Foreign News and Analysis Since April 2005 -- formerly China Confidential -- What's Really Happening in the WorldForeign Confidential ™
Monday, May 14, 2012
If the Euro Cracks: Comment
Considering a Common Currency's Collapse
Be that as it may, if the euro cracks it could lead to the breakup of the European Union, which could be catastrophic for the global financial system. Nobody seems to have a clear view of the relationship between a potential breakup of the euro and the massive derivatives exposure of the big banks and hedge funds. So-called too-big-to-fail financial institutions are secretive and resistant to regulation; regulators are overwhelmed; and the prestige press, which is supposed to clarify complex issues, has done an awful job of reporting economic news. Business journalism is mainly an oxymoron, and the big TV networks are prisoners of pictures, practically incapable of telling stories that lack attention-getting video images.
Small consolation: if economic conditions dramatically worsen, the networks will get the pictures they need … of mass poverty and unemployment and terrifying social unrest.
Related: Reuters Reports Contingency Plans Being Drawn Up for Forcing Greece's EU Exit
Copyright © Foreign Confidential™More Pain in Spain
So far, Spain’s handling of these difficult choices has failed to restore confidence. Instead of winning support from international investors and attracting fresh investment, the austerity program has produced bitter fruit: recession, spiking unemployment and little faith that either growth or control of public debt are within reach. With investors still skeptical about Spain’s financial health, the government has to pay about 6 percent interest to borrow money. That rate is too expensive to be sustainable because it will boost the government’s obligations to a level that would be hard to pay off, setting up a deadly debt spiral and forcing Spain to raise interest rates yet higher if it is to convince anyone to lend it more money.
-The Washington Post. Read the full story.Questions NBC's David Gregory Didn't Ask JPMorgan' s CEO
A few questions that should have been asked following the bank's disclosure of a $2 billion loss on derivative bets:
What Jamie Dimon Didn't Tell You on Meet the Press
How JPMorgan Actually Lost $17.5 BillionSunday, May 13, 2012
Euro Zone Crisis Update
Social Democrats gain in Germany. Click here for the story.
Foreign Confidential™ sources say EU banks are preparing for a return of the Greek drachma as new elections loom.
In the meantime, continued uncertainty is likely to boost the relative values of the U.S. dollar and the Japanese yen.Understanding Greece
'Once Upon a Time There Was a Middle Class'
With Greece entering its fifth year of recession, the message is loud and clear: Protracted austerity is killing the middle class and without it there cannot, by definition, be a political middle ground. It will gradually shrink to irrelevance, with its days of dominance consigned to a distant memory.
Former members of the middle class who have now been reduced to near poverty are finding the message of more radical parties far more appealing than they would have, had they felt a semblance of financial stability.
-Athens News. Read the entire editorial.
DAY OF PROTEST IN SPAIN
In related news, at least 100,000 people protested in the streets of cities across Spain Saturday, rising against the country's austerity measures in a run-up to the one-year anniversary of the start of a movement that spread across the region.
Tens of thousands of protesters gathered in Madrid's central Puerta del Sol plaza, the birthplace of the protests against economic injustice. Tens of thousands more demonstrated in Barcelona, with smaller protests in other cities.
The protesters say they will continue their demonstrations through May 15, the first anniversary of the initial protests. Authorities say they won't allow anyone to camp overnight at the protest sites.
Unemployment in Spain is neatly 25%. Half of Spaniards under the age of 25 are unemployed.Saturday, May 12, 2012
On CIA's Extraordinary Success
FBI Urges Vigilance Against Industrial Spying
The FBI is targeting economic espionage, urging U.S. companies to be on the lookout for telltale signs an employee could be an industrial spy. Read more.'Last Throw of the Dice' in Greece
If talks fail, fresh elections are expected to result in a government led by the Coalition of the Radical Left (SYRIZA) with one or two small coalition partners. SYRIZA is staunchly anti-austerity; but the party's leader, Alexis Tsipras, has said he also supports staying in the euro zone, arguing that when push comes to shove, the EU, led by Germany, will back down and agree to Greek demands for a modification of austerity measures while providing additional financial assistance. A big gamble.
Related: How Greece Could Leave the Euro ZoneUK Utility Focusing on Biomass Supply Challenge
Cutting Coal, Drax Insists on Sustainability Standards
The sustainability of biomass fuel is one of the major challenges that currently faces Drax, the operator of the UK's largest coal power plant.
That's the view of Drax Power's head of environment Nigel Burdett who claims that the sustainability of biomass as a fuel is vital as the company's sustainability policy will reject any unsustainable biomass plans.
Burdett was speaking at the Forestry, Biomass and Sustainability conference in London last week, organised by Environmental Finance Publications, where he said that there is a sufficient supply of biomass.
However, he added that ensuring it meets rapidly evolving sustainability standards poses more of a challenge.
According to Environmental Finance, Burdett said that securing long-term supplies of biomass is currently "tough without knowing what the baseline is."
When it comes to biomass perceptions, Burdett added that "we need common ground across Europe, if not globally."
Currently Drax estimates biomass represents a greenhouse gas saving of 85 per cent over coal, which is actually better than the 60 per cent required in the UK.
KMS Baltics is a partnership of independent companies providing forestry investment management in Estonia, Latvia, the UK and Romania.
Monday, 14 May 2012
NBC TV Meet the Press moderator David Gregory's interview with JPMorgan Chase chief Jamie Dimon was little more than a video news release.
Related: Warren Buffett on Derivatives as 'Time Bombs'
The CIA's use of a Saudi spy to infiltrate Al Qaeda in the Arabian Peninsula--a key AQ affiliate--was truly extraordinary, an example of the kind of crack intelligence work that saves American lives. Read more.
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