Unknown Pontiacs being unloaded from freight cars, San Francisco 1941
This is just bluff in the ‘fight’ to keep SYRIZA from winning the January 25 elections. Merkel knows the risk of the eurozone falling apart.
• Germany Believes Eurozone Could Cope With Greece Exit (Reuters)
The German government believes that the euro zone would now be able to cope with a Greece exit if that proved to be necessary, Der Spiegel news magazine reported on Saturday, citing unnamed government sources. Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the euro zone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable, Der Spiegel reported.”The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” the weekly news magazine quoted one government source saying.
In addition, the European Stability Mechanism (ESM), the euro zone’s bailout fund, is an “effective” rescue mechanism and was now available, another source added. Major banks would be protected by the banking union. It is still unclear how a euro zone member country could leave the euro and still remain in the European Union, but Der Spiegel quoted a “high-ranking currency expert” as saying that “resourceful lawyers” would be able to clarify. According to the report, the German government considers a Greece exit almost unavoidable if the leftwing Syriza opposition party led by Alexis Tsipras wins an election set for Jan. 25.
The Greek election was called after lawmakers failed to elect a president last month. It pits Prime Minister Antonis Samaras’ conservative New Democracy party, which imposed unpopular budget cuts under Greece’s bailout deal, against Tsipras’ Syriza, who want to cancel austerity measures and a chunk of Greek debt. Opinion polls show Syriza is holding a lead over New Democracy, although its margin has narrowed to about three%age points in the run-up to the vote. German Finance Minister Schaeuble has already warned Greece against straying from a path of economic reform, saying any new government would be held to the pledges made by the current Samaras government.
“.. the euro “is a historic disaster.” “It doesn’t mean it is easy to break up,”
• Greek Euro Exit Would Be ‘Lehman Brothers Squared’ (MarketWatch)
A decision by a new Greek government to leave the eurozone would set off devastating turmoil in financial markets even worse than the collapse of Lehman Brothers in 2008, a leading international economist warned Saturday. A Greek exit would likely spark runs on Greek banks and the country’s stock market and end with the imposition of severe capital controls, said Barry Eichengreen, an economic historian at the University of California at Berkeley. He spoke as part of a panel discussion on the euro crisis at the American Economic Association’s annual meeting. The exit would also spill into other countries as investors speculate about which might be next to leave the currency union, he said. “In the short run, it would be Lehman Brothers squared,” Eichengreen warned.
He predicted that European politicians would “swallow hard once again” and make the compromises necessary to keep Greece in the currency union. “While holding the eurozone together will be costly and difficult and painful for the politicians, breaking it up will be even more costly and more difficult,” he said. In general, the panel, consisting of four prominent American economists, was pessimistic about the outlook for the single-currency project. Jeffrey Frankel, an economics professor at Harvard University, said that global investors “have piled back into” European markets over the last years as the crisis ebbed. Now, there will likely be a repeat of the periods of market turmoil in the region and spreads between sovereign European bonds could widen sharply.
Kenneth Rogoff, a former chief economist at the International Monetary Fund and a Harvard professor, said the euro “is a historic disaster.” “It doesn’t mean it is easy to break up,” he said. Martin Feldstein, a longtime critic of the euro project, said all the attempts to return Europe to healthy growth have failed. “I think there may be no way to end to euro crisis,” Feldstein said. The options being discussed to stem the crisis, including launch of full scale quantitative easing by the European Central Bank, “are in my judgment not likely to be any more successful,” Feldstein said. The best way to ensure the euro’s survival would be for each individual eurozone member state to enact its own tax policies to spur demand, including cutting the value-added tax for the next five years to increase consumer spending, Feldstein said.
“A central bank claiming that it will do ‘whatever it takes’ while not delivering with actions eventually loses its credibility ..”
• A Stress Test For Mario Draghi And The ECB (NY Times)
Mario Draghi indulged the photographers and their rapid-fire shutters for a few moments, making his first appearance for the news media in the European Central Bank’s ostentatious new high-rise headquarters in Frankfurt. Then he shooed the cameras away. He had an important message to deliver. Mr. Draghi, the central bank’s president, told reporters on that early December afternoon that it was ready to deploy new weapons against the eurozone’s dangerously low inflation rate. Though this 19-nation bloc is one of the world’s richest economies, it has never really recovered from the 2008 global financial crisis. And low inflation is one of the impediments to growth. Emphasizing every word, Mr. Draghi said that the bank’s governing council had just agreed to prepare “for further measures, which could, if needed, be implemented in a timely manner.”
In the past, such assurances had bought time for Mr. Draghi. His famous vow in 2012 to “do whatever it takes” to save the euro currency union had seemed to work without the bank having to actually take much action. But on this day, after months of Mr. Draghi’s saying the equivalent of “stay tuned,” his statement of resolve failed to work the old magic. European stock markets sagged even as he spoke. The reaction by investors, whose money and faith will be crucial to any true economic recovery, raised an ominous question: Is the man who is arguably the most powerful official in Europe really powerful enough to pull the eurozone out of its doldrums?
“A central bank claiming that it will do ‘whatever it takes’ while not delivering with actions eventually loses its credibility,” said Athanasios Orphanides, a former ECB board member. “It is difficult to escape the conclusion that the E.C.B. has not been operating in a manner that promotes fulfillment of its mandate.” Mr. Draghi’s quandary is that the actions that might save the eurozone also threaten to divide it. As he begins the fourth year of an eight-year term, the central bank has still not pursued the path that many economists say offers the greatest hope to millions of Europeans to escape from a “lost decade” of stagnation: buying government bonds and other financial assets in huge numbers. Such an approach, known as quantitative easing, was used successfully by the Federal Reserve in the United States. The idea is to pump money into the financial system, encouraging more lending and spending and kick-starting the economy.
Interest rates may trigger all of these.
• Ten Warning Signs Of A Market Crash In 2015 (Telegraph)
The FTSE 100 slid on the first day of trading in 2015. Here are 10 warning signs that the markets may drop further.
Vix fear gauge For five years, investor fear of risk has been drugged into somnolence by repeated injections of quantitative easing. The lack of fear has led to a world where price and risk have become estranged. As credit conditions are tightened in the US and China, the law of unintended consequences will hold sway in 2015 as investors wake up. The Vix, the so-called “fear index” that measures volatility, spiked to 18.4 on Friday, above the average of 14.5 recorded last year.
Rising US Treasury yields With the Federal Reserve poised to raise interest rates for the first time in almost a decade, and the latest QE3 bond-buying programme ending in October last year, credit markets are expecting a poor year for US Treasuries. The yield on two-year US Treasuries has more than doubled from 0.31pc to 0.74pc since October.
Credit insurance Along with the increased US Treasury yields, the cost of insuring against corporate credits going bad is also going up. The cost of insuring investment grade US corporate credit against default has become 20pc more expensive, rising from lows of 55 to 66 since July, according to Markit.
Rising US credit risk The wider credit market is also flashing warning signs. The TED spread, as reported by Bloomberg, is the difference between the rate US banks are willing to lend to each other and the Federal Reserve rate, which is seen as risk free. The TED spread is taken as the perceived credit risk in the general economy, and increased 9pc in December to its highest level since the end of 2013.
Rising UK bank risk In the UK, a key measure of risk in the London banking sector is the difference between the London interbank offered rate (Libor) and the overnight indexed swap (OIS) rate, also called the Libor-OIS spread. This shows the difference between the rate at which London banks are willing to lend to each other and the Federal Reserve rate which is seen as risk free. On Friday, the Libor-OIS spread reached its highest level since October 2012.
Interest rate shock Interest rates have been held at emergency lows in the UK and US for around five years. The US is expected to move first, with rates starting to rise from the current 0-0.25pc around the middle of the year. Investors have already starting buying dollars in anticipation of a strengthening US currency, with the pound falling 10pc against the dollar since July to hit 1.538 on Friday. UK interest rate rises are expected by the end of the year.
Bumpy?!
• Bosten Fed’s Rosengren: Rate Increases May Be Bumpy For Markets (MarketWatch)
Low long-term interest rates signal that the Federal Reserve’s coming increases could be bumpy for investors, Eric Rosengren, the president of the Boston regional branch of the U.S. central bank, said Saturday. The 10-year bond’s current 2.15% yield is “not a rate that is going to be sustainable in a completely normalized economy, which does imply the 10-year rate at some point in the normalization process will not be as low as it currently is,” Rosengren told the American Economic Association. That indicates that there may be “bumpier ride” than the prior two Fed tightening cycles in 1994 and 2004 “just because there needs to be an adjustment at some point along the cycle,” Rosengren said.
The Boston Fed president also noted that it is also “unusual” how much the stock market has risen before the first rate increased compared with the last two periods. Offsetting concerns about possible volatility is that the Fed can afford to be “patient” in tightening because inflation is so low, he said. “As long as we’re experiencing very low inflation, there is no reason for the path[of rate hikes] to be particularly abrupt,” Rosengren said. Mark Gertler, an expert on monetary policy at New York University, told the same panel that the Fed funds rate could reach 4%-5% over a two-year period once the central bank starts tightening. Rosengren said his estimate was a little less, with the funds rate reaching 3.75%-4% over the same period.
“Trust, not cash, is the fuel that makes the financial system function ..”
• Wall Street’s Big Problem In 2015 Is Trust (CFA Institute)
To the U.S. prosecutors moving forward with insider trading charges all I can say is “good luck.” Wall Street isn’t afraid of you. The U.S. appeals court’s stunning, unanimous decision to overturn the December 2012 convictions of two hedge fund traders has blown the doors off the legal definition of insider trading. According to the ruling, insider trading may be legal in certain circumstances, even if it gives an investor an unfair advantage. This decision will likely reinforce the lack of trust in financial services professionals and the belief that the markets are rigged for a select few. It was yet another reputation-damaging year in the financial services industry: the collapse of Espirito Santo bank, corruption scandals in Brazil’s state oil company Petrobras and investigations of insider-trading at France’s BNP Paribas.
Closer to home, the SEC is investigating fees charged by private equity advisers, and five major U.S. banks agreed to pay $4.3 billion to settle charges of systematically manipulating the foreign currency markets, with criminal prosecutions still a possibility. It’s clear that recent scandals and the regulatory reforms they provoked have not sufficiently changed how some participants in the financial industry conduct their business. As participants in that industry, we’re doing the public – and ourselves – an injustice if we write the litany of scandals off as “just a few bad apples” or even worse, as the price of doing business. We are making it too easy for the public to equate the finance industry with self-dealing, dishonesty and corruption. Trust, not cash, is the fuel that makes the financial system function, and when investors, big and small, start to regard the system as one rigged against them, the risk of collapse will never be far away.
Acting on this belief for the past four years we’ve conducted a Global Market Sentiment Survey (GMSS) to invite the insights and perspectives of our members — respected industry experts — on the economy, market integrity, and their expectations for the coming year. This year, members said that they expect the world economy to grow, and their concerns over the negative impact of central banks’ tapering of quantitative easing programs have eased. On the other hand, their optimism is tempered by the potential for continued weakness in developed economies as well as the ongoing effects of political instability in many regions. The greatest area of concern for the health of the global economy, however, remains the same as it has year after year: the lack of trust in the industry.
Thing is, you’d have to repeat this all the time.
• Japan’s Cash Helicopter May Be First To Take Off (Reuters)
Japan could become the first rich nation to launch helicopter money. Dissatisfaction with deflation and growing disillusionment with quantitative easing might prompt the country to reach for the final trick in the monetarist playbook. Economist Milton Friedman first conjured up the enticing image of bank notes dropping from the skies in 1969. Thirty years later, Ben Bernanke proposed a helicopter drop of cash as an antidote for Japan’s anaemic demand and falling prices. The future Fed chairman’s suggestion was too outlandish for what was then still a conservative Bank of Japan. The central bank had already cut interest rates to zero, and subsequently embarked on quantitative easing. But that’s about as far as it has been prepared to go.
Yet QE is failing to live up to its billing. The monetary authority is buying staggeringly large quantities of financial assets from banks in return for newly-printed yen. Government bonds worth about $1.7 trillion – a quarter of the outstanding amount – have already vanished into the BOJ’s vaults. This bond-buying spree has yet to launch a self-sustaining cycle of private demand, or lift inflation to the central bank’s 2% target. A panicky BOJ policy board decided in October to expand its asset purchases by as much as 60%. QE makes cheap cash available to banks to lend, but they can’t do so unless there are willing borrowers with profitable investment opportunities – a problem in ageing Japan. This is where Friedman’s helicopter comes in by giving cash directly to households.
The mechanics would be relatively straightforward. Assume each of Japan’s 52 million households received a debit card with, say, 200,000 yen ($1,700) loaded onto it by the central bank. Any remaining balance on the cards would disappear after a year, ensuring that recipients spent the windfall. The move would inject an extra 10 trillion yen, or 2% of GDP, of private purchasing power into the economy. This in turn would encourage companies to invest and pay higher wages. The net effect would resemble a tax cut, but one financed by newly printed money rather than government debt. For Japan, whose government debt already equals 245% of GDP, being able to stimulate the economy without having to sell more bonds would be a major advantage. Consumers could spend freely in the knowledge that they would not have to repay the windfall in future in the form of higher taxes.
But if Friedman’s helicopter is such a doughty anti-deflation tool, why has no central bank used it yet? The usual answer is that tax cuts are fiscal decisions that only elected governments can make. Monetising the government’s debt is a recipe for a debased currency and hyperinflation. Japan has given cash to its citizens in the past and may do so again. But the cheques have always come from the government, not the central bank. Upsetting this status quo will mean the finance ministry loses control of fiscal policy. Politicians won’t let such a thing happen. The BOJ might also baulk at such a radical move: its policy board only narrowly approved the recent expansion of QE. Yet Japan could introduce a money-financed tax cut by stealth. Suppose that QE ends in late 2016. By then, the BOJ will own almost two-fifths of Japan’s government debt. Any attempt to sell those bonds back to the private sector could undermine the country’s economic and financial stability.
Adair Turner, former chairman of Britain’s Financial Services Authority, has suggested converting the central bank’s government bonds into perpetual, zero-coupon securities. With one stroke of its pen, the government would be free of its obligation to repay the debt. The pressing need for Japan to raise taxes would vanish. The fragile consumer economy, which buckled under the burden of a modest increase in the sales tax last April, would breathe a sigh of relief. This too will be a money-financed tax cut by the back door, without the need for helicopters or debit cards. Such an experiment in monetary manipulation would attract a worldwide audience. Many rich nations have depleted their rate-cutting arsenal. If the fight against long-term deflationary stagnation becomes a losing battle, Friedman’s helicopters might not just be flying over Japan.
“The industry has a cost problem that cannot be met forever by shrinking capital expenditures and selling assets.”
• Oil Price Slump May Spur European Oil and Gas Deal-Making (NY Times)
There was $383 billion in mergers and acquisitions in the oil and gas sector last year, as of Dec. 11. Yet Europe has largely missed out: About three-quarters of the targets have been in North America, according to Thomson Reuters data. Shale has played a big role. In 2015, oil and gas bankers in Europe will get a bigger slice of the action. The sharp drop in the price of crude oil, to around $60 a barrel, will make it harder to get deals done in the short term. It makes everyone more cautious. Buyers worry that prices can fall further, while the seller’s instinct is to hold out for a recovery. The last big fall in oil prices, at the end of 2008, was too short to push a big merger and acquisition wave.
But if the current oil price persists, financial stress may make small players vulnerable. Net debt at explorers including Afren, EnQuest, Premier Oil and Tullow Oil could all reach three times earnings before interest, taxes, depreciation and amortization, or more, if oil remains at $60 through 2015, Barclays estimates. Cash-rich Repsol of Spain already took the plunge with an $8.3 billion bid last month for the Canadian oil and natural gas producer Talisman Energy. Chinese companies, active in the past, have a lot on their plate with big capital commitments, but buyout groups have raised billions of dollars to invest, including in energy infrastructure assets.
All-stock defensive mergers of the type seen in the late 1990s are possible, too. This has already started on a small scale with Ophir Energy’s all-share takeover of Salamander Energy. The industry has a cost problem that cannot be met forever by shrinking capital expenditures and selling assets. BP’s former chairman, John Browne, wrote in his memoir that a merger with Shell, pondered while he was at the helm, might have delivered $9 billion in annual synergies. BP faces big liabilities in the Gulf of Mexico and volatility in Russia. BG Group of Britain has long been a target, and the new chief executive starts in March. It’s not clear that Shell, the wallflower in the 1990s, will make a move. Exxon and other majors in the United States might be tempted. Either way, chances are Big Oil will get even bigger next year.
“The average net worth of households under 30 has fallen 48% since 2007 to $44,354.”
• Endangered Species: Young US Entrepreneurs (WSJ)
The share of people under age 30 who own private businesses has reached a 24-year-low, according to new data, underscoring financial challenges and a low tolerance for risk among young Americans. Roughly 3.6% of households headed by adults younger than 30 owned stakes in private companies, according to an analysis by The Wall Street Journal of recently released Federal Reserve data from 2013. That compares with 10.6% in 1989—when the central bank began collecting standard data on Americans’ incomes and net worth—and 6.1% in 2010. The Journal’s findings run counter to the widely held stereotype of 20-somethings as entrepreneurial risk-takers. The sharp decline in business ownership among young adults, even when taking into account the aging population, adds to worries about business formation heading into 2015, economists said.
The number of new U.S. business establishments fell in the first quarter of 2014, according to the latest available data from the U.S. Labor Department. It is difficult to pinpoint the precise reasons for the decline in private business ownership among young Americans. One theory is that they face more postrecession challenges raising money. Such fast-growing sectors as energy and health care likely require a significant access to credit or capital. The decline also reflects a generation struggling to find a spot in the workforce. Younger workers have had trouble gaining the skills and experience that can be helpful in starting a business. Some doubt their ability. Business ownership among young adults likely remained at low levels in the year that just ended, say some economists.
“I wouldn’t expect to see a major pickup” in young adults starting or owning businesses this year, given that it’s easier for them to find jobs, said Robert Litan, a Brookings Institution economist. [..] The plunge in business ownership captured in the Fed survey is an “interesting and worrisome finding,” said John Davis, faculty chair of the Families in Business Program at Harvard Business School. If the trend continues, he said, the U.S. economy could become less vibrant. “We need startups not only for employment, but also for ideas,” Mr. Davis said. “It’s part of the vitality of this country to have people starting new businesses and trying new things.” The decline in young entrepreneurs is part of a broader drop in private business ownership over the past 25 years.
Between 2000 and 2012, new business formation slowed even in such high-growth sectors as technology, according to economists John Haltiwanger and Ryan Decker of the University of Maryland and Javier Miranda of the Census Bureau. Slowing U.S. population growth since the early 1980s has reduced the supply of potential entrepreneurs of all ages, and lessened demand for new goods and services, said Mr. Litan of the Brookings Institution. Meanwhile, business consolidation has led to more formidable competition for startups, making it harder for new entrants to gain a spot in the market, he said. Overall, the U.S. “startup rate”—new firms as a portion of all firms—fell by nearly half between 1978 and 2011, according to an analysis by Mr. Litan and his research partner, economist Ian Hathaway.[..] The average net worth of households under 30 has fallen 48% since 2007 to $44,354.
Let’s see some proof.
• North Korea Responds With Fury To US Sanctions (Guardian)
North Korea has issued a furious statement slamming the United States for imposing sanctions in retaliation for its alleged cyber-attack on Sony Pictures. It again denied any role in the breach of tens of thousands of confidential Sony emails and business files. An unnamed spokesman at North Korea’s foreign ministry on Sunday accused the US of “groundlessly” stirring up hostility toward Pyongyang and claimed the new sanctions would not weaken the country’s military might. US president Barack Obama last week authorised a new layer of sanctions on several Pyongyang institutions and officials, in the wake of the crippling hacking attack on the Hollywood movie studio. US investigators have said North Korea was behind the attack in November, but some experts have raised doubts about the conclusions of the FBI probe.
Pyongyang has repeatedly denied involvement and demanded a joint investigation into the attack – a proposal the US has ignored. North Korea’s foreign ministry said Washington’s rejection of the proposal revealed its “guilty conscience”. It said the US was using the attack to further isolate the North in the international community. “The persistent and unilateral action taken by the White House to slap ’sanctions’ … patently proves that it is still not away from inveterate repugnancy and hostility toward [North Korea],” the ministry spokesman told the state-run KCNA news agency. The impoverished but nuclear-armed state is already heavily sanctioned following a series of nuclear and missile tests staged in violation of UN resolutions. The spokesman also said the new sanctions would further push the North to strengthen its military-first policy known as Songgun.
And have it managed by banks, for a nice fee.
• Retired Workers Could Be Given Right To Sell Their Pensions (Guardian)
Millions of retired workers could be given the right to sell their pensions under plans being floated by a Liberal Democrat minister. Pensions minister Steve Webb said that he wanted to build on reforms in last year’s Budget which will mean that from April, working people will be able to cash in their pension savings for a lump sum when they retire. In an interview with The Sunday Telegraph, he said that he wanted to extend the scheme to existing pensioners, enabling them to sell the annuities they had been required to buy under the old rules to the highest bidder. “I want to see people trusted with their own money wherever possible. I have already heard from people around the country who would like to see this change made,” he said.
“I want to see if we can get these freedoms extended to those who are receiving an annuity, but who might prefer a cash lump sum. “No one would be obliged to do so, but for those who would prefer up-front capital to regular income, I can see no reason why this should not be an option.” Webb said that he would like to launch a public consultation and publish an agreed coalition plan before the general election. But with time running out ahead of polling day on May 7, he indicated that he would be seeking support from Labour so as to ensure the reforms could be carried through early in the next parliament, regardless of the outcome of the election.
Intentional errors?
• The West Is Wrong Again In Its Fight Against Terror (Independent)
Islamic State (Isis) will remain at the centre of the escalating crisis in the Middle East this year as it was in 2014. The territories it conquered in a series of lightning campaigns last summer remain almost entirely under its control, even though it has lost some towns to the Kurds and Shia militias in recent weeks. United States air strikes in Iraq from 8 August and Syria from 23 September may have slowed up Isis advances and inflicted heavy casualties on its forces in the Syrian Kurdish town of Kobani. But Isis has its own state machinery and is conscripting tens of thousands of fighters to replace casualties, enabling it to fight on multiple fronts from Jalawla on Iraq’s border with Iran to the outskirts of Aleppo in Syria.
In western Syria, Isis is a growing power as the Syrian government of President Bashar al-Assad loses its advantage of fighting a fragmented opposition, that is now uniting under the leadership of Isis and Jabhat al-Nusra, the Syrian affiliate of al-Qaeda. Yet it is only a year ago that President Obama dismissed the importance of Isis, comparing it to a junior university basketball team. Speaking of Isis last January, he said that “the analogy we use around here sometimes, and I think it is accurate, is if a JV [junior varsity] team puts on Lakers uniforms it doesn’t make them Kobe Bryant [famed player for the Los Angeles Lakers basketball team].” A year later Obama’s flip tone and disastrously inaccurate judgement jumps out at one from the page, but at the time it must have been the majority view of his national security staff.
Underrating the strength of Isis was the third of three great mistakes made by the US and its Western allies in Syria since 2011, errors that fostered the explosive growth of Isis. Between 2011 and 2013 they were convinced that Assad would fall in much the same way as Muammar Gaddafi had in Libya. Despite repeated warnings from the Iraqi government, Washington never took on board that the continuing war in Syria would upset the balance of forces in Iraq and lead to a resumption of the civil war there. Instead they blamed everything that was going wrong in Iraq on Prime Minister Nouri al-Maliki, who has a great deal to answer for but was not the root cause of Iraq’s return to war. The Sunni monarchies of the Gulf were probably not so naïve and could see that aiding jihadi rebels in Syria would spill over and weaken the Shia government in Iraq.
Word.
• ‘Premier Of War’: Czech President Says Yatsenyuk Not Seeking Peace (RT)
Czech President Milos Zeman has slammed Ukrainian Prime Minister Arseny Yatsenyuk, calling him “a prime minister of war” because he is unwilling to peacefully solve the civil conflict in the country. “From the statements by PM Yatsenyuk, I think that he is a ‘prime minister of war’, because he does not want a peaceful solution to the crisis [in Ukraine] recommended by the European Commission,” Zeman told Pravo, a Czech daily newspaper. Yatsenyuk wants to solve Ukrainian conflict “by the use of force,” added the Czech leader. According to Zeman, the current policy of Kiev authorities has two “faces.”
The first is the “face” of the country’s president, Petro Poroshenko, who “may be a man of peace.” The second “face” is that of PM Yatsenyuk, who has an uncompromising position toward self-defense forces in Eastern Ukraine. Zeman said he doesn’t’ believe that the February coup, during which then-President Viktor Yanukovich was deposed from power, was a democratic revolution at all. “Maidan was not a democratic revolution, and I believe that Ukraine is in a state of civil war,” Zeman said, responding to what he described as “poorly informed people” who compared Maidan with Czechoslovakia’s Velvet Revolution in 1989.
In November 2013, the initially peaceful demonstrations which started as a reaction to then-President Viktor Yanukovich’s refusal to sign the EU association deal became violent in early 2014. Kiev’s central Independence Square – Maidan Nezalezhnosty – was turned into a battlefield as Ukrainian protesters clashed with police through January and February. The unrest resulted in a coup that toppled Yanukovich and his government in February. The Republic of Crimea’s withdrawal from Ukraine was followed by a conflict in the country’s southeast. According to UN figures, at least 4,317 people have been killed and 9,921 wounded in the conflict in eastern Ukraine since April when Kiev authorities launched a so-called anti-terrorist operation in the region.
A huge problem all over Europe.
• Dresden Crowds Tell A Chilling Tale Of Europe’s Fear Of Migrants (Observer)
The precipitous rise of Pegida, or Patriotische Europäer gegen die Islamisierung des Abendlandes (Patriotic Europeans against the Islamisation of the west), a populist anti-immigrant movement, has shaken Germany’s main parties to the core and prompted an acrimonious debate at a time when Europe’s biggest economy is straining to deal with a record intake of more than 200,000 asylum seekers in 2014 – mainly from Iraq and Syria – a figure higher than any other country in Europe and which is due to rise considerably this year. Merkel’s condemnation of the group gives voice to growing concern among established parties in Europe about the impact immigration is having on domestic politics, in what will be a crucial election year across the continent.
This week Merkel will travel to London for talks with David Cameron. While the main thrust of their discussions will be on Russia and Ukraine and the economy, the two will probably not be able to avoid talking about the rise of parties such as Ukip and AfD/Pegida, or Cameron’s plans to curb migration from Europe as he seeks to renegotiate the terms of the UK’s EU membership. Merkel will visit the British Museum’s exhibition, Germany: Memories of a Nation, a trawl through 600 years of German history, which inevitably gives space to the war – one of the most striking exhibits is the gate of Buchenwald concentration camp – and will further remind Merkel why immigration is so important for her country’s image of itself as a modern, progressive and welcoming land. But it is an image that is under threat. Monday’s Pegida demonstration will be extremely closely observed, by everyone from constitutional experts to sociologists and experts in neo-Nazism.
The questions most frequently addressed are what has prompted Pegida and how it can be dealt with. To condemn it means potentially isolating voters and fuelling the movement even more. But to ignore what is after all still a fledgling movement with no mandate seems too perilous a position for German politicians duty-bound to keep in mind the country’s Nazi past. Already there are suggestions, so far unfounded, of a link between the recent apparent arson attack on a hostel for asylum seekers near Nuremberg, which was daubed with swastikas and anti-immigration slogans, and a pre-Christmas graffiti onslaught on a mosque in Dormagen in North Rhine-Westphalia, which was also smeared with swastikas and slogans such as “Get yourself to concentration camp” and “Waffen SS”. Such incidents have only served to stoke the tension.
I’ve known Nanko for a long time, haven’t seen him in ten years or so now. Very brave man, and very respected by all sides in Rio. Which is so hard to do.
• Inside The Favela Too Violent For Rio’s Armed Police (Observer)
“Yeah, I want to get out,” says Ricardo, 21. Then, relaxing, he takes the hand-grenade he has been toying with on his lap and places it amid the beer bottles on the table. In Vila Aliança in Bangu, western Rio, this is not particularly unusual behaviour. Outsiders rarely come to this lawless favela – a centre of the drugs trade in Rio de Janeiro – and the armed bandidos who guard the area from police raids and rival gangs had been monitoring my approach for miles. As our car wound through the narrow roads, smiling children and friendly teenage boys wearing shorts and flip-flops and carrying rifles appeared. Vila Aliança is not on the list of favelas earmarked for “pacification” – military intervention that paves the way for a permanent Pacifying Police Unit (UPP) to move in to improve security before the 2016 Olympics.
The UPP project has been credited with improving security in 38 communities, but this violent and dangerous favela remains beyond the pale. Nanko van Buuren, a Dutchman in his 60s, has been coming to the city’s most marginalised areas for decades. His Ibiss foundation runs the Soldados Nunca Mais (Soldiers Never More) project. In Vila Aliança he is greeted as paitrao, a Portuguese neologism that combines the words for “boss” and “father”. “Nearly all [traffickers] would get out tomorrow if they could,” says van Buuren. Most start in the drugs trade as young teenagers and four fifths are likely to die before reaching 21. Since 2000, the Soldados project has used sport, arts and peer counselling to help 4,300 “child soldiers” leave a way of life that guarantees early death or imprisonment.
It also uses sport to build bridges between youths raised on hostility towards rival gangs. “What interests me is seeing how people respond to social exclusion,” says van Buuren, referring to the resilience of people in the 64 favelas where 340 Ibiss staff work. For the former World Health Organisation psychiatrist, who came to Rio in 1985, it is the role of peacemaker of which he is proudest. Building peace in communities like Vila Aliança, where a parallel power structure has evolved over decades of state neglect, is nightmarishly difficult, as residents are routinely caught in the crossfire between gangs and police ..
Great story.
• Ecuadorian Student Invents Revolutionary ‘Bat Sonar’ Suit For The Blind (RT)
The bat’s navigation system has inspired an Ecuadorian student to create an innovative costume that allows blind people to move around freely without a cane. “The suit is equipped with ultrasonic sensors to enable the person navigate in different surroundings. It emits vibrations to direct the person and warn of different objects near him,” Inti Condo, the suit’s creator, told RT’s Spanish channel. According to Condo, his invention, which started as a student project, represents an electronic copy of a biological navigations system used by bats. His project is entitled Runa Tech (Human Technology) in Kechua, which is the most widely spoken language among the indigenous peoples of South America.
The Runa Tech costume has a total of seven sensors, which are located in strategic areas of human body, including the waist, hands and shoulders. It adjusts to the rate at which the wearer is walking and warns him or her of looming threats, including staircases and other obstacles. The intensity of vibration in the suit increases the closer the person is to a dangerous object, preventing possible accidents. A single Runa Tech costume now costs an expensive $5,000, and the technology is so far unable to withstand contact with water. It’s also currently impossible to wear a coat or any other overclothes with the suit, as it would prevent the sensors from working, Pichincha Universal website reports.
But the project has already attracted interest from private investors, with Ecuador’s Yachay Tech University also promising to help the student improve his suit. “Our organization looking into the issue to advise on the ergonomics of the invention and the feasibility of its subsequent mass production,” Hector Rodriguez, Yachay’s geneneral director, said. Condo is a member of an ethnic diversification program at the San Francisco de Quito University, which attracts students from Ecuador’s indigenous communities. “These guys really want to achieve great success and commit themselves to the development of the Indian peoples. They prove that they are only needed to be given a chance in order to prove themselves,” David Romo, who heads the ethnic diversification program, said.
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