by Peter Ustinov.


adonis49

adonis49

adonis49

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