Workers Protest Poor Working Conditions and Low Wages in China’s State Capitalism

Posted by PITHOCRATES - January 29th, 2012

Week in Review

Big Government types everywhere look to China and say that’s how business should be done.  State capitalism.  Where the state can make sure that capitalism is a kinder more caring kind of capitalism.  Like it is in China (see Thousands Strike in China in First Month of 2012 posted 1/28/2012 on The Epoch Times).

The first month of the year in China has seen tens of thousands of people strike and protest against poor working conditions, overdue wages, or insufficient pay levels. By Jan. 22 there had been reports of at least 10 strikes and large-scale protests across China since the beginning of the year—almost one every two days. Many of the incidents involved thousands of people—in one case up to 8,000.

It’s not the goodness of government making China rich.  It’s not cutting edge technology increasing productivity.  It’s not a love of government that spurs their workers on to work harder and ask for less.  No.  It’s low wages.  And the heavy hand of government settling labor disputes in the favor of the state.

In China there are no labor unions.  The Big Government types always seem to leave that out when they fawn over the Chinese government and their brand of state capitalism.  Cheap labor is the key to state capitalism.  Unlike in free market capitalism.  Where market forces set the price of labor.  Not the state.  Using force to keep wages low.


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Salafists in Tunisia trying to make that Country a Conservative Religious State like Iran

Posted by PITHOCRATES - January 29th, 2012

Week in Review

More and more the Arab Spring appears to be ushering in a new conservative religious rule.  Even at ground zero of the Arab Spring.  Tunisia.  One of the most liberal states in the Middle East.  Until the Arab Spring, that is (see Thousands of Tunisians protest conservative Islam by Agence France-Presse posted 1/28/2012 on The Vancouver Sun).

Thousands of Tunisians angered by the increasing prominence of ultra-conservative Islamists in a country only recently freed from dictatorial rule took to the streets in protest Saturday…

Some in Tunisia are angry by the growing influence of radical Islamists, known as Salafists, who have dominated headlines in recent weeks.

Police on Tuesday ended a weeks-long sit-in by Salafists at the university in Manouba, about 25 kilometres (15 miles) from Tunis. The Salafists were angry the university had banned the full-face Muslim veil, or niqab, over security concerns if students were concealed from head to toe.

Journalists have also suffered attacks at Salafist protests…

Tunisia was the first country in the Arab world to initiate mass protests against its autocratic leadership, triggering a wave of protests across the region last year in what became known as the Arab Spring uprisings that led to the ouster of Egypt’s Hosni Mubarak and Libya’s Moammar Gadhafi.

The Salafists made a good showing during the recent Egypt elections.  And Libya’s rebels had connections to al Qaeda.  So you know where that country will be heading, too.  These Middle East countries, yearning for freedom from Western-leaning dictators who their Islamist minorities hated are now falling under control of these Islamists.  Who will correct that Western-lean to an Eastern-lean.  Towards Iran.


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Ireland Exposes the Fundamental Flaw of the Eurozone, it’s not a True Union

Posted by PITHOCRATES - January 29th, 2012

Week in Review

Here’s a little Déjà Vu.  All the way back to 1787 Philadelphia.  Before there was a United States of America.  When there was only a weak confederation of states.  With representatives from each state sitting in the Congress of the Confederation.  Where each state had an equal vote.  And all changes to the Articles of Confederation required unanimous agreement from all states.  And often times tiny little Rhode Island could alone scuttle new legislation.  And did.  Often.  Because they had a profitable seaport.  And liked charging tariffs to those who didn’t.  It was quite lucrative.  And paid a lot of Rhode Island’s expenses.  Making their citizens happy.  Because they didn’t have to pay much in taxes.  Thanks to those tariffs.  Flash forward to the present time and you see the same problem.  Not that Ireland is like Rhode Island.  But that problem of requiring unanimous agreement from all member states in the Eurozone (see Irish voters would back EU fiscal treaty: poll by Conor Humphries posted 1/28/2012 on Reuters).

European leaders are expected to agree on the fiscal compact on Monday in a bid to regain market confidence in the public finances of the 17 countries sharing the euro.

Irish citizens, who are entitled to vote on any major transfers of powers to Brussels, are seen as one of the biggest obstacles to overhaul of the bloc. They have twice rejected changes to EU treaties before voting through amended versions.

The confederation didn’t work for the Americans.  Which is why they met in 1787 in Philadelphia to draft a new constitution.  And create a new federal state.  Something beyond a monetary union.  One that was a true union.  Monetarily.  And fiscally.  Which is why the United States of America ‘were’ truly untied.  And worked.  The ‘were’ being changed to an ‘is’ following the American Civil War.  Emphasizing that union.  While the ‘united states’ of Europe are not quite so united.  And why the Eurozone is struggling to survive.


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Countries Outside the Eurozone want those Inside to Increase their Firewall before they Commit to more IMF Funding

Posted by PITHOCRATES - January 29th, 2012

Week in Review

The road to save the Eurozone must pass through a firewall.  A big pile of money that can rush in and stop another crisis from taking hold and spreading.  Money that will just sit there.  And because it’s there it will give everyone confidence that the Eurozone is okay.  Because if something happens again there’s that big pile of money just sitting there to help stop anything bad from happening.

It will be there, say, in the rare chance that a member state has another debt crisis and can’t raise money in the bond markets.  This money will address that crisis.  Keeping the state and the banking system calm.  And liquid.

It is reassuring what a big pile of money can do.  Just sitting there.  If they just let it sit there.  Which is easier said than done.  In fact, this was very difficult to do in many pension funds.  All that money just sitting there.  Doing nothing.  While budget deficits were growing.  So they borrowed a little every now and then.  Until those funds became dangerously underfunded.  So setting up this firewall may be easier said than done.  Because all of the Eurozone member states have deficits.  And large debts.  They may be a little skittish putting in more money to try and save a member state.  Especially if that state is beyond saving (see IMF leads global push for euro zone to boost firewall by Paul Carrel and Emma Thomasson, Reuters, posted 1/28/2012 on Yahoo! News).

Countries beyond the 17-country bloc want to see its members stump up more money before they commit additional resources to the IMF, which this month requested an additional 500 billion euros ($650 billion) in funding…

In a carefully worded keynote address, Merkel suggested doubling or even tripling the size of the fund may convince markets for a time, but warned that if Germany made a promise that could not be kept, “then Europe is really vulnerable.”

On Friday, U.S. Treasury Secretary Timothy Geithner pressed Europe to make a “bigger commitment” to boosting its firewall.

Two bankers who attended meetings with Geithner at the Forum said on Friday the United States was looking for the euro zone to roughly double the size of its firewall to 1.5 trillion euros. There was no immediate comment from the U.S. Treasury.

Some countries want a free pass on their irresponsible spending ways.  They want help.  But they want other people to pay for it.  While other countries have been carrying a much larger weight than others.  Like Germany.  The richest economy in the Eurozone.  Whose taxpayers may be growing tired of being the go-to country in times of bailouts.  And the U.S. wants the Europeans to spend more to save the Eurozone.  About twice as much.  Making the price of membership so high some may just consider leaving.

“The euro zone is a slow-motion train wreck,” said economist Nouriel Roubini, made famous by predictions of the 2008-09 global banking crisis.

He expected Greece, and possibly Portugal, to exit the bloc within the next 12 months and believed there is a 50 percent chance of the bloc breaking up completely in the next 3-5 years.

Hong Kong’s Chief Executive, Donald Tsang, said no matter how strong the euro zone’s firewall is, the market will look at the nature of the economies it is protecting.

“If it is protecting insolvent economies…no matter how strong the firewall is, it won’t survive,” he said..

So it may not help no matter how big the firewall is.  Because most countries don’t want to be told what to do.  And won’t change the way they run their countries.  And without fixing the underlying problems (excessive government spending) there’s no saving the Eurozone no matter the size of the firewall.


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Fitch follows S&P and Downgrades Eurozone Countries which doesn’t Help the Eurozone Debt Crisis

Posted by PITHOCRATES - January 29th, 2012

Week in Review

First Standard & Poor’s.  Now Fitch.  Things are not looking up for the Eurozone (see Greek debt deal hit by eurozone ratings downgrades by Angela Monaghan posted 1/28/2012 on The Telegraph).

Following similar action from rival Standard & Poor’s (S&P) earlier this month, Fitch downgraded Italy, Spain and Slovenia by two notches and Belgium and Cyprus by one notch. Fitch took no action on France’s AAA credit rating despite S&P downgrading the country two weeks ago.

The rating agency warned that the eurozone crisis would only be resolved “as and when there is broad economic recovery” and with “greater fiscal integration”.

It was also being reported last night that the German government wants Greece to hand over control of tax and spending decisions to a ‘budget commissioner’ appointed by the rest of the eurozone, before the country gets its second bail-out.

The budget commissioner would have to power to veto decisions made by the Greek government, according to a proposal seen by the Financial Times, marking a significant step-up in the EU’s powers over the sovereign governments of member states…

Eurozone finance ministers said that while there were still considerable challenges ahead, they believed in the future of a united eurozone.

They’re still trying to save the Eurozone because they can’t save the Eurozone.  Greater fiscal integration?  Hand over tax and spending decisions?  Having a veto over other sovereign nations?  It sounds like to save the Eurozone will require some erasing.  Of the borders between these sovereign states.  Something that sovereign states don’t like.  Being conquered.  Only with Euros and debt.  Instead of artillery and bullets.  Or sword and lance.

So to save Greece all the Greek people have to agree to is to become a vassal of the greater power.  Sort of a step back in time.  To the days of feudalism.  Where the poorer states serve their lord.  Who serves their sovereign.  The new Eurozone structure.  Whatever that may be.  Where the stronger member states will be among the nobility and have greater privileges than the poorer states.  Who will be among the serfs.  Grateful for the generosity of their masters.  And showing due gratitude and obedience.

It’s a simple plan.  But knowing the history of Europe one that is not likely to work.  Not in an age when the trend is towards independence.  Not subjugation.  Hell, even Scotland is talking about their independence from the United Kingdom.  So to think the Greeks are just going to surrender their sovereignty is wishful thinking.  Not in the land where Western Civilization was born.  Not in the country that contains the once great city-state of Athens.  That inspired Alexander the Great.  And the Romans.  No.  That’s just a wee bit too much history for the Greeks to surrender.


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Boeing Posts Record Revenue but U.S. Defense Spending Cuts, Rising Pension Costs and Higher Taxes are on the Horizon

Posted by PITHOCRATES - January 29th, 2012

Week in Review

In Keynesian economics the government plays a large role in the economy.  By buying a lot of stuff.  And by hiring lots of government workers at all levels of government who buy lots of consumer goods.  Keynesians say these government expenditures are important.  Especially during bad economic times.  For when no one else is spending only the government can step in and sustain spending.  Even if it’s paying someone to dig a ditch.  And then fill it back in.  Because the wages for that person doing that useless activity will be used to buy consumer goods.  And it will stimulate the economy.

Interestingly, this love of government spending does not extend to military personnel.  Or defense spending.  Which, according to Keynesian economics, are just what the economic doctor ordered.  But, alas, they are always the first government spending to be cut to pay for other government spending.  Why?  Well, military personnel tend to vote Republican.  And defense spending tends to feed a lot of money to large corporations (see Boeing faced with strong headwinds by Tim Devaney posted 1/25/2012 on The Washington Times).

The Chicago-based plane-maker announced a 20 percent increase in earnings and record revenue gains in 2011…

But Boeing now faces likely cuts in U.S. defense spending, rising pension costs and a higher tax rate…

The company’s tax rate is expected to increase to 35 percent in 2012 from 33 percent last year, which will cost the company an additional $92 million, or 12 cents per share.

The Democrats use class warfare.  For they have little success with their policies and can’t run on successful track records during elections.  And in class warfare you need enemies.  Old rich people.  And, of course, evil corporations.  Hence the attacks on the industrial military complex.  Which Democrats are all in favor of.

And note that increase in their taxes.  That’s not an increase to $92 million.  That’s an additional $92 million.  Here I thought Boeing’s job was to build and sell airplanes.  When apparently they are nothing more than a cash piñata for the government to whack open to pay for more government spending.  That isn’t spent on, of course, defense spending.  Or Republicans.


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