Wikileaks: Misanthropy and the Spectre of Scrutiny

Amid the bluster surrounding the public release of 278 of 251,287 secret and confidential USG diplomatic cables by Wikileaks as of Monday November 29th; more telling as to the behaviour and thinking of governments and vested interests is the current reaction in the world media and of public officials, than any information so far to be gleaned from these documents.  This author has read the majority of the 278 published cables, and perused the remainder, the greater share originating from embassies in Europe, the middle-east and central Asia, where the US armed forces are most active, and a smattering of cables from east-Asia, Africa and the Americas rounding out the balance.  Read in volume, they provide a fascinating glimpse as to the psychology and priorities of USG foreign policy.

The characterization by the Pentagon of Wikileaks being “reckless” in their release of the documents came in fact ahead of their release, as were Sunday’s headlines quoting the White House statement that their publication is “reckless and dangerous.”  If the documents so far released are dangerous at all, it is mostly to the continued perception by the American public that their government stands above other nations on a moral high-ground, and that USG foreign policies are in any tangible way amenable to and affected by democratic processes at home.  Wikileaks has in fact respected the danger that confidential informants and private citizens inside Iran, Afghanistan and Korea face by censoring their names, though the names of foreign diplomats, statesmen and US officials are rarely spared, as they are ostensibly publicly accountable.  Such statements from sources protected by Wikileaks’s self censorship are in any case usually the least revealing as to actual policy, and are interesting only in their insight as to what foreign insiders and parties want the USG to do or think.  

The statement by White House press secretary Robert Gibbs which has formed the leading paragraph in so many news outlet’s headlining stories: "To be clear -- such disclosures put at risk our diplomats, intelligence professionals, and people around the world who come to the United States for assistance in promoting democracy and open government," is a falsehood, as the cables themselves demonstrate that the USG, with abandon, continues to support on a quid pro quo basis innumerable corrupt dictatorial regimes such as in Bahrain, Qatar, Oman, the UAE, Saudi Arabia, Kuwait, Azerbaijan, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan and Afghanistan.  The notion that anyone anywhere is soliciting the USG in the aid of “promoting democracy and open government” is absurd in the light of these cables, which instead demonstrate foreign governments soliciting the USG for money, weapons and military action against their neighbours, or in the cases of Syria, Azerbaijan and Turkey, that the USG not continue to provoke the Iranian regime and desist from sponsoring terrorism, subterfuge and the foment of dissent within Iran’s borders, which they believe strengthens the Islamic leadership by providing it pretext for the further curtailing domestic freedoms of movement and expression, and which convinces the Iranian leadership that an attack by American forces is imminent and forestalled only by its current difficulties in neighbouring Afghanistan and Iraq.  The cables reveal that many representatives of middle-eastern nations believe that Iran’s operations and attempts to destabilise Iraq and Afghanistan stem from the Iranian government’s conviction that allowing a military success in Iraq or Afghanistan would precipitate a rather immediate invasion of Iran itself by Western forces. 

French President Nicholas Sarkozy has called Wikileaks a “Threat to democracy,” which seems understandable only if one extrapolates that the release of the cables will motivate people such as him to dispense with it.  For the moment, exactly how the exposure of secretive government workings to the public threatens that public’s right to rule itself (democracy), if it does not in fact do the opposite, remains unexplained.  Canada’s foreign affairs minister, Lawrence Cannon, called the leaks “deplorable” and reportedly continued that ‘leaks like this one do not serve anybody's national interests and may threaten national security.’

Hilary Clinton’s statement that the leaks are “An attack on the international community, the alliances and partnerships, the conversations and negotiations that safeguard global security and advance economic prosperity," seems ironic in light of the continual proliferation of weapons and conflict on every continent and the ongoing global economic crisis; and thereby causing one to wonder about exactly whose security and economic prosperity she speaks, and to whom she is referring when she invokes the name “international community,” a rather ambiguous and ubiquitous term of late.   There are also the calls from News outlets such as Fox News and NY Rep. Congressman Peter King that Wikileaks be deemed a terrorist organisation, and that its assets be seized and donors be considered sponsors of terrorism, which is an obvious absurdity, inconsistent even with the USG’s loose definition of terrorism, and would define innumerable US citizens as terrorists.

One of the few reasonable reactions by any government to the scandal is from David Cameron’s Conservative UK government, who as very recent newcomers to power are perhaps not (yet?) a part of Secretary Clinton’s ‘international community’.  A spokesman for the UK government discussed the matter with reporters, stopping short of branding Wikileaks as a criminal or terrorist organisation, and relating simply that the released cables and a lack of confidentiality on matters “is inhibiting the conduct of governments.”  While an honest observation, the merit of the conduct of any government and which matters merit strict confidentiality is itself a matter which clearly requires debate.

Overall, the picture is one of public leaders worldwide closing ranks in face of what they view as a clear attack on their authority and mandate to continue the types of behaviours described in the cables, which it is.  They deplore the leaks as a threat to “national” security, mistaking themselves as the nation and not merely its representatives, and are weary of the possibility that an informed public may better understand their government’s duplicity and actions against the public welfare in favour of privately profitable wars and support for autocratic/oligarchic regimes abroad, causes which almost no citizens of western nations find virtue in.  A massive PR campaign is being mobilised in the mainstream media, beginning with a repetitious doublethink mantra which in its essence suggests to the public mind that to hold its leaders to task on matters most important is antithetical to their freedoms and democratic rule.  

Only 278 of the 251,287 cables obtained by Wikileaks have thus far been released.  The relative voracity of global leadership’s reaction to the publication of these cables, which have provided very little extra insight beyond information which is already publicly available, if not conveniently located in a single place from a single source, is perhaps indicative that the ruling echelon is convinced the most damning evidence of their self-interest and misappropriation of public trust is yet to come.

East eats West?

This week's Economist magazine's headlining articles and cover-page, 'Buying up the world- The coming wave of Chinese takeovers' highlight the process and nature of foreign takeovers by Chinese firms.  The piece offers surprisingly little discussion or speculation as to China's deeper motivations and timing in its recent takeover bids for large multinational companies, or as to the reasoning of other governments and critics who would resist the emerging trend before concluding that rejecting China's advances would "be a disservice to future generations." 

There is something absurd about the reasoning in these articles, which do point out the "opaque and arbitrary" nature of authority within large Chinese companies, and which do briefly note that takeover bids are most often made on companies working in strategic resource sectors; but which base their conclusions on speculation that Chinese firms will "bring new energy and capital to flagging companies around the world," that "Chinese companies will have to adapt" and that its investments in the global economy will help to make China's interests "increasingly aligned with the rest of the world's."  That the Economist can readily admit to not understanding the motivations and interests of "opaque" Chinese government and authority but then predict its evolution is a failure of logic and a cause for concern should policy makers around the world find agreement with this thesis.

A steady accumulation of bonds and hard currency in all denominations, especially of its largest rivals in the US and Euro-zone, coupled with a well timed and targeted increase in the rate of takeover of global means of production and access to raw materials represents an obvious, well planned, forward looking and ongoing effort to supplant Western hegemony in favor of an ill-defined future global order over which a preeminent China presides.

This is the Chinese mission according to Chinese leaders and state-owned news outlets, as discussed in a 2008 CSIS report which states among other things: "The PRC-owned Hong Kong daily Wen Wei Po opined that the elevation of the “harmonious world” theory in the congress work report indicates that Hu (Jintao) is “assuming an even more important role in international affairs that is, as ‘formulator, participant and defender of world order,’ in order push the entire world toward harmony.”  Other such thinking among leading Chinese thinkers is evident in Zhao Tingyang’s The Tianxia System: The Philosophy for the World Institution (2005) and Liu Mingfu’s book The China Dream: Great Power Thinking and Strategic Positioning of China in the Post-American Age (2010).  All of these sources are united in their assumption that a Chinese eclipse of Western economic power is inevitable, though they may differ on their view of that post-ecliptic world.  Without knowing the truth about China's aims, the West should be wary of allowing a monolithic foreign government access to its strategic resources and internal economies.  

The Economist article gives further evidence that China's entry into global capitalism is not motivated by the usual basic greed and desires of Western investors when it reports that "Natural-resources firms can become captive suppliers to China, rather than selling on the open market... Westerners realised their new objective was to maximise production, not profits" and "Chinese firms... risk political fallout if they fail.  Their sense of mission makes them 'transparent', says one European executive."  That China's is a long term view is undeniable in the context that they would forgo immediate profit by selling to the highest bid on the market in favor of repatriating newly exploited resources. 

Western economic domination of the world reached its zenith in the 20th century, when according to this weeks Economist articles "Britain owned 45% of the world's FDI (Foreign Direct Investment) in 1914; America's share peaked at 50% in 1967."  It is undeniable that, in competition and in concert, Western powers used their public institutions and militaries to further their economic-imperial goals, making the 20th century the bloodiest and most warlike known to history.  Entire continents were subjugated and looted in the pursuit of profit and 'civilisation',- including China, and large parts of Central and South America, Asia and Africa remain captive to the national and corporate institutions which have inherited that legacy.  While the West so often points out China's human rights abuses and excesses of power, the Chinese are always quick to point out the hypocrisy of such criticisms, as it did in its recent report on the US's human rights record published in the China-daily; a startling and credible list of very recent abuses.  If there are any worries among people in the West as to the waning of Western power in favor of Chinese influence, it should perhaps not be in lament of a lost golden age of economic and military triumph, but in fear that the emerging power in China, accountable to no one and secretive in their aims and motivations, will as it hijacks a global economic system which promotes greed and consolidation of power, look upon and treat the West in the same manner that the West has China and the rest of the world.  


Read the Economist reports and other related articles here:

The Economist:
http://www.economist.com/node/17463473
http://www.economist.com/node/17460954

Regarding Chinese policy and statements about US human rights abuses:
http://csis.org/files/media/csis/pubs/080129_murphydecoding.pdf
http://www.chinadaily.com.cn/china/2010-03/12/content_9582218.htm

Regarding takeovers:
http://news.bbc.co.uk/2/hi/7967604.stm
http://www.cbc.ca/money/story/2010/11/03/potash-ottawa-review.html 
http://www.thetrumpet.com/?q=6336.4792.0.0

Seoul G20: Perplexing Conclusion, Clear Result

The conclusion of the most recent G20 summit in Seoul last Friday, hailed as a success for political reasons by attending politicians, was punctuated with the following agreed upon statement: "Uneven growth and widening imbalances are fueling the temptation to diverge from global solutions into uncoordinated action... uncoordinated policy actions will only lead to worse outcomes for all."  In other words, 'while we agree in principal that it is best to agree, we disagree.'  I can only imagine that, if only the leaders of nations in times past, who with the specter of wars and economic strife looming before them, had been privy to such wisdom, things would have turned out exactly the same...

In spite of ambiguous political statements made in Seoul last week, markets have been remarkably unified in their response.  Since markets closed on the Wednesday (Nov. 10) before the summit began in earnest, every single major US dollar denominated market has fallen.  Several of these markets had been gaining steadily leading up to the G20 summit, but all have dipped in response to the G20's conclusion.  Here is a quick statistical rundown of some of those losses up to the Wednesday Nov. 17 close:

Dow Jones   -350 points (-3.1%);
S&P 500   -40 points (-3.2%);
NYSE Comp.   -259 points (-3.3%)
Crude $/Brl   -6.77 (-7.7%)
Copper $/lb   -0.24 (-6.0%)
Gold $/oz   -62 (-4.4%)
Platinum $/oz   -97 (-5.6%)


Thus, money (or value) is coming out of stock and commodity markets across the board.  Furthermore, Treasuries, both 30yr and 5yr notes, fell 1.5% and 0.9% respectively, during the same period; markets which often gain when stock markets are in turmoil.  Taken in the context of a rise of 1.44 points (+1.9%) during the same period, in the US Dollar Index (USDX) which is a guage of the value of the dollar relative to other world currencies, we can reasonably assume that losses in the value of stocks and commodities are partly, if not mainly, a result of a strengthening US dollar.  This represents deflation.  What is the cause of this deflationary pressure?  It could be that investors have responded to the G20's failure to resolve its differences over state manipulations in currency markets by pulling out of markets and deleveraging, or paying off debts.  The US dollar being a debt-based currency, any net reduction in USD debts effectively reduces the amount of USD in the system, producing deflation. 

Perhaps the dirtiest word in modern economics, many analysts of late, even Fed chief Bernanke, have begun to broach the issue of deflation.  That it is impossible in America has been the misplaced hope of so many bank and fund chiefs.  The Japanese banking crisis of the 1990s has resulted in persistent deflation for over a decade.  The more recent global recession, particularly the crash in the summer of 2008, was a deflationary crash, which saw all markets lose value at break-neck speed after being inflated by Bush's bank bailouts and stimulus spending.  That extra money was un-created nearly as quickly as it was created when it was used by large institutions to pay off debts and deleverage.  So what to expect?  With interest rates already at historical lows and failing to stimulate more borrowing, look for the Federal Reserve to enact more quantitative easing, the modern equivalent of printing money.  This will complete another round in the cycle, and further consternate the US's G20 partners, especially China, who will see it as another salvo in the much denied currency war.  However, if they fail to do so, fear of another credit crunch may trigger another US dollar exodus from markets everywhere, and the global 'double dip' recession will be upon us.  It seems that there is no positive alternative, and no way out of the rabbit hole the US has dug for itself and the rest of us.

Perhaps the only thing keeping the floundering juggernaut of global finance afloat is the placebo effect of the actions of its masters who maintain a public image of confidence and certainty about their actions.  If at any time any major player all at once goes bust or pulls their money off the table, everyone else may just decide to cash in.  It seems since the summit, a few players at least, have decided to pocket at least a few of their chips, just in case.

Japanese Population Crash will be Political, not Economic Failure

There has been much discussion in the developed world over the last decades among economists and policy makers concerning their ageing populations.  Recent discussions on CBC Radio's 'The Current', as well as treatment of the issue by other news outlets as it concerns Japan are a striking demonstration of the fear of the unknown future.  Analysts are watching with a keen eye, as Japan may provide a litmus test as to how well modern democracies and economies are able to weather the demands of an ageing and shrinking population.

Compared to Western nations, Japan's immigration policy is non-existent, and Japan features near the bottom of the list in 'Total Fertility Rate' or TFR, regardless of whose doing the math.  Since 2005, deaths outnumber births in Japan.  Projections along these rates vary, some stating that by 2055 the population will have shrunk by 30% which represents more than 30 million people.  While the question of what Japanese society will look like in two or three generations as its population shrinks is fascinating, the fears stemming from this issue pertain mostly to the ageing of Japan's shrinking population, which is expected to continue. 

The implications of an ageing population are well understood:  Fewer working people paying less taxes to support more and more pensions and social services will certainly be the trigger for future attempts to reform pension, health and welfare systems, etc., which are already the point of heated debate in developed nations.  Witness recent rioting in France over pension reforms and the raising of the retirement age from 60 to 62, or G.W. Bush's failure to enact pension reforms in 2005 amid resistance from organised labour and the AARP.  Any shift in the status quo represents a shift in wealth, privilege, and the potential for both, and will be opposed doggedly by those groups seeing themselves as the losers in the trade.  The real question is, how can a democratic nation cope with growing divisions along the lines of age.  One may wryly consider that rollbacks in pensions and social programs will occur in democracies as soon as enough baby-boomers are dead or too senile to vote in their own interests.

Japan's is a special case however, and Western nations will take their cues from how Japan deals with its population problem at great risk.  Japan's is an export-based economy, making it dependent on foreign purchasing of their goods.  As their work force shrinks, so will drastically the total production and total income of their export sector, which props up household incomes, the tax base and social services, as well as the stock market and thus the private investments of its citizens.  Service economies, diversified and net importers of finished goods, such as the US, Canada and Europe, will not suffer in the same way.  These Western economies may suffer a lack of spending and conspicuous consumption in the retail sector, but they are not dependent on net inflows of currency in the same way that Japan is.

There is, however, reason to hope.  To allow the population to shrink as it ages may not be as bad as some predict.  GDP will certainly fall allong with a marked population decline, but it is less clear that per-capita-GDP would also fall.  The same can be said for almost any statistic, be it productivity v. productivity-per-capita, etc.  While Western nations invite immigration to counter low birth rates, their economies must grow to maintain, let alone improve, average living standards as population rises.  Recent economic hardships demonstrate that this is not always possible.  In a vacuum, if Japan's population were to shrink by a fifth, then the remaining four fifths would be left to split the fifth of the pie left behind, enjoying the resources which previously accommodated everyone.  With proper stewardship of Japan's available resources and economy, something along those lines may be possible.  While there may be less money around to buy things, there will be less demand on fixed assets such as land and real-estate, as well as on other domestic markets.  Incomes may increase as Japanese firms compete in a shrinking market of Japanese educated workers, technicians and specialists. 

To what degree will future Japanese generations be willing to honor the agreements and obligations of past governments?  Again, the question is, will democracy in such hugely populated jurisdictions allow for enlightened and sustainable policy?  The problem may not at all be the shrinking or ageing of a population, but the political structure's ability to handle the changing demography.  Japanese politicians are avoiding the issue for all the wrong reasons.  With so many vested interests, with so many people with so much to lose, a vocal minority may win the day, as they often do, to the detriment of sustainability, good governance, and people at large.

The truth is that there is no example in history of how a modern economy or modern democracy will react to a shrinking population.  There are sure to be "shrinking" pains, as pains, strife and unrest happen during any major demographic shift.  In the most pessimistic of predictions for Japan however, there is a lack of creative and inspired thinking. 

Read/ listen to stories about this issue:

http://www.cbc.ca/thecurrent/episode/2010/11/16/nov-1610---pt-2-japans-population-crash/

http://in.reuters.com/article/idINIndia-49967220100708

http://www.businessweek.com/lifestyle/content/aug2010/bw20100812_825983.htm

Famine Present, Brazilian Future?

A recent Economist article is shocking, if not blindly optimistic in its revelations about the world's prospective ability to feed itself.

The piece, published in the Aug. 28th edition, attempts to present Brazil's agricultural reforms of the past 40 years as a road map to insuring against future famines.  However misguided in its conclusions, the article is honest in its presentation of the problem of world hunger, acknowledging that "by 2050 world grain output will have to rise by half and meat production must double to meet demand."  One may wonder if these increases would only serve to maintain the current balance of global food supply and demand, which provides enough food at low enough prices to properly feed only 5 out of 6 people on the planet (WHO statistic), leaving more than 1.1 billion people in a constant state of mortally dangerous hunger and malnutrition.  The author also admits that these increases must come in spite of "flattening" growth in global grain-yields, a lack of "extra farmland" and "renewable water running short.".

The article opens with the suggestion that the current Malthusian pessimism, as far as agriculture is concerned, is trivial enough to be fit for making puns, and that the world has been subject to such doomsaying before, such as in the 1968 Best-seller The Population Bomb by Paul Erlich, which predicted that in the "1970's and 1980's hundreds of millions of people will starve to death."  Nevermind the fact that Erlich was essentially correct in his prediction, and nevermind that such a state of affairs continues to be true, with current WHO estimates attributing 36 million deaths per year to hunger and malnutrition.

Attempting to offer constructive and positive suggestions as to the problem's solution, the Economist lays out the basis for what it terms "Brazil's agricultural miracle."  Brazilian farms are "many times the size even of American farms," America being the home of large-scale industrial farming; that "Farmers... sell crops on a scale that makes sense only if there are world markets for them... they depend critically on new technology," and that "Brazil's progress has been underpinned by the state agricultural-research company and pushed forward by GM crops."  The article minimizes damage to the Amazon rainforest as a part of the "miracle" to the point of incredulity, saying that Brazil is an example of how to "save the world's imperilled ecosystems" by growing "so much food elsewhere that nobody would need to touch the natural wonders."  One is left to speculate on what type of statistics underpin this fantastic argument. 


Ambiguation and pun making aside, the article makes no account for certain troubling facts.  According to the WHO, 11 million Brazilians remain "undernourished," even as Brazil is a net food exporter, and while this number is on the decline, one cannot separate the economic, agricultural and land reforms of the past 40 years in Brazil from the military dictatorship which initiated them in the late 1960s and early 1970s.  It was an iron fist that swept aside property rights and civil liberties, and held down working-class wages in the name of agro-industrial progress and upper-class economic growth.  Former General/President Emilio Medici famously gave an honest assessment of his government's policies: "A economia vai bem, mas o povo vai mal"- "The economy does well, but the people do poorly." 

If the Economist is correct in its assertion that food production will need to increase dramatically in the next 40 years to meet demand, it remains unclear how other countries could manage to duplicate the 'milagre Brasileiro,' which would require them to conjure new farmlands and sources of fresh water, of which Brazil had untapped abundances of; to make multiple technological breakthroughs allowing more and more efficient use of those ever more scarce lands and resources and to abandon democracy, property rights and free markets in favor of central planning and speedy consolidation. To replicate this "miracle" outside Brazil seems less an option than a strange dystopic pipe-dream of plutocratic control and alchemy, perhaps just as nightmarish as any Malthusian prediction.


Read the Economist article at http://www.economist.com/node/16889019