Wednesday Night #1478

As we approach the second decade of the twenty-first century, the changes, or reluctance to change, on the part of governments and business, becomes more evident, not always to the benefit of the majority of citizens.  A cynic’s point of view might be that we have been invaded by local native Martians.

The Russian spies
Espionage may very well be the second oldest profession, incessantly practiced by natives of all countries.  If  so, why  has this story become front page news in the United States, especially now during the visit of the President of the country on  allegedly bankrolling them?  It would appear that investigative reporting has largely given way to news handouts; thus the cynical might point to the simultaneous shift of focus away from the Gulf of Mexico oil spill in the anticipation of the inevitable hurricane season, to that sinister spy plot.

The Gulf of Mexico oil spill 
B.P., the third largest corporation in the world may very well emerge much smaller than it was prior to the current emergency, but the drama should be viewed in context.  During World War II (1942-43), German submarines sank some 50 (estimates vary) vessels including a high proportion of oil tankers in the Gulf of Mexico. Even if these were not super tankers, the spillage from the bunkers of other ships and oil from tankers would have been important. There was no clean-up and the Earth survived thanks to oil-hungry bacteria, but also to the fact that much of the activity took place during hot weather when the oil would have vaporized. Nonetheless, previous events indicate that Earth has recuperative powers  the ability to heal over time and, as in the case of the Ixtoc spill, could surprise us.
The problem in the Gulf, however, is somewhat different.  The gases are being burned off and it is the heavy oils that are contaminating the water and beaches.  These will be followed by light oils, potentially much more disastrous.  If the relief well can be completed prior to their emission, the healing process will be somewhat less long.

Nuclear energy
If we were to focus on energy rather than petroleum, it would become evident that the World energy situation is critical, and that the only system with the capacity to deliver a suitable replacement in the required quantity is nuclear, with fossil fuels reserved for aviation, road and off- road transport.
Douglas Lightfoot announced that The Lightfoot Institute has recently received status as a Registered Charity in Canada and now offers all a valuable opportunity to join in promoting a reliable energy supply, to keep the lights on, the machines running and a sustainable future for us all. Everyone is encouraged to join The Institute by making a contribution. He adds:  “We need your support to:
–Let people know there is a positive and workable solution to guarantee our energy supply
–Present this message to a wider audience
–Inform the grass roots so they can spread the message far and wide” (more info on the Lightfoot Institute will follow)

The world economy
The printing of money (in the form of credits) following the recent meltdown stimulated the economy and created jobs.  This is no longer the case.  The U.S. government has more recently created billions of dollars without a positive response on the part of the economy.  Indeed, the creation of money appears to have lost its power to create jobs.  Evidence of that fact can be found in the continuing increase in the price of gold.  The U.K. pound preceded the U.S. dollar as the world’s reserve currency and with the exception of the rising price of gold, the U.S dollar retains that position, but for how long?  G.D.P.  growth is dependent on a good banking system, rarely found in many countries today.  In fact, the world is in no position to face another crisis.  The U.S. dollar is strong only by default, a precarious position. The U.N. Department of Economic and Social affairs ponders the replacement of the U.S. dollar as a reserve currency with a special basket of currencies.  However rational, indeed necessary, this appears, it would be very unlikely that the U.S. would voluntarily give up the privilege of printing currency that continues to be accepted globally.
More pessimistic Wednesday Nighters predict a world crisis in the next ten years or more, the first phase consisting of a financial crisis, followed by a sovereign debt crisis leading to the necessity to raise taxes and reduced benefits, unemployment and/or monetary destabilization, social unrest, the only solution seen to be a single world currency.

Multinationals and the world economy
Early and mid-twentieth century economics professors taught that the quality of the service or product was the objective of a business and the bottom line was the measure of success in attaining that objective.  Whether or not that reflected the nature of business at that time, small companies have largely disappeared, corporations appear to have changed and no longer appear to have either conscience or loyalty to any nation or to anything but the acquisition of further wealth as measured by the bottom line. Multinationals are so powerful and so mobile, that – with the exception of China which is said to direct them –  nations appear unable (or unwilling) to enforce application of national rules.  International trade makes for competition and mobility.  Both Germany and France have succeeded in retaining their multinationals, but not the U.S., which appears unwilling to legislate the functioning of large corporations.  It is a paradox that the electorate asks governments to intervene against  multinationals while those governments do everything to attract them.  If the scenario of government control over multinationals were to be realized, it would be the least affluent countries that would be most adversely affected.

The market
There is a much uncertainty in the market at this point.  It may be important to examine the second quarter results and hear the projections of the CEOs.  Emerging markets are stimulating domestic consumption.  They are not in debt and are progressing well.  China’s prime focus is on science, technology, engineering materials.  The Canadian, Australian and Brazilian economies will largely escape  world economic problems.  In Europe, Germany, too, appears to be in a favourable position.

Asbestos
Should Canada export asbestos? Under what circumstances? If the mines are closed down, what is the government’s obligation to the workers, their families and communities?
A group of scientists has called on the Canadian government to ban exports of asbestos. The researchers issued the call in the Environmental Health Perspectives journal in the U.S. Their article recommends that the government stop providing financial support to companies that mine and export the substance. One of the researchers is Dr. Philip Landrigan of the Mount Sinai School of Medicine in New York City, who says it has been recognized for decades that all forms of asbestos cause cancer. Dr. Landrigan adds that it is impossible to work safely with asbestos, particularly in developing countries where labour laws are weak. Canadian companies mine a form of the substance which they claim can be used safely under controlled conditions.

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It is with sadness and a sense of awe that we note the passing of Eva Prager at the age of “97 and two-thirds” – she was an extraordinary artist who led an extraordinary life. We extend our deepest sympathy to her son, Vincent.

There are certain news items that just won’t go away these days.

Our fascination with the build-up to the G8 and G20, somewhat like the dance of the mongoose and the cobra, is now refocused on the build-down, or letdown, depending on your view. Amidst the headlines and stories from major papers around the world trying to make the best of what appears to be a pretty inconclusive gathering, we wonder what the cost per minute and/or average cost per country delegation (leaving out who brought how many) works out to. Given that we are not very good at working in the requisite number of zeros for billions, we will leave the calculation to a more skilled mathematician.  With respect to the lack of outcome of the meetings, John Evdokias comments: “I don’t remember a time when any of the G-Summits produced specific and executable goals.   At best, world leaders navigated to the same page.  Krugman’s concern (The Third Depression) that G20 will be now ‘tightening’ and at the wrong moment, is valid.  However, Governments are also able to again change their course, and in very short order.”

We would like to draw your attention to two pieces. The first, published in the Tyee, is by Michael Byers of UBC, who asks  G20 Protests: Is this What Harper Wanted?
PM’s disastrous decision to hold the summit in Toronto: a cunning plan? Dr. Byers is no slouch; we recommend the article.

The second, if only for contrast, is Terence Corcoran’s bizarre tirade against global governance (which seems in his terms to embrace any form of agreement among any number of governments) and, as best we can discern, concludes with praise for the G20 because:  “The message from Toronto … is that capitalism and global governance are not synonymous. The strength of market economics rests in the constitutional sovereignty of nations, and not in the fantasies of the collective global governance movement.”

Now that General McChrystal has been fired – and is retiring from the Army –  matters are not improving noticeably. As a consequence of the unfortunate publicity surrounding his sudden departure, all eyes are turned to the war in Afghanistan and the success  – or lack thereof – of the COIN policy recommended and embraced by the General. Two recent items for your consideration:  Hamid Karzai given timetable by G8 to tackle corruption in Afghanistan — World leaders issued a stark warning yesterday to the Afghan president, Hamid Karzai, demanding detailed plans of how he will take over responsibility for the country’s security and drive out corruption within five years. Need we say that we are highly skeptical that such plans will ever be drawn up, let alone submitted? Frank Rich’s The 36 Hours That Shook Washington is more realistic and contains some excellent advice for President Obama. Reports that President Karzai met with representatives of Pakistan’s ISI and Sirajuddin Haqqani are hardly reassuring.

And, there’s the Gulf Oil Spill. It seems that the looming tropical storm will not interfere with the clean-up operations or the drilling of the relief wells, however the timely success of the latter is far from assured  Of concern too is the corollary issue that  BP Is Pursuing Alaska Drilling Some Call Risky while all other new projects in the Arctic have been halted by the moratorium on offshore drilling. BP’s project has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea. The reason: it sits on an artificial island – a 31-acre pile of gravel in about 22 feet of water – built by BP.
If that particular bit of bureaucratic reasoning is not sufficient to stoke the fires of indignation, we submit the story of the SWAT (Shallow Water Attention Terminal), the innovative 17-foot-boat, which has a collapsible canopy that sprays cooling water. SWAT has the ability to ride in waterways as shallow as 8 to 10 inches deep, which allows for easier access to oiled birds and other wildlife victims of the BP disaster.  It also has a large work table, which allows for immediate treatment of suffering animals and the boat is equipped with internet access. The developers planned to donate the first four boats to the University of Southern Mississippi’s Gulf Coast Research Laboratory, but have  been informed the boats will not be used because GCRL does not have a permit to rescue wildlife suffering in the Gulf. You can read more if you can stand it.

We look forward to hearing Peter Perkins‘ views on the U.S. Financial Regulatory Bill, with specific reference to derivatives and the “Volcker Rule”, which, according to Bloomberg May Give Goldman, Citigroup Until 2022 to Comply . The Atlantic blog offers an interesting tie-in with the G8/G20 meeting.

With the news that Greece is planning to issue T-bills in mid-July, that country is back on the WN agenda. Kimon recommends Life Amid the Ruins for a good understanding of the underlying issues in the collapse of the economy. Also, we must again give the nod to Hans Black’s suggestion that unlike Japan, Greece could always sell a few islands to solve some of its problem. According to the Guardian (Greece starts putting island land up for sale to save economy), someone was listening and taking notes.

With all of the above to absorb, we risk omitting the historic appointment of Australia’s first woman Prime Minister – what a culture shock! Julia Gillard sounds great and we wish her well, particularly in her battle with the mining interests.

What to make of the story of the Russian spies posing as Canadians? Great material for a docudrama!

Finally, we note the arrival of the Queen in Halifax – is John Curtin following her in anticipation of a sequel to After Elizabeth II? Wouldn’t he have more fun doing the docudrama on the Russian spies?

With all the doom and gloom, one of the more entertaining reports is Stratfor’s daily analysis of the World Cup events in geopolitical terms. (Sample: The first match in 2010, against Brazil, exemplified North Korea’s geopolitical strategy and tactics. Few would have guessed that North Korea was capable of competing with Brazil, the team that has won the most World Cup championships. But for decades the same combination of uncompromising loyalty to the group and the element of surprise have enabled Pyongyang to maintain power despite being surrounded by the likes of greater powers — the United States, Russia, Japan, China and South Korea.) We wish we had kept score on the reports. As Tony Deutsch often tells us, if we run into an aspiring Political Science Ph.D. student, we could suggest it as a dissertation topic.