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Is it a real crisis?

I must admit that I have seen this financial crisis unfold. I have had mixed feelings. On one hand, I have not lost any sleep over giant banks and rich financiers loosing some of their clout and some of their money. Also it is good for the poor that oil prices are falling. On the other hand. Rapidly rising interest payments, lack of credit for ordinary people and the collapse of the Icelandic economy has had me worried.

The moneycrisis. Thanks to scriptingnews for sharing under Creative commons
The moneycrisis. Thanks to scriptingnews for sharing under Creative commons

Now, it seems that the lack of credit is transforming the crisis from a finacial crisis to a real economy crisis. Solid businesses lack liquidity to keep in business, and shops lack the credit to take in new goods. Now reports are coming in that this hits food as well. The BarentsObserver.com writes:

Now the chain has ruptured with banks now longer willing to offer the credits. Subsequently, the wholesalers are no longer able to buy the foodstuff from the producers and then sell it on to the supermarkets, newspaper Komsomolskaya Pravda reports. Consequently, the shops are emptying.The situation has now made Russians line up in the shops and secure their necessary products. The result is an even more rapid decrease of good in the stores.

Russia certainly has the money to shore up its banking sector and get credit moving again. I’m less certain about Iceland, even though they are trying to loan a couple of billions from Russia. Reuters had a wire the other day stating that:

Iceland has food stocks for about 3 to 5 weeks, but needs quickly to restore a proper foreign exchange market so importers can get back to normal business and avoid shortages, importers said on Wednesday […]The problem for importers was uncertainty about whether they would get foreign exchange, which they now have to apply for under a rationing system begun by the central bank.

I don’t actually believe that we will see food riots or starving in either Iceland or Russia. Neither country i Zimbabwe. But this is an instructive lesson into how modern capitalism works. And it works through credit. Get Rich Slick puts it this way:

There WILL be plenty of food around but it would be a matter of the truck driver having the credit to buy the fuel for his truck to get the food from the farm to your grocer. It will be a matter of the grocer to have credit to pay the trucker for his services. It will be a matter of the fuel station to have the credit to buy fuel from big oil and so on…..

When access to mony stops, everything stops. Still the worlds production capacity is the same. When it comes to food, oil, steel, transport, fertilizer. Nothing has changes. This gives us one very clear signal. The market must not govern us. We must have democratic elected governments that regulates, oversees, produces and makes sure that a crisis in the market place do not ever spill over into a crisis that affect food, health or security. I believe, naively maybe, that the Nordic welfare state has come close to finding an equilibrium where entrepreneurship and safety coexists in a way that maximizes productivity, welfare and security. Recent crises in Norway stems from deregulation not overegulation. If we take Iceland as an example, the crisis stems from a total deregulation of the banking sector.

This crisis shows, yet again, that we need to govern the market, not be governed by it.

Norway must aid Iceland

Iceland has major financial problems. The currency is in free fall, and interest rates rises sharply. Iceland has already nationalised the third largest bank in the country.

This has triggered a debate in Iceland about EU membership and adoption of the euro as currency. I do not not have strong opinions about how Island should arrange themselves in relation to the EU, but I think that it’s time for that Norway do what we can to help Iceland in this situation. Norway is in a very strong financial position. We can make sure that the icelandic government and central bankhave to money and credibility to back up it’s currency and contribute to get the Icelandic economy back up.

The BBC writes today:

The country’s credit rating was slashed after the Glitnir nationalisation. The Icelandic krona, which had lost more than half its value since last summer, lost a further 14% this week.

The government is openly divided on whether to keep the currency or ditch it – and adopt the euro.

There’s a growing sense that this country, with just 300,000 people, is too small to cope. Sigurdur Kristjanson, an MP from the prime minister’s party, disagrees.

I’m no economist, but I’m sure that Norway has the ability to back up a neighbour in need. The Norwegian primeminister and minister of finance should let the Icelandic government know that we are ready to help if they need it.

It’s the least we should do.

The Icelandic economy is in uproar, picture borrowed from Wikipedia
The Icelandic economy is in uproar, picture borrowed from Wikipedia

Updated:
I found an interesting blog here

The Irish no – paid for by the United States?

Some media, including Der Spiegel and EUObserver reports that it was U.S. neokonservatives that paid for the Irish no-campaign.

Der Spiegel quoted the French Europe Minister Jean-Pierre Jouyet from a meeting in Lyon:

“Europe has powerful enemies on the other side of the Atlantic, gifted with considerable financial means.”

further

He was putting the blame for the Irish rejection of the Lisbon Treaty on some surprising shoulders: neoconservatives in the United States. “The role of the American neocons was very important in the victory of the ‘no,’” he said.

The starting point for discussion about this is that an organization with  the name Libertas spent some 1.3 million euros in the no campaign in Ireland. Twice as much as Fianna Fail used on the yes campaign. Speculation is based on the fact that the founder of Libertas also is director of Rivada Networks. This company sells trades a lot with the US millitary. Several of those who worked for Libertas was paid by Rivada. It is not public how Libertas got by their money. The Herald writes a little about the background of the founder of Libertas here. They put particular emphasis on that several former American millitary officers are on the Board of Rivada Networks. Speculations increased after some comments from John Bolton, former U.S. UN ambassador. According to Der Spiegel:

John Bolton, the former US ambassador to the United Nations, was in Dublin to deliver a speech on trans-Atlantic relations a week before the vote. He warned that the treaty could “undercut NATO,” something that would be a “huge mistake.” According to Bolton, known for being one of Washington’s most outspoken hawks, if the EU had its own military capability people will think NATO redundant and that Europeans “can take care of their own defense.”

It is not surprising that the European Parliament hungrily has embraced this matter – they seems to be far from ordinary people. Rather than discuss the reasons why people in Europe do not want an ever closer union and work to change the EU to something the people need and want, they use their time on conspiracies. My impression is that the EU parlamentarians are some of the most federal-minded people that are, and that they to a small degree understand why the EU is faced with so much opposition among people. In any case, EUObserver writes that:

The European Parliament’s delegation to the US will on its next trans-Atlantic visit ask Congress about allegations that the Irish anti-Lisbon Treaty campaign was funded out of America.

The parliament’s political group leaders – the “conference of presidents” – made the decision on Thursday (25 September) following calls for transparency by the Irish and French governments and the European Commission.

Daniel Cohn-Bendit, leader of the green group in the European Parliament expresses the rather strange reaction that many on the European left have; that the CIA is behind all that is evil in the world. The EUObserver quotes him on:

“The Irish press revealed that there possibly exists a link between the financers of the No campaign in Ireland and the Pentagon as well as the CIA … If proved true, this would clearly show that there are forces in the US willing to pay people to destabilise a strong and autonomous Europe,”

I think Cohn-Bendit and others have much more to gain from working to make the EU more democratic and less federal than to use their time on the search for U.S. supported conspiracies

The Arctic is melting – drill for oil

The Arctic is melting – drill for oil. That is the response from the European Commission at least if we are to believe the EUObserver, that writes:

Drilling for oil in the fragile northern environment must go ahead with European financial and political support for the sake of EU energy security, energy commissioner Andris Piebalgs declared on Friday (19 September) at a debate on the subject in Brussels.

“You cannot say [the Arctic] is a sanctuary,” said the commissioner “… otherwise, where will will we get our energy from?”

The lack of logic is of course amazing. We are doing badly, lets do worse. But is is a good example of how we have com in this predicament at all. To continue doing what we are doing is the most important thing. The lack of imagination is mindgobling.

So you say, is there really such a thing as global warming? I dare you to look closely at the graph below.

Less ice in the Arctic than before
Less ice in the Arctic than before, source http://nsidc.org/arcticseaicenews/

However, the EU is not the only ones that is looking north. I have written about it here, but take a look at this quote from the same EUObserver:

In August last year, a Russian submarine planted a flag on the Arctic sea floor underneath the North Pole, while on Wednesday (17 September), during a meeting of the country’s security council, President Dmitry Medvedev set in motion plans to claim part of the Arctic shelf as national territory.

The move will “turn the Arctic into Russia’s resource base of the 21st century,” he said at the meeting.

Meanwhile, Conservative Canadian Prime Minister, whose nation also has competing claims on the north, has also pledged to assert Arctic sovereignty while campaigning ahead of the country’s 14 October federal election.

Too many people sees dollars where they should see warning flags

Conflicting claims

I have earlier written about the conflicting claims in the polar basin. The University of Durham has published this very interesting map of these claims.

Claims in the Arctic
Claims in the Arctic

You can find a larger version of this map in a pdf-version with notes at http://www.dur.ac.uk/resources/ibru/arctic.pdf This map gives you a good idea of the potential conflicts in the north.

The Arctic is heating up

No, I’m not talking about climate change. Even though I obviously could have, the North West passage is open again this year. No, I’m talking about the international scramble to grab land (read sea bottom) in the Arctic.

The United Nations Law of the Sea gives all the countries around the Arctic bassin until 2014 to stake their claim or earlier if they ratified before 2004. This means we are in for a rush of claims. Norway has already submitted her claim, Russia, Canada and Denmark (Greenland)are ready to do so. What the US will do is uncertain. The US has not ratified the Law of the Sea treaty, while the other countries have.

There is litle doubt that some of the claims will overlap. Certainly more than one country will claim the pole. Russia surely has made her intent clear by planting a flag on the north pole.
With the ice disappearing and the US Geological services claiming that large reserves of petroleum is to be found, there is reason to believe conflict will be many and tough. Lets just hope they do not escalate. Dose.ca writes:

In the latest sign of the rising international political stakes in the Arctic, the top U.S. Coast Guard official has revealed a planned shift in American foreign policy from scientific research to “sovereignty” and “security presence” in Alaskan waters bordering Canadian and Russian

further

“The primary mission right now is the maritime boundary line with Russia – keeping foreigners from stealing Alaskan fish,” Rear Admiral. Gene Brooks, head of the U.S. Coast Guard’s operations in Alaska, told the radio network.

and

…prompted the Conservative government to promise a new year-round icebreaker for Arctic waters and a fleet of up to eight ice-reinforced patrol boats.

But we should be careful not to look at this potential conflict with old cold war glasses. The potential disputes between Canada and the US, Canada and Denmark are equal poignant as the potential conflict between all the Arctic countries and Russia.

However the Telegraph writes that:

As the polar powers have got out their maps in the last couple of years, four of them – Norway, Denmark, Canada, and the USA – have made the unpleasant discovery that the fifth – Russia – is far ahead of the game. As Russian forces consolidate their grip on her messy southern frontier in the aftermath of the war with Georgia, her diplomats, oilmen and military have been pressing their advantage in the north, a border region which is on a far vaster scale but equally confused and disputed.

Cleo Paskal, an Assistant Fellow at Chatham House and an expert on how climate change will affect borders, said: “The Russians have a big head start. Their nuclear submarines have been all over the Arctic for decades, they have 16 icebreaking ships to the Americans’ four, they have a lot of experience and a lot of the right gear.

So as all countries are beefing up their military capabilities in the Arctic, lets just hope the dispute settlement mechanisms in the Law of the Sea treaty will be robust – and enough.

Protestant ethics in Russia?

The russiablog.org had a very interesting post by Nikolai N. Petro today. He argues that the young people have a stronger weberian protestant ethic than you find in Western Europe. Wikipedia quotes Max Weber as having written:

In order that a manner of life well adapted to the peculiarities of the capitalism… could come to dominate others, it had to originate somewhere, and not in isolated individuals alone, but as a way of life common to the whole groups of man.

This fits very well with what Petro reports from Russia. He writes that:

Recently, however, young Russians have begun to display new patterns of both political and economic behavior that have led pollsters to refer to them as the “Putin Generation.” … They tend to be bolder than their parents, viewing aggressiveness as a manifestation of self-confidence and initiative. Unlike their parents and grandparents, who are appalled by the emergence of the “super rich,” they are proud that Russia has the world’s second largest number of billionaires and either hope to make the list of Russia’s richest individuals themselves or see their children on it. … A 2007 study of 17-26 year olds, conducted by the Russian Academy of Sciences, concludes by describing them as “relaxed about planning for the future. They not only talk of wanting to achieve success in various forms – they actually believe they can do it.”

I believe this is great news. While I don’t long for yet another big supercapitalist country, I do believe that Russia only can rise to the heights that she should and could reach if the people of Russia shed the lethargy of Soviet communism. My experience from living in Vladivostok (OK it is 10 years ago and a lot has changed) was that most individual responsibility for the common good had disapeard, and I believe been destroyed by soviet communism. If the new generations of Russia can work not only for themselve but also for the common good Russia can again be a force for good in the world.

Arkhangelsk, maybe the last time?

This is just to give you a short update. The Barents Observer writes that the recount in Arkhangelsk must be a falsification. They report a rusnord.ru saying that

News site Rusnord.ru has however approached the leaders of the ballot stations, all people with extensive experiences from former elections. They all underline that the original results could under no circumstances have been incorrect. As noted by Rusnord, the votes on the respective station were on May 25 counted a minimum of three times in the close presence of election observers. The people counting the votes did not have any pens or pencils available, which could have made them able to manipulate election documents.

Maybe this is not the last of this election?