Archive for January, 2012



Many in the United States deem their taxes too high and demand state and federal government do something about this. However, this is not the case and if anything, Americans are undertaxed.

Indeed, it has been written that the “top marginal rate is 35 per cent after all, and the marginal rate on a couple with $70,000 (€54,1710) in taxable income is 25 per cent. But the truth is that most households probably pay a lower rate than Romney”. He adds that “What is clear, though, is that a large majority of US households – about two out of three – pays less than 15 per cent of income to the federal government, through either income taxes or payroll taxes. This disconnect between what we pay and what we think we pay is one of the US’s biggest economic problems”.

Indeed, unless this perception is reversed, and quickly, the main problems that are leading to “American decline” will take hold and cause a real diminution of power due to ever rising levels of debt and deficit.

Crucially he writes that “Together, all federal taxes equalled 14.4 per cent of the nation’s economic output last year, the lowest level since 1950. Add state and local taxes, and the share nearly doubles, to about 27 per cent, according to the Tax Policy Center in Washington – still lower than at almost any other point in the past 40 years” he goes on to note that “Total taxes at current rates would still make up a smaller share of the economy than in virtually any other rich country – not just European nations but also Australia, Canada, Israel and New Zealand”.

As a result, tax increases are a must. There is not only an economic imperative for this but also a moral argument. This would not only aid those less well off but would curb the individualism and begin to restore the notion of the common good that has gone missing from  so many nations.

In historical perspective “Taxes have fallen most for the very affluent. Romney and his father – George W Romney, the former automobile executive, Michigan governor and presidential candidate – do a nice job of illustrating the change. The elder Romney, who died in 1995, paid an average federal tax rate of 37 per cent in the 12 years for which he released his tax returns, according to an analysis in Tax Notes magazine. Mitt Romney’s tax rate has been far lower, thanks mostly to the decline in taxes on stocks and other investments. The top marginal tax rate on ordinary income has also fallen sharply”.

Any argument that productivity would fall by taxing the rich has been recently seen to be what it is, garbage. Tax rates could go to up to 83% without affecting growth according to one report.


Soft power?


In an article in the Economist, the attempts of China to gain soft power are addressed.

The author writes that “Huimin county regards itself as the birthplace of Sun Tzu and thus the fountainhead of an ancient wisdom which, officials believe, can help persuade the world of China’s attractiveness”.

The piece goes on to note that a  Sun Tzu symposium is held in the town and the “Sun Tzu may have written about stratagems for warfare, but Huimin’s assembled scholars prefer to tout him as a peacenik. Their evidence is one of the sage’s best-known insights: ‘The skillful leader subdues the enemy’s troops without any fighting.’ What better proof, say his fans in China, that the country has always loved peace?”. Of course the writer is being sarcastic, with plenty of evidence to the contrary.

Thus he states that, “Chinese leaders, determined to persuade America that they mean no harm, have recruited Sun Tzu to their cause”. He adds that ” In June 2003 a small group of senior propaganda officials and foreign-policy experts met in Beijing for the first time to discuss the importance of soft power. Later that year officials began touting a new term, “peaceful rise”, to describe China’s development. Their message was that China would be an exception to the pattern of history whereby rising big powers conflict with established ones”. He notes that the term “peaceful rise” has been altered to become “peaceful development”.

The writer argues that “The results have been mixed. With rich countries on the skids, China’s economic model is looking good. Development driven by the state as well as the market seems to be delivering dividends”.

Crucially he notes that “the economic model is inseparable from the political model; and, as the Arab spring has shown, authoritarianism has little appeal in the West or anywhere else. China’s hard power, in terms of cash, is certainly increasing; but its careless use of that power has not attracted admiration.  Its truculent behaviour at the Copenhagen climate-change conference in 2009, its quarrels with Japan over fishing rights in 2010 and its more assertive behaviour recently in the South China Sea have created deep unease about the nature of its evolving power”.

He reports laughably that Chinese “officials have been trying to win over Western audiences by pouring billions of dollars into the creation of global media giants to rival the soft power of brands such as CNN and the New York Times.  He adds that “China is hamstrung by a contemporary culture that has little global appeal. Its music has few fans abroad; indeed, China’s own youth tend to prefer musicians from Hong Kong, Taiwan, Singapore and America”.

Even worse for Chinese soft power there is little to choose from. He argues correctly that Buddhism is foreign, Taoism is not suitable in an atheistic state and “it was that China used Confucius’s name to brand the language-training institutes it began setting up abroad in 2004. There are now more than 300 Confucius Institutes worldwide, about a quarter of them in America. But Confucius is problematic. Mao and his colleagues regarded Confucius’s philosophy as the ideological glue of the feudal system they destroyed”.

All that leaves is  Sun Tzu.

Has China soft power? No. Will it have? No.

What police?


As usual “international law” is recieved on bended knee when it comes to Libya. Notably the criticism comes after the successful overthrow of Gaddafi.

The author, Posner, notes how “Unless the country descends into anarchy or an equally abhorrent dictator succeeds Qaddafi, the Libya intervention will be regarded as a victory for the West”. Posner goes on to note that “Both international and U.S. law took a drubbing alongside Qaddafi’s ragtag army, casting further doubt upon the already tenuous notion that international military actions can be conducted on a legal basis”.

Yet as usual he and those who support this view, fail to come up with a reasonable alternative.  He argues, legalistically that “Libya is a sovereign state and, as a matter of international law, NATO cannot bomb it without a legal justification”. NATO was bombing a sovereign state, but it was as a result of cold realism that the intervention took place. Gaddafi had links to terrorists, was on the doorstep of the European continent and the chance to provide for a stable peaceful Libya was a chance that was rightly taken up. In addition to these reasons, there was the humanitarian issue, althought this was of secondary concern.

The writer goes on to note that the UN Security Council gave authorisation to bomb Libya. He adds that the UN Charter “gives the Security Council authority to take actions to promote peace and collective security. But Libya did not threaten its neighbors or any other country. The purpose of the intervention, according to the resolution that authorized it, was to protect Libyan civilians from their government”. While this is true, it is also the political justification, for public on both sides of the Atlantic now wary of any war, even one to their obvious, albeit, long term, benefit.

He mentions how “Some commentators claimed that the Libyan intervention was justified by the Responsibility to Protect (obnoxiously known as “R2P”), a principle formally endorsed by U.N. members in 2005″. Indeed, some realists have problems, on the one hand proclaiming the power, authority and legitimacy of the state, while on the other advocating for war which overturns these principles. He whines that “As a principle or norm, it has been applied selectively, to say the least. No one seems interested in protecting Syrian or North Korean civilians from their governments”, yet his naiviety is shown in citing these examples. The issue of Syria has been dealt with here before, while North Korea, shows the dangers of dealing with states that are unstable. Indeed both these examples substantially bolster the arguments for realism.

He goes on to cite the example of “1999, [when] China and Russia refused to consent to a military intervention in Serbia to protect Kosovo from ethnic cleansing, forcing NATO to go it alone and violate the law”. He continues in this vein arguing that UNSC Res 1973 only allowed for the protection of civilians and forbade the deposition of Gaddafi. Yet he fails to mention how else would civilians have been protected had Gaddafi been left in power?

If he is so concerned with “international law” why doesn’t he have it enforced and call the police and have America, the UK and France arrested, oh wait, what police?

Romney = Obama


If Romney wins the election, and there is no certainty that he will given the recent findings that he has accounts in the Cayman Islands which coupled with his links to “vulture capitalism” means that his victory in November is far from certain.

If he does win will his foreign policy be any different? Others have said that in the election Romney will attack Obama on Syria, Iran and Russia. The answer however is no. After Bush = Obama, should Romney win in November, we’ll get Romney = Obama. In a piece by Michael Cohen answers those who think otherwise.

He argues that “In his only major foreign policy speech of the campaign at the Citadel in South Carolina, Romney offered a stark disparity between what a foreign policy under President Romney would look like as opposed to that of President Obama”. Of course this is simply politicians being politicians.

Cohen rightly notes that “This is the crux of Romney’s attacks on Obama’s foreign-policy performance: He is weak, he is feckless, he doesn’t quite love America enough, he doesn’t believe the United States is an exceptional country, and so on. This represents a familiar pattern of attacks against Democrats dating back decades”, he adds that ” but when it comes to offering policy solutions markedly different from the current resident of 1600 Pennsylvania Ave., Romney has little to offer other than tough talk”.

Cohen goes on to note that “In an interview yesterday with FP’s Josh Rogin, Romney’s top national security surrogate, former Missouri Senator Jim Talent, said his candidate’s four foreign policy priorities are preventing ‘Iran from getting a nuclear weapon … channeling China in a direction of peaceful competition rather than aggression … reestablish[ing] the strength of traditional allies, and play[ing] a larger leadership role in the international community.'”

Cohen rightly mentions how “In principle, at least, it’s very difficult to see how these priorities are in any way different from those underpinning Obama’s foreign policy”. Cohen writes that “Romney has criticized the president for choosing to withdraw troops from Afghanistan based allegedly on “electoral expediency,” but has not indicated any willingness to keep troops in the country past 2014 and has called for speeding up the handover of security responsibility to the Afghan government — which is precisely Obama’s position on the war”.

He concludes noting “on Iran’s nuclear program, Romney’s policy of “crippling sanctions,” covert operations, keeping all options on the table, and working with allies in the region to isolate Iran is remarkably similar to Obama’s”.

So no change then. Thank Heaven for that.

Opening the gates?


After the death of Kim Jong Il maybe America will not have to intervene after all to depose his son.

Daniel Kliman argues that North Korea may open up under Kim Jong Un. He argues that “The conventional wisdom is that North Korea will at best muddle through its current leadership transition or at worst implode; either way, it will continue to treat the United States as enemy No. 1. If the latest Kim to rein in Pyongyang manages to consolidate power”. Of course, Kim being able to consolidate power depends on Chinese aid. While there is no need to assume this will cease the Chinese leadership may have other things on their minds other than the survival of North Korea.

Kliman argues that “the youngest Kim was elevated almost overnight; his ability to command loyalty among the generals and cadres that constitute North Korea’s elite remains unknown. The combination of an internal power struggle and popular discontent could cause a collapse, triggering massive refugee outflows, the proliferation of nuclear material, and a unified but unstable Korean Peninsula”.

He adds however that “North Korea could just as easily survive. Predictions of its demise, though regularly made, have routinely underestimated the regime’s capacity to endure despite imposing terrible economic hardships on its people. During the famine of the 1990s, in which several million North Koreans may have perished, the regime channeled food and other goods to the military and party elites, guaranteeing their loyalty”.

He mentions that “China’s economic presence within North Korea will continue to expand, particularly if Kim Jong Un is willing to pursue market-oriented reforms in a more serious and sustained way than his father. While Kim’s desire to undertake such reforms is uncertain, China’s eagerness to see him revitalize North Korea’s economy is not. Despite the leadership transition in Pyongyang, Beijing’s objectives remain unchanged: to see an economically viable, subservient country on the northern half of the Korean Peninsula for the foreseeable future”. As has been stated above this is dependent of a strong China and a weak North Korea. It is highly uncertain how long this dynamic will last for.

Kim Jong Un’s choices Kliman says are stark, either “become an economic protectorate of China or build a less antagonistic relationship with the United States”.

Unstable times ahead, as usual, for the Korean peninsula.

Someone else to blame


An interesting article examines the role of the China in the financial crisis.

She notes that “President Barack Obama has laid the blame at the feet of Wall Street ‘fat-cat bankers,’ and he finds himself in the company of Federal Reserve Chairman Ben Bernanke. Even Republican presidential hopeful Mitt Romney criticized Wall Street for ‘leverag[ing] itself far beyond historic and prudent levels’ in his 2010 book, blaming its ‘greed’ for contributing to the crisis”.

Yet she says that this is only part of the reason. She argues that ” these explanations for the twin crises in the United States and Europe simply ignore the facts. Subprime mortgages with exotic features accounted for less than 5 percent of new mortgages in the United States from 2000 to 2006″, adding that “The immediate cause of the housing bubbles in the United States and the eurozone periphery was not regulatory oversight failure, but the precipitous drop in interest rates in the early 2000s. And the country that bears partial responsibility for depressing interest rates is a traditional punching bag in the American political arena, one that has somehow avoided most of the blame in this round: China”.

She goes on to argue that the Federal Reserve began to lower interest rates in 2000 that this had the effect of “Americans got themselves indebted up to their eyeballs and went on a prolific spending binge with their newly acquired cash. Spending out of home equity extraction amounted to $750 billion, or more than 4 percent of GDP, in 2005 alone. Fed policymakers generally looked favorably upon remortgaging as a source of personal consumption expenditure”.

Worryingly she adds that ” recently released Fed transcripts show how future Treasury Secretary Timothy Geithner scrambled in 2006 at a Fed meeting to come up with a superlative for “terrific” to describe Greenspan’s tenure”. She argues that “it was China, not the U.S. economy, that prospered on Americans’ spending binge. The world’s most populous country grew at double-digit rates for much of the 2000s. And while the U.S. savings rate hovered around 15 percent of GDP, China’s savings rate increased from 38 percent in 2000 to 54 percent in 2006”.

This she says was exacerbated by the fact of the “large buildup of savings in China and other emerging economies (mostly oil exporters) depressed interest rates worldwide from 2004 on, as too much money was chasing U.S. Treasury bonds and other supposedly risk-free securities, driving up the price of bonds and driving down interest rates. Thus, by the time the Fed started to worry about rising inflation by mid-2004, leading the Fed to try to put the brakes on the economy, it was already too late”.

She adds a similar problem occurred in Europe with the interest rates on Irish, Spanish Greek and other nations falling to German levels due to the common currency. She makes the fair point that “Despite all the acrimony in Europe about northern eurozone governments’ bailing out the periphery, the actual costs of the bailouts are low if you take into account the windfall that Germany and the Netherlands have reaped due to lower borrowing costs”.

She speculates that the “economic cataclysms in the United States and Europe may seem driven by their own peculiar circumstances at first glance, but both would have been much less severe without China’s ascendance. Without China as a major economic player, the low interest rates at the start of the millennium would have been more effective in kick-starting the U.S. economy, and the Fed would have begun raising the Fed funds rate much sooner, with the European Central Bank (ECB) following suit”.

She concludes noting “As China’s economy continues to mature, it may just be the economic engine that the United States and Europe need to dig themselves out from under their mountain of debt”. However, she has forgotten the enormous housing bubble that will collapse the Chinese economy and may take the regime and much of what remains of the world economy with it.



Is the reason for the Arab revolutions dignity?

Seeing sense


In an unexpected but welcome move UK Prime Minister, David Cameron has said that the 50% top rate of tax will remain.

For once democracy seems to have been behind something good. The article notes that “that abolishing the levy is politically impossible in the near future amid fears that they will be accused of pandering to the wealthy”. It goes on to say that “Cameron has come under increasing pressure from business leaders and backbench Tories to scrap the tax to stimulate the economy. He has said it should only be temporary and he is sceptical that it raises money”.

The article notes that the higher rate of tax “is expected to show a ‘surge’ in revenues totalling hundreds of millions of pounds from the first year — undermining the economic case for scrapping the levy. Ministers are also thought to believe that the decision effectively to extend the public sector pay freeze until 2015 has postponed the removal of the 50p rate”. At last the rabid neoliberals have been defeated. Their arguments that business would flee and people would trample each other in a attempt to leave the UK has proven to be totally inaccurate. The wealthiest are, justifiably, paying the most tax.

It notes that “Cameron yesterday announced a crackdown on executive pay. Ministers indicated that a “catch all” law to stop tax avoidance could be introduced in spring”.

One of Cameron’s other ideas is that shareholders would have real power over the company to veto the pay of executive salaries. This would right a wrong that has gone on for far too long where those with shares in a company have had no responsibility but have benefited from the rewards/profits, irrespective of how they were obtained. As usual the report notes the vested interests have everything to lose, “the Institute of Directors said allowing shareholders to reject a wage or bonus would create a litigious minefield that could also damage a company’s ability to attract top-notch directors”.

It goes on to mention how “Cameron told The Telegraph he was keen to end the culture of executives ‘patting each other’s backs, and handing out each other’s pay rises’. Among proposals to crack down on out-of-control packages, Mr Cameron said he would ’empower’ shareholders by giving them a binding ‘vote on top pay packages’ and on payment for failure”.

The news article notes “Carol Dempsey, partner at PricewaterhouseCoopers, warned voting on pay levels was meaningless since companies generally held back sensitive information over why they paid certain amounts. ‘The vote would take place without people knowing what the company was trying to achieve so it wouldn’t be in shareholders’ best interests.’ A binding vote could also ‘distract from running the everyday business’, she said, as a vote against would require the board to produce a plan B, which could get rejected again in a never-ending circle”. Surely, the “everyday business” is to run the business, not the executives enriching themselves irrespective of how well, or badly, the company preforms.

If these two measures go through, and proper regulation is implemented, the UK will be set up for long term sustainable growth.

Time to remember


On this day 219 years ago, Louis XVI was murdered. Let us never forget the violence that swept France and Europe and the effects that still haunt the world.

Another twist


So after the appointment of Angelo Cardinal Amato, SDB as the prefect of the Congregation for the Doctrine of the Faith seemed assured it seems now that he has “no chance of being selected”.

The previous favourite, Bishop Gerhard Ludwig Muller of Regensburg has returned to the running along with Jean-Pierre Cardinal Ricard and as has been stated here before, Archbishop Joseph DiNoia. Archbishop DiNoia worked as the undersecretary at the CDF until his 2009 appointment as secretary of the Congregation for Divine Worship and Discipline of the Sacraments.

Reports state that an English speaking candidate is being examined due not only to the large volume of sex abuse cases that still comprise much of the work of the Holy Office but also Anglicanorum coetibus and the overseeing the growth that it has seen recently. The appointment of Cardinal Ricard, would in some ways make a great deal of sense. He has been a member of both the CDF and the Pontifical Commission Ecclessia Dei for some time and knows the issues that are currently being discussed. His time at PCED has come to be particularly memorable due to the offer of reconciliation with the SSPX and the subsequent rejection of the offer of full communion with the Church. His French background could be a negative if an English speaker is a priority for the post.

There is still talk that if Bishop Muller does not take over from Cardinal Levada will could still be appointed to replace Cardinal Farina as archivist and librarian of the Holy Roman Church.

Yet again


Another day, another article about American decline.

Susan Glasser, editor of Foreign Policy mentions that “economists now predict that China may surpass the United States as the world’s largest economy a lot sooner than we thought“. Glasser adds that “The zeitgeist about America is so bleak that Secretary of State Hillary Clinton even begins her speeches these days being forced to remind audiences that the U.S. economy is still the world’s largest and its workers by far the most productive.”

She notes how “Mitt Romney’s recent speech on foreign policy, before an audience of cadets at The Citadel, there to serve as an enthusiastic, uniform-clad backdrop while he questioned President Barack Obama’s patriotism”, she says that “Obama’s supposed sin? Not being sufficiently believing in the high church of American greatness”. She adds that this effectively means that “this has been translated into an alleged lack of faith in America”.

Glasser quotes a speech by Romney “‘In Barack Obama’s profoundly mistaken view, there is nothing unique about the United States.’ Now, this might seem like a difficult charge to make stick against Barack Hussein Obama, the African-American son of a single mother who rose against all odds to become the nation’s first black president”. She is wrong is saying however that “the more depressing point to me is simply that this is the debate Romney and others are determined to have”. Although it is impossible to know for sure, Romney probably has no interest in having this “debate” and would much rather discuss the details of policy. Romney is forced to have this “debate” as he wants to get the GOP nomination and in order to do that, must do this.

She adds that “Americans in both parties, as surveys have consistently found, are simply fed up with bearing the costs of global security that come associated with being the world’s only superpower”. Yet, at the same Americans people believe in exceptionalism and wish to lead the world. The current feelings of being “fed up” are merely temporary, thankfully, and down to the global economic crisis and will not last. As she writes “even if Americans can be convinced to keep bearing the costs — and that is very likely, given that this extraordinarily rich nation still spends just under 4 percent of GDP on defense and has had to make few sacrifices to maintain its military through a decade of post-9/11 wars in Afghanistan and Iraq”.

She writes that America has “a huge, and growing, image problem in a world where the decline narrative has set in”. She justifibly concludes arguing that “the bigger problem may be this: a political system that rewards bloviating over American greatness but not those whose hard work or big ideas might ensure Americans actually still have something to crow about”.

This can be fixed however, with longer terms and more power.

Another “new” strategy


President Obama recently announced a new strategic guidance plan. The plan is meant to aid the transition to focus on Asia, as Secretary Clinton has said recently, to overseeing hopefully modest defence cuts, to moving out of Europe.

Some of noted that the document “This new guidance makes good sense in today’s world, but it assumes that the Pentagon will absorb only $487 billion in budget cuts over the next decade. If far deeper cuts occur, as required by sequestration, the Department of Defense will not have the resources to execute the guidance”. Thankfully most politicians in Washington agree that any deeper cuts would be dangerous to both America and the wider world if any deeper cuts were to take place.

The writers argue that the pivot is correct with, most of, Asia booming economically and demographically. They also note the threats of the region such as China and North Korea. They write that “several Asian countries have asked the United States to strengthen its diplomatic and military presence in the region so it can remain the ultimate guarantor of peace and security. A bolstered U.S. presence will reassure allies who worry about American decline by clearly conveying an unwavering commitment to Asian security”. This not only good for American allies but good for America itself. The recent fad of US decline-ism is seeping through the body politic and beyond into the wider public. The downside of this of course is the fact that America’s Asian allies take the US for granted and free ride on its security which allows them to cut back their own.

Yet they are well aware of the dangers of abandoning the Middle East, “U.S. interests in the greater Middle East remain largely unchanged: ensuring the free flow of petroleum from a region containing 51 percent of proven global oil reserves, halting nuclear proliferation, and guarding against the diminished but still real threat of Islamist-inspired terror attacks”. They conclude that “The Pentagon’s new strategic guidance presents a realistic way to maintain America’s status as a global superpower in the context of shrinking defense dollars. But further cuts, especially at the level required by sequestration, would make this “pivot but hedge” strategy impossible to implement and would raise serious questions about whether the United States can continue to play the central role on the global stage”.

Others note that the document “is planning to shrink the Army and Marine Corps, reduce forces in Europe, and make cuts to the country’s nuclear arsenal. The cuts may make it less likely that the U.S. will undertake more large-scale stability operations like those in Iraq and Afghanistan”.

Elsewhere Dr Walt bemoans the fact that the strategy is still “interventionist”. Aside from the argument which Walt reiterates that Asia will free ride on US security guarantees just as Europe has done since the 1950s so Asia will follow. Walt notes that the document’s pivot to Asia and away from Europe means that “these changes do not herald a philosophical shift away from a highly interventionist outlook. The new DG says the United States will still ‘take an active approach to countering [terrorist] threats,’ meaning continued drone strikes, night raids, and various forms of covert action”. While Walt does not agree with these approaches they obviously are working, slowly but surely. He concludes noting ” the new DG (and the budget it implies) should be seen as a step in the right direction (even if not an especially bold one). But a final word of warning: the Defense Guidance is not a strategy; it is a political framework that is intended to inform the budget planning process that lead to the creation of forces and the development of specific capabilities”.

Dov Zakheim takes a different view altogether. He writes that “It should be recalled that the administration’s own Quadrennial Defense Review, written in the shadow of the president’s pledge to depart from Iraq, was committed to ‘maintain ability to prevail against two capable nation-state aggressors.’ Now, however, the administration proposes to plan for our forces to fight just one war, while being ‘capable of denying the objectives of – or imposing unacceptable costs on – an opportunistic aggressor in a second region'”. 

He goes on to make the excellent point that “This budget driven strategy is a throwback to the discredited “win-hold-win” strategy that the Clinton administration proposed early in its first term. At that time, it quickly became clear that the strategy could not work. There was no way of knowing whether forces engaged in one combat theater could be freed to fight in another theater, and, even if they could be freed, whether they could arrive in a timely fashion to defeat the enemy”. Yet he fails to see the main point. America is going to have to raise taxes, and cut spending. The Pentagon is going to have to be a part, albeit, a small part of this. If not the economic power on which US power is based will collapse. Others follow suit criticising the document noting stingingly ” envisions a scaled-back American presence and incurs greater risk without leveling with the American people as to the nature and magnitude of that risks”.

Others have argued that “The abandonment of a decade’s worth of investment and grinding experience in stability operations is a dangerous risk that willfully ignores the realities of the contemporary security environment. Weak and failing states, and the rogue actors who operate within them, represent a real threat to regional and global stability”.

There was the Monroe Doctrine then the tilt to Europe, then the Middle East and now Asia. President Obama is certainly taking a risk, but if it pays off to produce long term gains he will go down as a great president. If not he will endanger not only US interests but the security of the world which depends on a powerful America.

Business as usual at the vampire squid


In the whole of 2011, Goldman said that it made 47% less in profits than in 2010” and yet bonuses of $12.2bn (£7.4bn) were paid out. Makes sense.

Adding fuel to the fire


If you add an overheating economy, a restless people imagine what would happen. Now add to that mix a dangerously subservient government controlled press.

An article on the role of the Global Times, Chinese Communist Party mouthpiece examines just that. Larson notes the recent infamous “saber-rattling editorial, printed with only slight variations in the Chinese and English editions, which duly unnerved many overseas readers. ‘Recently, both the Philippines and South Korean authorities have detained fishing boats from China, and some of those boats haven’t been returned,’ the editorial fumed. ‘If these countries don’t want to change their ways with China, they will need to prepare for the sounds of cannons.'”

Such hyperbole is worthy of the New York Post but unlike the Post the Global Times is under the tight control of the government. Larson explains that “while the People’s Daily is the parent publishing organization of Global Times, the two newspapers have remarkably different missions. Global Times is unequivocally a state-owned paper subject to the same censorship regime, but since its founding in 1993 it has evolved a more populist function — a mandate to attract and actually engage readers, rather than to telegraph coded intentions of the Foreign Ministry or the Organization Department, which determines all senior personnel appointments”. Thus from the outset Larson notes that the paper’s role is populist and can thus stir up, or damp down trouble, almost as it sees fit.

She describes meeting the editor-in-chief Hu Xijin, “he told me when I visited recently as part of a delegation of American editors and academics. ‘And we are not afraid to upset you.'” She adds that “Hu, however, breaks the mold in nearly every way but one: his devotion to the party. He is a former war correspondent and a maniacal editorial micromanager “.

Worse still she writes that “Hu relishes in mentioning lightning-rod topics that most state outlets simply avoid as too sensitive, including the 1989 Tiananmen massacre and this spring’s detention of artist Ai Weiwei, if only to reinforce a party-friendly line. If the de facto stance of China’s state-run media is to avoid controversy, Hu actively courts it.” Larson adds that the paper’s “circulation the third-largest newspaper in China, with a daily print readership of 2.4 million, according to the Sobao Advertising Agency, and reported web readership of 10 million.”

Larson says “Global Times has delivered on that hunger for international coverage, albeit often with a claustrophobic worldview that presents China, arguably the world’s second-most powerful country, as a besieged underdog. A sample of front-page headlines from October 2011: ‘Attacking China becomes a new vogue for Washington DC’; ‘The Senates vote menaces China’; and ‘India and Vietnam signing contracts provokes China’.” It is this mix of violent nationalism and paranoia that is so dangerous. It breeds an atmosphere where the other is always the enemy and anyone who ever challenges this an also a threat to the state.

She concludes thus, “As a former reporter at Beijing Youth Daily told me: ‘Why do people read Global Times? There are few options … there’s no real news in China. We have such limited choices.'”

It is this lack of balance in the media in China that is not only dangerous for regional stability but could cause the acceleration of the end what the Global Times supports for.

Huntsman bows out


Huntsman ends his campaign that started so well.He lives to campaign another day.

“Not anytime soon”


In a piece that discusses the future of oil the focus on Latin America is notable.

She argues that “By the 2020s, the capital of energy will likely have shifted back to the Western Hemisphere, where it was prior to the ascendancy of Middle Eastern megasuppliers such as Saudi Arabia and Kuwait in the 1960s”. She adds that “The reasons for this shift are partly technological and partly political”. The reserves of a variety types of oil include “The U.S. endowment of unconventional oil is more than 2 trillion barrels, with another 2.4 trillion in Canada and 2 trillion-plus in South America — compared with conventional Middle Eastern and North African oil resources of 1.2 trillion. The problem was always how to unlock them economically”. She argues that since the first years of this decade, this problem as all but vanished. She mentions that “With the help of horizontal drilling and other innovations, shale gas production in the United States has skyrocketed from virtually nothing to 15 to 20 percent of the U.S. natural gas supply in less than a decade. By 2040, it could account for more than half of it”.

Not only that she notes that “Oil production from shale rock, a technically complex process of squeezing hydrocarbons from sedimentary deposits, is just beginning. But analysts are predicting production of as much as 1.5 million barrels a day in the next few years from resources beneath the Great Plains and Texas alone — the equivalent of 8 percent of current U.S. oil consumption”. She notes that “analysts expect an additional 1 to 2 million barrels a day from the Gulf of Mexico now that drilling is resuming. Peak oil? Not anytime soon”.

Of couse it woud be unwise to say that these estimates will transpire to be exactly as predicted. In the 1920s many believed that Saudi Arabia had no oil whatsoever, yet technology has moved on since then, but these figures are just estimates, albeit informed ones.

She mentions that “Brazil is believed to have the capacity to pump 2 million barrels a day from ‘pre-salt’ deepwater resources, deposits of crude found more than a mile below the surface of the Atlantic Ocean that until the last couple of years were technologically inaccessible” with a number of large fields found in recent years. The scale of the reserves are assured when “oil-thirsty China has also recognized the energy potential of the Americas, investing billions in Canada, the United States, and Latin America”.

Taking the example of Libya she says that “Changes of government in the region have historically led to long and steep declines in oil production. Libya’s oil output has never recovered to the 3.5 million barrels a day it was producing when Col. Muammar al-Qaddafi overthrew King Idris in 1969; instead it has been stuck at under 2 million barrels a day”. Yet there is evidence that this will rise over the coming months and years if stability remains. She adds that Iran suffered a similar fate with 6 million bpd being produced under the Shah, but only 4 million currently.

She concludes that “The boom in the Americas, meanwhile, should be food for thought for the Middle East’s remaining autocrats: It means they may not be able to count on ever-rising oil prices to calm restive populations“.

In a reassuringly upbeat prediction she finishes saying “The U.S. energy industry may also be able to provide the technical assistance necessary for Europe and China to tap unconventional resources of their own, scuttling their need to kowtow to Moscow or the Persian Gulf. So watch this space: America may be back in the energy leadership saddle again”.

On the wane


Just two years ago, Ahmadinejad was allied with the nation’s supreme leader, Ayatollah Ali Khamenei. Now they are adversaries. The reformist bloc, including presidential candidate Mir Hossein Mousavi and former president Mohammad Khatami, is also opposed to Ahmadinejad. The clergy are divided and losing power. Above all of them sit the Revolutionary Guards, who are turning Iran’s theocracy into a quasi-military dictatorship. None of this suggests political stability or strength“.

From whence he came


The appointment of the new prefect of the Congregation for the Doctrine of the Faith to replace William Cardinal Levada has taken a new turn.

The seemingly assured appointment of Bishop Gerhard Ludwig Muller of Regensburg has now all but vanished.

Reports now indicate that the trusted aide of Pope Benedict, Angelo Cardinal Amato will now take the role. Cardinal Amato, 73, served from 2003 to 2008 as the secretary of the CDF. As per custom he was rewarded being named prefect of the Congregation for the Causes of Saints and a cardinal in 2010. The age of Cardinal Amato seems not be have bother Benedict overly, as he will turn 74 in June. Thus, unless there are last minute changes, Cardinal Amato will only have three or so years at the CDF before he too retires.

Discussions are so far advanced that Angelo Cardinal Comastri, vicar general of His Holiness for the State of the Vatican City is thought to be the most likely candidate to take over from Cardinal Amato. It should be known that among Cardinal Comastri’s curial memberships is that of the  Congregation for the Causes of Saints.  There is so far no word as to who will take Cardinal Comastri’s place.

In other related news, a close associate of Cardinal Bertone, Raffaele Cardinal Farina, S.D.B. who serves as archivist and librarian of the Holy Roman Church is turn to retire soon. The post is normally given to distinguished diplomats and curialists at the end of their careers. Cardinal Farina, 78, does not fit into either category,  having spent most of his life in the academy. The replacement for him is currently thought to be none other than Bishop Muller.

Justifiable response?


In an article in Foreign Affairs, Time to Attack Iran, Matthew Kroenig argues that a strike against Iran is the least worst option.

He opens saying “Proponents of a strike have argued that the only thing worse than military action against Iran would be an Iran armed with nuclear weapons. Critics, meanwhile, have warned that such a raid would likely fail and, even if it succeeded, would spark a full-fledged war and a global economic crisis”.

He adds that “Fearing the costs of a bombing campaign, most critics maintain that if these other tactics [diplomacy, sanctions, and covert operations] fail to impede Tehran’s progress, the United States should simply learn to live with a nuclear Iran”. He says that a carefully organised strike against Iran would be in the long term interests of the United States, and therefore the world. He does not however address that intelligence does not know where all of the weapons/reactions are and thus if most were destroyed in an attack it is highly possible that some would remain. If this were to happen Iran’s response would be at best anger, worst, extreme rage with it directed at Israel and other countries in the Middle East.

He goes on to say that the “Stuxnet computer worm, which attacked control systems in Iranian nuclear facilities, temporarily disrupted Tehran’s enrichment effort, but a report by the International Atomic Energy Agency this past May revealed that the targeted plants have fully recovered from the assault”. Worryingly he adds that “The Institute for Science and International Security, a nonprofit research institution, estimates that Iran could now produce its first nuclear weapon within six months of deciding to do so”.

Thus, it would be fair to say, given all that has been reported that if the  Institute for Science and International Security is correct in its findings then Iran will have a nuclear weapon by July. He mentions that “Some states in the region are doubting U.S. resolve to stop the program and are shifting their allegiances to Tehran”. Yet, he does not say which states. Apart from the obvious, and complicated case of Iraq the other states in the region are cleaving closer to the United States, urging it to act. He continues saying that “Others have begun to discuss launching their own nuclear initiatives to counter a possible Iranian bomb”. This is certainly true, but even if states like Saudi Arabia and Egypt have definitely made the decision to acquire nuclear weapons, and there is no evidence that they have, it would take years to acquire them. He does make the valid point that “Iran could choose to spur proliferation by transferring nuclear technology to its allies — other countries and terrorist groups alike. Having the bomb would give Iran greater cover for conventional aggression and coercive diplomacy, and the battles between its terrorist proxies and Israel, for example, could escalate”.

He argues that Iran’s nuclear site are known and “although Tehran might again attempt to build clandestine facilities, Washington has a very good chance of catching it before they go online. And given the amount of time it takes to construct and activate a nuclear facility, the scarcity of Iran’s resources, and its failure to hide the facilities in Natanz and Qom successfully, it is unlikely that Tehran has any significant operational nuclear facilities still unknown to Western intelligence agencies”. Somewhat optimistically he argues that “a devastating offensive could well force Iran to quit the nuclear game altogether”.

A concludes reiterating his argument for a well prepared attack that would have long term beneficial consequences. Dr Walt disagrees however. In a blog post he writes that Kroenig is part of a school of thought that portrays the threat as “Step 1 you adopt a relentlessly gloomy view of the consequences of inaction; in Step 2 you switch to bulletproof optimism about how the war will play out.”

Walt naively argues that “He assumes that Iran is hellbent on getting nuclearweapons (not just a latent capability to produce one quickly if needed) and suggests that it is likely to cross the threshold soon. Never mind that Iran has had a nuclear program for decades and still has no weapon”. Walt obviously ignores the IAEA’s own report which is strongly worded and reasonably unambiguous.

Walt mentions how “Iran’s entire defense budget is only about $10 billion per year (compared with the nearly $700 billion the United States spends on national defense), and it has no meaningful power-projection capabilities. Thus, contrary to what Kroenig thinks, containing/deterring Iran would not add much to U.S. defense burdens”. Yet Walt overlooks the obvious non state power that Iran possesses with Hamas and Hezbollah.

Laughably Walt in the piece goes on to argue “let’s be crystal clear about what Kroenig is advocating here. He is openly calling for preventive war against Iran, even though the United States has no authorization from the U.N. Security Council”. As if the UNSC is the arbiter of all morality! Walt ignores the fact that Russia and China have done everything to undermine the attempts of the rest of the world to get Iran to stop its obvious weapons programme.

Kroening replies and on the debate goes.

Newer and shorter


A new shorter ceremony for the creation of cardinals has been approved by Pope Benedict to take place over one day instead of two.

Implemented in full


Amid the recent reports that key proposals of the Vickers report would be sidelined, members of the UK Government have said that it will be implemented in full.

It has been reported that the Business Secretary, Dr Vince Cable said that “proposed lenders should be forced to split their retail and investment banking arms to help prevent future bailouts will be backed by Chancellor George Osborne”.

The news article then casts doubt as to the usefulness of this noting, “the planned reforms estimated to cost the industry up to £7 billion, there are fears they will slow lending at a time when the economy is in danger of sliding into recession”. However, there is considerable disagreement as to the accuracy of this figure. Not only that but to “wait” to implement these direly needed reforms would be a disaster for future generations and imperil any future stability.
The article goes on to mention that “is expected to pledge to enact all primary and secondary legislation stemming from the report by the end of the current Parliament, with a white paper expected next year, according to newspaper reports. The reforms should be in place by 2019. The Chancellor has come under pressure to water down the proposals from bankers, who claim they are unnecessary and could lead to higher costs for customers”.
All proposed financial regulations should be enacted as a matter of urgency, especially with the euro on the brink of collapse. To wait would ruin any chance of regualtion at all, especially as the world economy is expected to be on an uptick by the time these current regulations are in place and as such there would be little or no appetite for them then, as it would “stifle growth”. Such lobbying pressure from bankers and others should be ignored, with many, though not all of the large UK banks now making a profit, it would not be unreasonable to ask them to pay for the regulations out of their own pockets. Or alternatively, the banks could reduce the bonus packages of their senior, and not so senior, staff.
Only when both of these have been implemented should governments consider looking into the fact that the accounts of citizens may have to face higher fees. Neoliberalism as we have known it has failed. It is time for a regulated market to take its place.

New Bishops secretary


Filling the vacancy left by the appointment of Archbishop Manuel Monteiro de Castro, Pope Benedict named the now former nuncio to Brazil, Archbishop Lorenzo Baldisseri as secretary of the Congregation for Bishops. Archbishop Baldisseri had been mentioned for other high ranking positions in the curia before such as Substutite for General Affairs and more recently nunico to Italy. He is assured of a sinecure and a red hat at the end of his new job in four or so years.

The Granite State decides


As expected Romney won New Hampshire. Ron Paul came second with Huntsman third. The former ambassador and governor insists he’s staying in with “Exit polls from the news networks show that Huntsman got the support of many Independent voters — who can register to vote in a party primary on the day of the contest. Plus, exit polling shows his strongest supporters say they are ‘satisfied’ with President Obama’s policies and ‘strongly oppose’ the conservative Tea Party grassroots movement. Neither of those types of voters are likely to be dominate in South Carolina’s primary”.

South Carolina next.

Full circle


President Obama has appointing a new Chief of Staff to replace Bill Daley.

Jack Lew currently serving as OMB director will take up the role next month. Described as “intensly private” the appointment is seen as “if Daley represented a period when the Obama administration aimed to conduct more outreach with the business community, Lew’s appointment suggests a more inward looking period relying on the skills of a consummate insider deeply familiar with the machinery of government”. The piece notes that Obama has gone from an aggressive hyper partisan operator through Daley, to end up with Lew.

Daley is said to be heading back to Chicago to be one of many co-chairman of Obama’s reelection. Interestingly, “Daley had previously vowed to stay on at the White House through the 2012 election”. The report adds that “Daley has had a turbulent tenure at the White House, where he has reportedly clashed with other officials. He also has had a cool relationship with House Democrats, including Senate Majority Leader Harry Reid”. The article concludes noting “One former Obama aide who has dealt with Daley called him ‘unapproachable’ and ‘standoffish'”.

Others have mentioned Lew’s partisanship, his “appointment fits with the leftward, populist tone that Obama has adopted as he enter the campaign season. The new chief of staff is a staunch liberal: he started his political career canvassing for anti-war hero Eugene McCarthy in 1968 (he was 12); his adviser at Carleton College was Paul Wellstone, later an iconic liberal senator; and one of his first jobs in Washington was working for Democratic lion and former Speaker of the House Tip O’Neill”.

Lew’s foreign policy experience should not be misunderestimated however. He was “the senior official responsible for the civilian surge in Afghanistan, which accompanied the administration’s 2009 military surge there. That increase, which added over 1,000 civilians from across the U.S. government to the Afghanistan mission, is slated to wind down this year along with the military surge”.

As to his replacement at the OMB, the deputy director, Heather Higginbottom was only confirmed “after her nomination was blocked by the Senate for 10 months. Republicans, led by Sen. Jeff Sessions (Ala.), said that Higginbottom’s lack of prior budget experience meant she was unqualified to serve as deputy. She suffered through a brutal hearing in the Senate Budget Committee”.

More likely names for Lew’s replacement are “Jeffrey Zients, Lew’s deputy in charge of management. Zients served as acting OMB director from July to November of 2010. While Zients has a reputation as a competent manager, he does not have the experience of negotiating with Congress that Lew has”, alternatively ”

Rob Nabors, a longtime budget wonk who served as deputy OMB director in the past and is now director of legislative affairs. Nabors, who previously worked for former Appropriations Committee Chairman David Obey (D-Wis.), was involved in all the major budget negotiations with Congress last year. Another choice could be Director of the National Economic Council Gene Sperling who has also spearheaded congressional talks”.

Whoever becomes the new nominee, GOP obstructionism is assured. The way to fix that, give the president the power to hire and fire who he wants, when he wants.

Carrying on


Now in second place at 18 percent, Huntsman was languishing in fifth place at 8 percent in the same poll in November“.

Reasons to ignore the UN


After a report was issued by the Lowy Institute Foreign Policy examines some of the excellent arguments.



As if they had nothing else to be concerning themselves with, the Francis Cardinal George of Chicago has put his foot in it, and refused to take it out.

Cardinal George who turns 75 on 16 January, on 21 December compared certain elements of the gay liberation movement to the KKK, saying “You don’t want the gay liberation movement to morph into something like the Ku Klux Klan, demonstrating in the streets against Catholicism”. While it would be foolish to say that there were not extremists in the gay liberation movement, to make such incendiary and politically insensitive remarks is outrageous, immoral and sinful.

Others interestingly have said “it is clear that he welcomed any opportunity to pick a fight”. The article adds that “His incendiary comment, spur of the moment or not, betrays a larger context that, in the cardinal’s universe, is no secret. And that context is that anti-Catholic hordes — gays, materialists, certainly The New York Times, politicians who won’t hew their views and strategies to the Catholic line, and other societal forces — lurk around every corner and are largely responsible for all the church’s troubles”. While this is certainly exaggerated there is some merit in the argument. Indeed, Pope Benedict himself said that the sin within the Church is the issue.

The piece goes on to say that “diminishes any standing the church might still have in the public arena”, he concludes that “Gays, on the other hand, might perceive the church as the bully in the current circumstance”.

Cardinal George has now, finally apologised for the remarks having repeated them more than once. He was quoted as saying “‘I am truly sorry for the hurt my remarks have caused,’ George said in an interview with the Tribune. ‘Particularly because we all have friends or family members who are gay and lesbian. This has evidently wounded a good number of people. I have family members myself who are gay and lesbian, so it’s part of our lives. So I’m sorry for the hurt.'” The fact that he has family members who are gay and that he still said it makes his original remarks all the more shocking and sinful.

The Consequences


Consequences of a euro break up.

Consistory 2012:the names

Pope Benedict having just ordained the new nuncio to Ireland, just after the Angelus announced the names of 22 new cardinals today for a consistory that will be held on 18 February. Eighteen of the 22 are to be electors. In order they are:
  • Fernando Filoni, prefect of the Congregation for the Evangelization of Peoples
  • Manuel Montiero de Castro, major penitentiary of the Apostolic Penitentiary
  • Santos Abril y Castello, archpriest of the Basilica di Santa Maria Maggiore
  • Antonio Maria Veglió, president of the Pontifical Council for Migrants and Refugees
  • Giuseppe Bertello, president of the Pontifical Commission for the State of Vatican City & president of the Governatorate of the Vatican City State
  • Joao Braz de Aviz, prefect of the Congregation for the Institutes of Consecrated Life and the Societies of Apostolic Life
  • Francesco Coccopalmerio, president of the Pontifical Council for Legislative Texts
  • Edwin Frederick O’Brien, pro-grand master of the Equestrian Order of the Holy Sepulchre
  • Domenico Calcagno, president of the Administration of the Patrimony of the Apostolic See
  • Giuseppe Versaldi, president of the Prefecture of the Economic Affairs of the Holy See
  • George Alencherry, major-archbishop of Erkugnalam-Angamaly of the Syro-Malybars
  • Thomas Christopher Collins, archbishop of Toronto
  • Dominik Duka OP, archbishop of Prague
  • Willem Jacobus Eijk, archbishop of Utrecht
  • Giuseppe Betori, archbishop of Florence
  • Timothy Michael Dolan, archbishop of New York
  • Rainer Maria Woelki, archbishop of Berlin
  • John Tong Hon, bishop of Hong Kong
Non electors:
  • Lucien Muresan, major-archbishop of the Romanians
  • Mgr Julien Ries
  • Fr Prosper Grech OSA
  • Fr Karl Josef Becker, SJ
The same thing happened this time as last time, namely that the order of creation on the biglietto was not in order. Strictly speaking Braz de Aviz should come second on the list, similarly O’Brien should come third.
Obviously a huge number did not make the list, Vincent Nichols, John Dew, Braulio Rodriguez Plaza, and Peter Takeo Okada to name but a few. No new residential cardinals-designate were announced from either Latin America or Africa despite a plethora of candidates.
Not only that Reinhard Cardinal Marx’s “reign” as the youngest member of the College will end on Consistory day when Rainer Maria Woelki of Berlin becomes the youngest member of the College having just been installed in Berlin in July last year at the tender age of 55.
What is also obvious is the domination of curialists on the list to the detriment of residential bishops.

Consistory 2012:possible names


As the announcement for the fourth consistory of Pope Benedict’s reign draws near. Tomorrow at the end of the Ephpiany Mass Benedict is expected to announce 15 names that would be electors. If this occurs Benedict would fill all of the cardinals that aged out in 2011 and up to Henri Cardinal Schwery, who loses his rights in June.

Benedict could, as has been suggested, go beyond this number and fill the 24 slots that would become vacant by the end of this year and have a slightly larger College for a short period of time. It now seems unclear that Benedict will do. While it is impossible to say both how many and who will be included for definite, below is a list of some of the prospective names who are thought to recieve a red hat next month:

  • Fernando Filoni, prefect of the Congregation for the Evangelisation of Peoples
  • João Braz de Aviz, prefect of the Congregation for the Institutes of Consecrated Life and the Societies of Apostolic Life  
  • Edwin Frederick O’Brien, pro-grand master of the Equestrian Order of the Holy Sepulchre of Jerusalem
  • Francesco Coccopalmerio, president of the Pontifical Council for Legislative Texts 
  • Manuel Monteiro de Castro, major penitentiary of the Apostolic Penitentiary 
  • Domenico Calcagno, president of the Administration of the Patrimony of the Apostolic See
  • Giuseppe Versaldi, president of the Prefecture of the Economic Affairs of the Holy See
  • Giuseppe Bertello, president of the Pontifical Commission for the State of Vatican City & president of the Governatorate of the Vatican City State
  • Santos Abril y Castelló, archpriest of the Basilica of Santa Maria Maggiore  
  • Bechara Boutros Rai, patriarch of Antioch of the Maronites
  • Mar George Alencherry, major archbishop of Ernakulam-Angamaly
  • Giuseppe Betori, archbishop of Florence
  • Timothy Dolan, archbishop of New York
  • Rainer Maria Woelki, archbishop of Berlin
  • Thomas Christopher Collins, archbishop of Toronto
  • Dominik Duka, O.P, archbishop of Prague
  • Willem Jacobus Eijk, archbishop of Utrecht
  • John Tong Hon, bishop of Hong Kong

Again this is not the exact list as there are no Africans and no Brazilians or indeed South Americans generally on this list.  All will become clear soon enough.

Romney wins, just


After Romney’s narrow victory, followed by Santorum and then Paul and as the campaign trucks move quickly to New Hampshire questions aboud.

After Romney won Iowa, just barely. The strangeness of the result is obvious. A multimillionaire, one term governor of one of the most liberal states in the Union somehow managed to win over a deeply conservative, rural and religious state. How did he win? Mostly through a massive advertising blitz, poor comptition and the fact that many who would have voted for Perry or Bachmann swung to Santorum at the last minute.

What is certain is that the “unbeatable” Perry is finished. Those who predicted that he would blitz the nomination process and crush President Obama in November have been proved drastically wrong. It is clear now that the campagins of Bachmann and Perry are gone finished. Perry had after a great start tried both desperately and pathetically to appeal to a base that abandonded him. Even the much vaunted Texas miracle was categorically obliterated.  As a result of Iowa his campaign has been “suspended” and will formally fold in the coming weeks. The news article notes that in a speech he “stopped short of a final declaration, it was clear in his tone that Perry was eyeing an end to his campaign”. It would seem that “with most of the votes counted Perry appeared headed to a fifth-place finish, with just over 10% of the vote”. Bachmann, despite what she said to the contrary predictably folded a day after the close of the caucuses.

The campaign of Newt Gingrich is also on the rocks with his fourth place finish, with 13 percent of the votes. It is doubtful that he can go on for much longer. It will be a feat if his campaign will finishes before South Carolina. The Granite State is next, and if a certain candidate doesn’t finish well he’ll be joining the Perry’s and Bachmann’s.

New major penitentiary


For the second time in his reign Pope Benedict named a new major penitentiary. Cardinal Baldelli was retired, having reached the age limit in 2010. He was replaced by Archbishop Manuel Monteiro de Castro who had been serving as secretary of the Congregation for Bishops since July 2009. 

It is almost certain that Archbishop Monteiro de Castro will be included in the list for the consistory this year.



As has been written here before, the Chinese economy is based on a huge property and minerals bubble. This bubble, like all bubbles will pop, eventually.

In an article in Foreign Affairs, Patrick Chovanec argues notes that “analysts have warned of a looming real estate bubble in China, but the predicted downturn, the bursting of that bubble, never occurred — that is, until now”.

He mentions how “Shanghai property developers started slashing prices on their latest luxury condos by up to one-third. Crowds of owners who had recently bought apartments at full price converged on sales offices throughout the city, demanding refunds. Some angry investors went on a rampage, breaking windows and smashing showrooms. ”

He notes that “According to the property agency Homelink, new home prices in Beijing dropped 35 percent in November alone. And the free fall may continue for some time. Centaline, another leading property agency, estimates that developers have built up 22 months’ worth of unsold inventory in Beijing and 21 months’ worth in Shanghai”.

He notes that “the lack of escape routes. If Chinese investors panic and rush for the exits, they will discover that in a market awash with developer discounts, buyers are very hard to find. The next three months will be a watershed moment for a Chinese investor class that has been flush with cash for years but lacking a place to put it”.

He adds that “Instead of developing a more balanced, consumer-based economy, an entire regime of Beijing technocrats — drunk on investment-led growth — let the real estate market run red hot for too long and, when forced to act, lacked the credibility to cool the sector down”. Of course a similar thing happened in Ireland except in that case an incompetent and moronic government.

Whatever blip Ireland is to the world economy, China is bigger. Tellingly he notes that ” steel production — driven in large part by construction — is down 15 percent from June”.  He augments this by arguing that ” Chinese radio reports that half of all real estate agents in the southern city of Shenzhen have closed up shop. According to Centaline, more than 100 local government land auctions failed last month, and land sale revenues in Beijing are down 15 percent this year. Without them, local governments have no way to repay the heavy loans they have taken out to fund ambitious infrastructure projects, or the additional loans they will need to keep driving GDP growth next year”.

He notes that a Chinese collapse could have devastating effects on the so called BRICS, that were long heralded to balance against America and bring world peace. He says that ” The impact of a housing downturn would have a significant impact globally. International suppliers who have been fueling China’s construction boom — iron-ore miners in Australia and Brazil, copper miners in Chile, lumber mills in Canada and Russia, and multinational equipment makers such as Caterpillar and Komatsu — could be hard hit”.

The scale of such an impact would be beyond that of the US housing bubble with “Residential real estate construction now accounts for nearly ten percent of the country’s total GDP — four percentage points higher than it did at the peak of the U.S. housing bubble in 2005”.

Even worse the Chines authorities seem to have learnt nothing from the economic collapse in “the West”. He mentions that “To maintain GDP growth of nearly ten percent during a massive downturn in global demand, China’s leaders engineered a lending boom that expanded the country’s money supply by roughly two-thirds”. Of course, this was done to keep the Communist Party in power and for little other reason. However, the irony is that instead of keeping them in power it may only hasten a Chinese collapse.

Finally, “Real estate investment has continued growing at nearly 30 percent annually. But inflation began to rise from 1.5 percent in January 2010 to a peak of 6.5 percent in July 2011, and authorities began to sweat. They broadened their cooling efforts. The central bank tightened credit expansion, and China’s economy began to slow. As 2011 progressed, developers scrambled for new lines of financing to keep their overstocked inventories”. With sales collapsing and buyers disappearing a sellers market has turned, very suddenly into a buyers market.

Does a collapsing housing market mean economic collapse and revolution? No, but in a country with no mechanism for venting public anger, a subservient media and a leadership in transition, all mean that in an effort to distract the public from the mess their officials made an increasing belligerence could be used to unite the people into attacking Taiwan, with the predicted American reaction.

Pay up


As resources are becoming more and more scare societies need to start limiting their use. There is no better, or quicker, way than to impose a tax to change the behaviour of people.

Charles Kenny in an article about water discusses this. He notes that “Farmers in California alone received about$236 million per year in effective subsidies from access to cheap water in the 1990s, for example. But California is far from the worst example of subsidizing unsustainable water use worldwide”.

Crucially he says, “unless we start charging consumers what it costs to deliver piped water, many parts of the planet are simply going to run out”. The water shortage is already obvious in the Mid East and North Africa and is only going to get worse. He mentions that “One-third of the world’s population already faces water shortages. A recent McKinsey reportestimates that based on current trends, by 2030, a third of the world will live in areas where the gap between water needs and accessible, reliable supply is greater than 50 percent”.

To only add to this urgency, he goes on to say that “Agriculture is the big problem — irrigation of cropland is responsible for 71 percent of freshwater needs worldwide, and accounts for over 93 percent of the freshwater we take out of rivers, lakes, and the ground and cannot then clean and re-use, according to the World Bank. By 2030, without efficiency improvements, global water requirements will climb from 4,500 cubic kilometers (about the volume of Lake Michigan) to 6,900 cubic kilometers each year”.

He cites the example of Saudi Arabia, and says that “Rather than farms forming circles of green in the middle of the Saudi desert (this in a country which spends billions of dollars on desalinizing sea water), Saudi Arabia should just import more food from places with more H2O.”

He concludes arguing that “Properly pricing water is a multiple win: It will reduce the impact of climate change, ensure future generations have access to water for drinking and food, and improve the quality and reach of piped supplies, saving money and improving health for billions worldwide”. Those who moan about the incursion of new taxes and “big government” would do well to think that without water no one, let alone a government can survive.

Water charging is not only a priority for national security but part of the common good, both within the nation, and globally. To say otherwise is dangerous, short sighted and individualistic.

Why did this happen?


After all that has happen it is worthwhile recounting how all of this began.

An article in the Economist gives a good idea how. It notes that “Ireland and Spain ran budget surpluses. Both meticulously kept within the limits for deficits and debts set down by the stability and growth pact—unlike Germany, which flouted the rules for four years from 2003 (and avoided punishment)”.

He adds that “Debt in these countries has become a burden not because of government profligacy but because each enjoyed a decade of low interest rates and was then hit by the financial crisis. Easy credit fuelled debt in households and the financial sector. The European Central Bank oversaw a binge of cross-border lending”. While this is of course undeniable the incompetence of the Irish government, whatever about the Spanish, led to a huge property bubble that was dramatically worsened by the ECB and the low interest rates it offered.

This in turn was made worse by the fact that “Germany then signalled that defaults could happen and that investors would have to bear a share of the losses—a reasonable demand, but a hard one to introduce in the middle of a crisis. Some investors asked to be rewarded for the extra risk and others, unwilling to start paying for credit research, just walked away. This set off a spiral of falling bond prices, weakening banks and slowing growth”, crucially he adds that “low interest rates fuelled domestic spending and spurred inflation in wages and goods, which in turn made their exports more expensive and left imports relatively cheaper. But it was also because Germany was recycling the surpluses produced by its export machine, financing their consumption”.

He rightly points out that “even when the crisis has abated, restoring Europe to health will take many years. That is because the troubled countries need to control their government deficits and to re-establish sound current accounts by improving their competitiveness. Germans feel that the responsibility for this lengthy adjustment lies exclusively with borrowers, which must urgently restore budget discipline”.

Yet the whole crisis has been made irreparably worse due to the inability of the ECB to have full control. The reason for this is obvious.

History made


Personal Ordinariate of the Chair of St Peter established covering the entire United States.