Slovakia, Poland, the Euro,

Slovakia is essentially a mini Poland but fiscally and currency-wise more like Finland, because Slovakia uses the euro, has lower state debt than Finland, and a population that generally has very little private debt. The banks lend money derived from local deposits and are healthier than their western counterparts.

Slovakia adopted the euro in 2009 did suffer a recession that year, but comparable to the one that hit the neighbouring Czech Republic, which kept its koruna independent currency. Large foreign investors such as Volkswagen, PSA, Kia, say they decided to expand operations in Slovakia because there was no currency risk with the destination markets.

Keeping an independent currency may be a desperate stabilisation tool for a country that is crisis hit and uncompetitive, but for Slovakia the currency union helps its exports and further economic integration with Austria and Germany.

In Poland the zloty’s sudden decline is putting economic growth at risk as it squeezes the 700,000 Poles – part of a nascent middle class – who took out mortgages denominated in foreign currencies, mostly Swiss francs. So far, people are making their payments, but as the zloty continues to fall against the franc there is a growing worry that it could choke off consumer spending.

Such a fear does not exist in Slovakia as there are no mortgages denominated in foreign currencies so this significant risk that is a problem for both Poland and Hungary does not exist in Slovakia...

The next election is unlikely to produce an anti-business government as even the left is committed to Slovakia's integration with the eurozone.

The new British prime minister is politically small-minded and lacking in substance. So much for the special relationship.

Britain under Tony Blair sacrificed men to fight in iraq in a big way, the UK has been supporting everything emanating from the US, with a fervour that can only be attributed to the UK getting something fairly substantial out of the "relationship".

Alas it seems that the nature of the UK's relationship with the USA seems to fundamentally be akin to that of a naive groupie and an ageing rock star... Love or commitment do not seem to be working both ways but it seems that now not even kind words are in the offing. What was the success of Tony Blair then??? the economy was a massive destructive bubble, and now accoriding to wikileaks:

David Cameron, Brown's successor as the guardian of British-American relations? The new British prime minister, American diplomats reported after a conversation with a high-ranking British banker, was politically small-minded and lacking in substance.

The only thing that can help this situation is European humility. British foreign minister, William Hague, has said: "The world has changed and if we do not change with it, Britain's role is set to decline." The new coalition in London now avoids using the term "special relationship."

well that didn't last long... and nothing of substance was gained. So why oh why is Tony Blair going around and pretending to be a great ex-statesman? He is a failed salesman that has fallen for his own pitch...

The rise of China and why its all a big mistake and bubble

It is not often that the chief economist of Goldman Sachs writes about china in the Financial Times newspaper.
http://www.ft.com/cms/s/0/dc113472-3cfd-11df-bbcf-00144feabdc0.html 

What they broadly say is:

1. greek crisis is largely fear of the future that started when unthinkable events like Lehman Brothers collapsed which now has led investors to question everything. Generally the greek furore will die down but the euro will somehow never recover from this.
2. China is going to continue its meteric rise
3. USA should continue to allow China to grow despite continuing to be an undemocratic dictatorship with an aggressive military
4. USA must stop threatening a trade war if china doesn't play ball
5. We should all let china export its deflation-inducing growth to the world and learn to love China,
6. there is no bubble in china, its all good

Overall the whole position is highly suspicious, it is offered as a prediction of what is going to happen when it looks more like what Goldman Sachs would like to happen and where it has bet its money. The fact that they are writing articles like this in the FT, betrays alarm that things are not going the way they have bet.

Here are some points that need to be considered:

• Dictatorships don't end up well in the long run, their internal contradictions build up over time and then cause instability, but this is not going to be a story of peaceful and admirable democratisation like in central europe. Asia is still fairly barbaric in terms of values and there are many military implications because of China's rising military power. These will come to a head in the near/medium future. China is not switzerland, it may well become aggressive one way or another especially if it realises that it is a good way to keep internal stability in the absence of jobs and growth.
  
• People like goldman have shown a lemming-like quality in their investing so much on the china story just as they invested so much on the previous US real estate bubble before. For various reasons china's future is going to be far less predictable than its past in the last 30 years, Goldman et al seem to have bet the house that things will continue exactly as they have in the past. It has to be remembered that the last time Goldman was badly caught out and would be bankrupt now if it wasn't for the american taxpayer saving Lehman. Their judgement is impaired, this is not the goldman of the past.

• There is a massive bubble in China, it seems to be using its savings to produce even more capacity to export to the west at a time when the west does not want to import anymore. China's mercantilism is glaringly obvious now, and its savings in the good times are artificially propping up its economy now (that is if you trust chinese statistics...). The degree of this lopsided hydrocephalic development is underappreciated. The biggest problem china has is that not a lot needs to go wrong for  a vicious cycle to be set in motion, creating the mother of all panics as the people that have plowed investment into china may pull all that out quite suddenly.  This realisation may be the reason for Goldman to be wheeling out its chief economist in the media. More to calm  investors rather than offer insight. There is a distinct Enron-like press management feel to the whole thing.
  
• China benefits from the free trade religion in policy in a massive way, trouble is that a big trade war would probably tip china over very rapidly especially as all players seem to have concluded that they all want to pursue beggar you neighbour policies leading to this massive trade war. The biggest loser out of this by far would again be China.

• There is no political support for current policies towards China, it was never strong but now it is heading very low, and sooner or later policy will shift to match it. 

• Linear development on unsustainable trends over very long periods of time is not how the world has experienced history. Its exactly when a nation looks unassailable that folly prevails (look at Japan...).
  

The economist needs to change... How the right has become discredited by this crisis and how this shows by the increasingly desperate articles in the economist magazine.

http://www.economist.com/opinion/displayStory.cfm?story_id=15663362&source=hptextfeature
The economist needs to change...

I think the www.economist.com has reached the limits of its ideology, because we live in the world that applied the economists' creed since 1979 and its now plain to see that from a european perspective, europe has lost by following the advice of the Chicagoschool/Economist/FTet al nexus.

In the name of free trade witht he US, we europeans have been sold:

1. crap sub-prime mortgages as saving financial products and lost money on those
2. american shares that seem extremely bubbly to me
3. we are lobbied to buy shoddy and diseased US food (e.g. chlorine bathed sick chickens etc..)
4. finally got the stupid credit card bug of not spending what we earn (worst case the UK)
5. we are being told what to do with our holidays and lives (i think anglosaxons don't really like their families and therefore keep themselves busy with work to avoid family life...) Personally I take many many weeks paid holiday a year and i dont work for the state. My life has meaning beyond work..
6. american-style politics of a presidential type (e.g. Blair) which shows what a mess it brought about in the UK creating 2 right-wing parties to choose from - hardly real democratic choice, its more like a "managed" political system - what the ancient greeks would recognise as an oligarchy....
7. US-based and influenced IMF emanating advice consistently bad and inappropriate but always suitable for US exporters' interests.
8. US-style healthcare although it is such a colossal disaster no civilised country wants to touch it and even the US is trying to move away from it via Obama., The economist was singing its virtues about a year and a half ago in a nauseating series of articles "special reports" which i would call advertorials.

I firmly believe that the pendulum needs to shift back quite a bit because the economist has become a religious publication in the sense that it doesn't change its mind when circumstances change. It is starting to sound like those breathless self-congratulatory and mindlessly campaigning press releases by US corporations.

I can personally testify to the fact that for most people as other comments described as well, the way of life in most european countries being infinitely more pleasant and purposeful than in the UK and the US (i have lived in all of them).

i can't help feeling that either economists' writers are rather sad individuals that should get out more, find a purpose in life and certainly consume far less...

(i am off for some cycling on the danube between Vienna and Bratislava and a coffee and croissants with my gf as i ve been given friday off by my employer because i did some good work
-gdp ticker counts this as minus... if i got a bonus and spent it on child labour employing products from China GDP ticker would say Plus- ergo stupid indicator and moronic free market zealots).

get a life seriously... Nobody thinks Thatcher was brilliant anymore, Adam Smith railed about morality in our financial interactions much more than he mentioned the invisible hand.

Anyone can grow if they inflate huge speculative bubbles... its fraud... like the anglo economies and poor Spain that now has concreted over all its beaches to create empty villas because it tried to be Britain through a housing based economy.

... and who benefits Featuring Rupert Murdoch the globalist

On my previous post ("What is the real purpose of globalisation, who causes it to happen, and why" ) i got a comment:

MB said...
Interesting post.... you may also analyze the benefits...
9/28/2006 01:36:49 AM "

Well i feel i showed here that so far in globalised USA the benefits are mostly going to the rich the middle class loses a lot and the people suffering abject poverty benefit a little bit. So there are benefits to a rich elite. I am not arguing whether there are benefits the question is WHO BENEFITS!

I don't think that i have a lot to add to the blissfully-happy-made-in-disneyland-story we are fed by corporate owned media, but it basically comes to this, globalisation will make investment flow to places like China, where the wonderful democratic government there will be delightedly more strong and will be allowed to continue to rule without elections legitimised by all the wealth generated by selling off the labour of their citizens and the lack of decent working conditions, and will continue the good charitable work its been doing for decades keeping in place North Korea's also excellent eternal president and dearly loved leader Kim in his quest to get nuclear weapons so he can nuke california. Spreading freedom my ass... If there is money to be made capitalists would prostitute their mothers...

The investors in the USA, britain etc will get a good return of course particularly because the salaries in china are not exactly fabulous but prices for the goods in the west drop but nowhere near how little the cost to the manufacturer is. While also the important thing you know like healthcare and pensions disappear or become expensive and unaffordable, we can however afford toasters that surf the internet! OR we can afford to buy a device where our boss can email us on a sunday that our job has gone to india! (great)

But returning to the comment, i 'll bite the bullet lets do a case study!

Globalisation changes lives, lets see it through the life of a major investor in China, Rupert Murdoch, and what the advantages of globalised profits are and how they enhance (Rupert's) lifestyle so he can shape it exactly as he wants.

Of course these investors were rich anyway and already live in big houses and need a little extra help with getting the 7th yacht (to match the 7 seas) and to marry more young girls (see pic) and Rupert's alimony payments and lawyer's fees and hair dye are surely more deserving causes than a pension for you or I (scum that we are as we are not investors in china and we selfishly want to raise a family and give them an education and have roof over our head and other deviant bahaviour like that).

Lets all help people like Rupert through low corporate taxation (proprietor of Fox news, The Times, The Sun, Sky television, more here)

Who after all is a self made man: (Murdoch was born in Melbourne, Australia. His father was Sir Keith Murdoch, a well-connected member of the Australian gentry, working as a journalist and adviser to Billy Hughes, the Prime Minister of Australia and who became Australia's most influential newspaper executive and media owner. Murdoch's mother is Dame Elisabeth Murdoch, née Elisabeth Joy Greene, daughter of Rupert Greene and Marie Grace de Lancey Forth. At the age of 97 Dame Elisabeth remains a strong influence on Rupert. The young Murdoch was educated at Geelong Grammar School and later at Worcester College at the University of Oxford.)

Family life (lets see what we should all aspire to in this brave new world)

Murdoch has been married three times. His first marriage in 1956 was to Patricia Booker, with whom he had one child, Prudence Murdoch McLeod. They were divorced in 1967. Very little is known about their marriage, and Murdoch has never spoken about it publicly.

In the same year, he married an employee, Anna Tõrv, a Roman Catholic of Estonian extraction. The timing (and Murdoch's subsequent behaviour) suggests that he had begun the relationship with Tõrv well before his marriage to Patricia ended.

Torv and Murdoch had three children: Elisabeth Murdoch (born in Sydney, Australia August 22, 1968), Lachlan Murdoch (born in London, UK Sept 8, 1971), and James Murdoch, (born in Wimbledon, UK Dec 13, 1972). Anna and Rupert divorced acrimoniously in June, 1999.
Anna Murdoch received a settlement of some reported US$1.7 billion in assets. Seventeen days after the divorce, on June 25, 1999, Murdoch, then 70, married Wendi Deng, then 30, a recent college graduate and newly appointed vice-president of STAR TV. She had previously married, in 1990, Jake Cherry (born 1937), from whom she was divorced in 1992. Anna Murdoch was also remarried, in October 1999, to William Mann.

Murdoch has since had two children with Wendi: Grace (born in New York November 19, 2001) and Chloe (born in New York July 17, 2003).

There is reported to be tension between Murdoch and his oldest children over the terms of a trust holding the family's 28.5 percent stake in News Corporation, estimated in 2005 to be worth about $6.1 billion. Under the trust, his children by Wendi Deng share in the proceeds of the stock but have no voting privileges or control of the stock. Voting rights in the stock are divided 50/50 between Murdoch on the one side and his children of his first two marriages. Murdoch's voting privileges are not transferable but will expire upon his death and the stock will then be controlled solely by his children from the prior marriages, although their half-siblings will continue to derive their share of income from it.

It is Murdoch's stated desire to have his children by Wendi Deng given a measure of control over the stock proportional to their financial interest in it. However it does not appear that he has any strong legal grounds to contest the present arrangement, and both ex-wife Anna and their three children are said to be strongly resistant to any such change.

Murdoch quotes
"We can't back down now, where you hand over the whole of the Middle East to Saddam...I think Bush is acting very morally, very correctly, and I think he is going to go on with it" [1]

"The greatest thing to come out of this [war in Iraq] for the world economy...would be $20 a barrel for oil. That's bigger than any tax cut in any country." [1]

"News — communicating news and ideas, I guess — is my passion. And giving people alternatives so that they have two papers to read (and) alternative television channels." [2]
"Can we change the world? No, but hell, we can all try."[3]

On Chancellor Gordon Brown, expected to succeed Tony Blair, "I like Gordon very much and I share a lot of his values. The Calvinist background I guess... Scottish blood, you know he does seem to believe in the work ethic."

"In this country, Fox News has gotten a big, big audience that appreciates its independence. There's passion there, and it's pushed. ... It has taken a long time, but it has now changed CNN because it has challenged them — they've become more centrist in their choice of stories. They're trying to become, using our phrase, more fair and balanced." [2]

Also not to be missed
http://myspace.com/murdoch_rupert