The Poland march shows the normalization of the country's far right

In my memery, Poland has always been a country with a love of freedom, and a love for the Catholic Church.  But now we see what happens when nationalism means that freedom only applies to "my" people and "my" church.  The idea there could be universal values doesn't seem to register with these marchers.  I can understand wanting to protect your sovereignty, especially when it has been so hard to win and to keep.  The strong cosmopolitanism of the EU is a hard sell, and it will remain so for a long time.  But that doesn't imply a celebration of hate, and that is all too often what we are seeing.

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Poland has a long liberal tradition, but we may be asking more of them they they are ready to handle.  If Britain can leave the EU, Poland can too.  Not NATO--I've found Poles far more interested in NATO than in the EU.  A Catholic Turkey seems to be where this is headed.

How the Poland march shows the normalization of the country's far right - The Washington Post

This is what journalism looks like

You may have missed this.  And even if you'd seen it you might not have recognized it.  It's called journalism.  We used to have it in the United States.

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The impossible triangle

It's coming down to the crunch.  The Eurozone is caught in its version of the "Impossible Triangle" in international finance: among states you can have unrestricted trade in currencies and/or fixed exchange rates (or, in this case, a single currency) and/or sovereign financial and monetary policies, BUT YOU CAN'T HAVE ALL THREE AT THE SAME TIME.  Something has to give.  So what will it be?

EUROPE: Changing The Rules In The Middle Of The Game:

I have been writing for a very long time about the changes needed to the EU treaty if Europe is to survive. Specifically, last week I noted that Angela Merkel has made it clear that the independence of the ECB must not be compromised. This week Sarkozy and the new prime minister of Italy, Mario Monti, agreed to stop their public calls for such changes (at least until their own crises get even worse, would be my guess). And Merkel has called for a new, stronger union with strict control of budgets as the price for further German aid for those countries in crisis. In seeming response: 

“The European Commission on November 23 proposed a new package including budget previews at EU level, the establishment of independent fiscal councils and growth forecasts, closer surveillance of bailout recipients and a consultation paper on Eurobonds. There is also a growing consensus among EU policy makers on the need for the adoption of fiscal rules in national legislation. However, it is far from clear whether EU countries would accept the implicit loss of sovereignty this would involve and agree to treaty changes enshrining legally enforceable fiscal oversight at EU level. The German Chancellor, Angela Merkel, is willing to support a change in Germany’s own constitution if the EU Treaty change to that effect is agreed first.” ( www.roubini.com)But this means a major treaty change that must be approved by all member countries. Note that Merkel wants the treaty change first, or at least the language, before she takes it to German voters, which will certainly be required, since what she is suggesting is not allowed by the present German constitution. Without the changes stated clearly and explicitly in advance, it is unlikely, as I read the polls, that German voters will go along. Merkel has made it clear that any proposed changes will be limited to fiscal issues and central control and not touch on the ECB’s independence. She is adamant against eurozone bonds and putting the German balance sheet at risk (see more below). 

But will the rest of Europe go along with what would be a major alterations of their own individual sovereignty and their ability to adjust their own budgets, no matter what? And agree to all this in time to deal with the current crisis? Such changes will be controversial, to say the least. And they would require, if I understand, the yes votes of all 27 European Union members, or at a minimum the 17 eurozone members.

Unfortunately (?), some, but not everyone, are panicing:

On Friday, Standard & Poor’s downgraded Belgium’s credit standing to AA from AA+, saying it might not be able to cut its towering debt load any time soon. Ratings agencies this week cautioned that France could lose its AAA rating if the crisis grew. On Thursday, agencies lowered the ratings of Portugal and Hungary to junk. 

While European leaders still say there is no need to draw up a Plan B, some of the world’s biggest banks, and their supervisors, are doing just that.  “We cannot be, and are not, complacent on this front,” Andrew Bailey, a regulator at Britain’s Financial Services Authority, said this week. “We must not ignore the prospect of a disorderly departure of some countries from the euro zone,” he said. 

Banks including Merrill Lynch, Barclays Capital and Nomura issued a cascade of reports this week examining the likelihood of a breakup of the euro zone. “The euro zone financial crisis has entered a far more dangerous phase,” analysts at Nomura wrote on Friday. Unless the European Central Bank steps in to help where politicians have failed, “a euro breakup now appears probable rather than possible,” the bank said. 

Major British financial institutions, like the Royal Bank of Scotland, are drawing up contingency plans in case the unthinkable veers toward reality, bank supervisors said Thursday. United States regulators have been pushing American banks like Citigroup and others to reduce their exposure to the euro zone. In Asia, authorities in Hong Kong have stepped up their monitoring of the international exposure of foreign and local banks in light of the European crisis. 

But banks in big euro zone countries that have only recently been infected by the crisis do not seem to be nearly as flustered. 

Banks in France and Italy in particular are not creating backup plans, bankers say, for the simple reason that they have concluded it is impossible for the euro to break up. Although banks like BNP Paribas, Société Générale, UniCredit and others recently dumped tens of billions of euros worth of European sovereign debt, the thinking is that there is little reason to do mo

Evidently, the French banks are convinced someone MUST save them.  Denial?

'via Blog this'

Hard talk

I mentioned this in class the other day. The whole interview (from BBC) is worth the time. For many people, the idea of "saving" the Eurozone is turning into a (sad) joke. One of my favorite quotes:

"...you know how screwed up Europe is when you have a German pope and an Italian central banker."

The real fun begins around the 12:30 mark.

Telling it like it is

As usual, the traders (whose livelihood depends on having clear perceptions) are a lot more accurate than the politicians (whose livelihood depend on distorting the perceptions of others) and more likely to tell it as it is.*

*Unless they are on CNBC, or course, where their primary job is to sell bad stock tips to gullible investors.

UPDATE (Sept. 30th):  It appears this guy's a real clown.  Not a professional trader, runs a failing professional speaker's business.  On the other hand, he's not one of the "Yes Men" and he's saying what many are saying elsewhere--just not on BBC.

Russia and China

STRATFOR has an interesting comparison of the immediate prospects for Russia and for China.  For Russia, the fact that the (nearly bankrupt) Greek government is going to them for help--after being rejected by the EU--is a blow to the eurozone and a boost for Russia's prestige.

This was an avenue that both Iceland and Serbia took during their economic crises, and each time the EU responded with financial aid of its own to counter Moscow’s rising influence. A Russian loan to Greece — no matter what the actual size of the aid package — would be a psychological blow to EU unity. An EU member state — a eurozone state no less — finding financial assistance in Russia rather than among its fellow euro users would lay bare the EU’s inefficiency, particularly in times of crisis management. Moscow would therefore send a powerful message to Central European states that see the EU as a counter to Russian spheres of influence on their borders.

China has the problem that it's stuck between saying no to helping Iran resist American sanctions--which would undermine its claim to counterbalance American power in the region--or try to block the sanctions--which it doesn't have the immediate infrastructure to do, and would encourage more Sino-US tensions.

While sanctions may not specifically target Iranian oil exports, Beijing reasonably fears they could create a chain reaction jeopardizing its oil supplies not only from Iran, but also from the rest of the Gulf, since these shipments pass through the Strait of Hormuz where Iran is most likely to aim any retaliation. While China’s economic growth rate is high, serious vulnerabilities exist in the banking, property and export sectors, all of which the government is attempting to address without triggering a destabilizing slowdown. Now would be an exceedingly bad time for a sudden energy shock.

Moreover, much of the credibility of China’s claims to rising international status rest on its ability to defend smaller states like Iran that are antagonistic to the United States. If China drops Iran at the first sign of American coercion, a host of other states — in Latin America, Africa and Southeast Asia — will rethink whether they can rely on China for support. In such a case, Chinese leaders would struggle to allay domestic outrage at yet another example of acquiescence to the United States, while much of the political capital they have painstakingly built up in recent years through speeches, state visits and investments across the world would be squandered.

From the Chinese perspective, it's one more reason to develop a much greater naval presence, or to work out some kind of arrangement that makes China's access to oil less dependent on the good will of the US Navy.

I wonder how the debt issue fit into this?  By some measures, the British economy is in even worse shape than the economy of Greece, and American problems are growing rapidly.  Can the Chinese find a way to use the debt as a lever?

"This report is republished with permission of STRATFOR"

Libson treaty is now in effect

The Lisbon Treaty, or new "constitution" for the European Union, goes into effect today. It includes the new posts of President of the European Council and High Commissioner for Foreign Affairs. It makes the EU Charter of Fundamental Rights binding by law for all EU institutions. It moves more power to the center, away from the individual states, clears the way for an extensive European diplomatic corps to represent the EU as a whole in foreign affairs, and removes the right of national vetoes for policies involving climate change, emergency aid, and energy security.

The treaty says that unanimous agreement will still be needed to affect taxes, foreign policy, defence and social security, areas where countries take their sovereignty very seriously. On the other hand, what constitutes "climate change" or "energy security" or "social security?" It looks like what we are getting here--as has been observed about the US Constitution-- is "invitation to struggle."