Global Economic Meltdown and the Euro

A good friend of mine -let's call him Feroze, to protect the innocents- sent me a message asking if we are seeing the end of the Euro. He was also wondering if the so called market forces are nuts to try to damage Eurozone countries. Feroze is a successful restaurateur and knows about investor behavior and market forces. His question echoes the BBC's Business Editor Robert Peston who asked the same question in British English, as in "Are Markets Bonkers?":

Are lenders to government, creditors of banks and investors in shares behaving in the kind of way that would guarantee them the kind of losses that presumably they would wish to avoid?

 I ask this question, because there is something of a paradox about investors' and creditors' current obsession with whether huge economies - the US, Italy, Spain and latterly France - will be able to repay all their debts. 

 The natural reaction of the governments of these countries, when they fear that it will become harder and more expensive for them to borrow, is to do what they think their creditors want - which is to introduce austerity measures, to reduce their respective deficits, the gap between what they spend and their tax revenues.    (...)

Now here's the thing.

With economic growth in the developed Western economies so weak, these austerity measures are convincing investors and creditors (the same ones who don't want to lend to Italy and Spain, or different ones?) that the risk of a slide back into recession has become larger. 

My take is that, despite Feroze's and Peston's reasonable questions, markets are indeed very sane. The crazy ones were the observers who gleefully cheered on massive austerity measures, as I pointed out.

Why Is No One Worrying About Pakistan?

Yesterday, I saw on BBC that a drone attack killed 21 people in North Waziristan. Official sources claimed, as they always do, that the ones who perished in the attack were all terrorists.

A month earlier, several drone attacks killed 30 people in various regions of Waziristan.

At least 13 people died in a missile strike on a house on the North-South Waziristan border. Earlier, missiles killed 10 people in South Waziristan.
On Monday night, officials said seven died when a drone targeted a vehicle in the Gorwick area of North Waziristan. 

In both pieces, arcane details (which were clearly provided by official sources) were presented without any substantial discussion of the context in which these drone attacks are taking place. I find that insouciance remarkable as US- Pakistan relations seem highly tense and unstable even to an outsider like me. Frankly, I dont believe that President Asif Ali Zardari is in a position to do much if events get out of hand. And with Pakistan's obsession with India and its newly acquired nuclear arsenal, I feel a lot less comfortable about this situation than most observers.

Let me enumerated the incidents in the last ten months.

Syria and the King's Speech

In the last few days, with corporate media preoccupied with the inexplicable unhappiness of the markets with spending cuts for which they clamored for so long, the Syrian adventure continued in relative obscurity. We have ADD, we cannot focus on more than one thing at a time.

As we averted our gaze, Assad's entourage of thugs moved their focus and artillery to Deir al-Zour and have been pounding this small eastern city since Sunday morning.

But there are indications that things are moving towards a denouement of sorts.

At the beginning of the month Secretary Clinton met with Syrian opposition leaders, a first for the Obama administration. The following day, there was a meek Security Council statement pushed through by Russia and China. Then, Secretary Clinton, during a visit to Canada, stated that approximately 2,000 people were killed by the Syrian regime in recent months and urged everyone to apply pressure on Assad.

So far, nothing earth shattering. Then, King Abdullah of Saudi Arabia went on al Arabiyya TV station and declared that Syrian clampdown is unjustified and unacceptable. Hours later, Saudi ambassador to Syria was recalled. And immediately afterwards, Bahrain and Kuwait recalled their ambassadors as well.

Admin Stuff

I was alerted to the fact that commenting requires registration. This was the default setting for Blogger, apparently.

I dislike doing that myself, so I don't see why I should force other people do it. I am not worried about concern trolls or flame wars: they only come with popularity.

So, obscurity has its upsides.

Feel free to leave comments. I am unlikely to respond to individual comments but I will read them all.

And I will appreciate them all, good, bad and snarky.

The Unbearable Lightness of Corporate Media

A very long time ago, in a far away galaxy, I spent a month as an intern in a large newspaper. I was a third year university student and the editor in chief was a friend of our Research Methods professor. Se he gave us a half serious mission to come up with a blueprint to increase his paper's circulation.

We took it more seriously than him and wrote a full report. The number one recommendation was to have a framework that unites all reporting. Without such a cohesive framework, we argued, news items will reach contradictory conclusions or worse, will be of the "he said - he said" type gossipy pieces. Number two was to have continuity of reporting. If your previous day piece reached a certain conclusion you should not change this the following day, at least not without reference to your earlier item, and not without explaining why you changed your conclusion.

Needless to say, he didn't like it. Stupid kids, what do they know, he said to our professor.

I remembered this episode when I saw the headlines the day after the debt ceiling reporting.

Ramadan in Syria

It looks like it is going to be a bloody month in Syria.

As Juan Cole noted, Ramadan is a tricky month for both sides. Apart from a very day of fasting (and not drinking any fluids), the daily prayers are increased to six, the last being "taraweeh" or "tarawih" which consists of at least 20 raka'at. That takes anywhere from an hour to two. Typically people stick around after these last prayers and stay up so that they can eat one last time before dawn and go to bed to wake up as late as possible.

On the one hand people are tired and weak. On the other hand, they are congregated all the time in large groups and that naturally leads to conversations about whatever that is on their minds. In this nstance, the obvious topic could be the infidels of the Baath party. People also have this feeling of purging and cleansing during Ramadan and as such they might be closer to martyrdom: dying in a holy month, when your body and mind is cleaner, is not an undesirable thing for a Muslim.

My guess is that, as the Syrian army closed off the Turkish border to ensure that Turks cannot use a massive exodus as a pretext to intervene, they grew confident that they can repeat the 1982 massacre and they are getting ready to turn this pious town into a bloody example once again. The problem is that this will not be as easily achieved as last time. Even with communications cut off, people have access to satellite phones, the Internet and all kinds of informal means to get the word out. And that will render the previous attitude to ignore what is taking place impossible.

Obama and the Debt Deal

One of the problems of a polarized world is that it removes the possibility of a shared reality. In such a world, each side decides what reality is and stick to it no matter what evidence is shown to them to question their belief in their version of reality.

Obama has been a conservative President. Yet, the right successfully branded him a Marxist and the left continues to claim that all his Cheney-Bush policies were part of an 11-dimensional chess game.

To me this is odd: even before his election, during the Democratic primaries, a good friend asked me if I thought he would make a good president and I said that he might but he would be a lot more conservative than Hilary Clinton. My interlocutor was not convinced because in her mind Hillary and Bill were interchangeable, and as Bill was a fairly moderate Democrat, she assumed Hillary would be too. Whereas just a simple comparison of their early national health insurance policies could have shown easily where each stood. And Obama stood next to Mitch Romney.

Since then, as Greenwald painstakingly documented once again, he did very little that can be held out as being different from what Bush-Cheney would have done.  Yet, this last deal is still being seen as him surrendering to Republicans. It is not. He is convinced that economy would be better off if the safety net brought in by the New Deal can be eliminated or weakened sufficiently. This has been the conservative objective supported by their relentless meta-discourse about how markets functioned perfectly with fewer distortions. And Obama is a believer.