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12/18/14

Cuba-USA: It’s not Cuba that has just decided to rejoin the modern world – it’s the US - by Martin Kettle

During the signing of the Versailles treaty in 1919, it is said that a delegate left the conference muttering: “What on earth will the historians say about all this?” When the remark was reported to the French prime minister,

Georges Clemenceau produced a characteristically good retort – Clemenceau was, after all, a journalist. “Well, one thing they won’t say is that Belgium invaded Germany.”

This week’s move undoubtedly involves risk for Cuba and its ageing authoritarian government. But it is Barack Obama who has made the big concession to reality by simply recognising that Cuba is now an independent nation. It has taken Washington an unconscionable time to reach this point.

More than 50 years ago, one of the key consequences of the ending of the Cuban missile crisis was an implicit concession on the part of President Kennedy that Washington would have to co-exist with the Cuban revolution. That concession has held good for half a century. But it is only this week that de facto recognition of Cuba has become de jure recognition.

It is therefore only partly true to say that the rapprochement between Washington and Havana represents the tidying up of a bit of outstanding business left behind by the cold war, leaving North Korea the cold war’s last lonely outpost.

Read more: It’s not Cuba that has just decided to rejoin the modern world – it’s the US | Martin Kettle | Comment is free | The Guardian

Spain Hits A New Low In Its Fight Against Entrepreneurship - by John Greathouse

One of my top former students, Fredi Fernandez, recently sent me a compelling email. After studying at UC Santa Barbara’s entrepreneurial program, he returned to Spain, excited to start a venture and make a positive impact on his homeland.

He founded Alpha Origins in 2011. Although he has helped a number of startups gain traction, he is now questioning if he should flee Spain, given the recent passage of the unprecedented Exit Tax, which seeks to tax potential, unrealized wealth.

Fredi’s email is worth reading, as it reinforces how lucky American entrepreneurs truly are. It is difficult to not be moved by his passionate desire for his country to share the entrepreneurial spirit that he experienced during his stay in California.

One could certainly argue that the US government could be more business friendly. However, when compared to the anti-startup environment prevalent in Spain, the relative degree to which entrepreneurship is an indelible aspect of American society is undeniable.

Geographically, the distance between Spain and the US is about 4,715 miles. However, from an entrepreneur’s viewpoint, the philosophical distance can be measured in light years

Imagine a country with a massive unemployment problem, recently over 24%, yet still with a great capacity to attract international talent, amazing weather and infrastructures. As a government, would you give incentives to build an entrepreneurial ecosystem or would you try to squeeze it?


If you were part of the current Spanish government, the very same government struggling with a huge unemployment problem, you might have a different answer. There have been many examples of Spain’s anti-entrepreneurial efforts, including forbidding Airbnb and Uber activities.

 Even Google News decided to close in Spain due, to a new law designed to protect legacy businesses. We can understand how disruptive companies affect entire industries. Change hurts, disruption hurts and it’s not easy to keep everyone happy. Got it!
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Read more: Spain Hits A New Low In Its Fight Against Entrepreneurship

EU leaders go into summit seeking a long-term strategy on Russia

As he arrived at the summit venue on Thursday, the new European Council president, Donald Tusk, said a long-term strategy to deal with Moscow was vital to maintaining stability on the EU's eastern borders.

"The situation is really dramatic and very dynamic and of course…. demands immediate reactions," said Tusk, hosting his first European Union summit since taking up the new post on December 1.

"We will not find a long-term solution for Ukraine without an adequate and consistent, both tough and responsible, strategy towards Russia," he said, referring to the military conflict between pro-Russia separatists and government forces in eastern Ukraine.

"Today we should send a strong signal on our readiness to further support Ukraine also financially as we have done politically," he added

Read more: EU leaders go into summit seeking a long-term strategy on Russia | News | DW.DE | 18.12.2014

Russia: Putin press conference: 'economy will rebound within two years' = by Haroon Siddique and Shaun Walker

President blames ‘external factors’ for Russia’s economic problems and describes sanctions as illegitimate
  • Vladimir Putin said that Russia’s economy would recover within two years. He did not identify concrete measures but referred to the world’s need for energy increasing again as the global economy recovered and diversification of the economy in the interim.
  • He blamed “external factors” for problems with the economy and the ruble. Putin described sanctions against Russia as “illegitimate” and said that Saudi Arabia and the US “might” have conspired to lower oil prices to harm Russia (and Iran).
  • The Russian president said that it was illogical to blame him for current frosty relations with the west. Referring to the number of US military bases around the world and its deployment of anti-ballistic missiles in Europe, he asked how Russia could possibly be seen as the aggressor. He also compared Nato expansion to the Berlin wall.
  • He repeatedly said that he wanted a diplomatic solution to the crisis in Ukraine. Putin said it must be solved by political means in line with fundamental international principles, including the right of self-determination.
  • Putin said it was “too early” to decide whether he would run for president in 2018.

Read more: Putin press conference: 'economy will rebound within two years' | World news | The Guardian

Israel suffers sharp rebuffs in Europe - by Cara Anna and John-Thor Dahlburg

Israel suffered back-to-back diplomatic setbacks in Europe on Wednesday, while the Palestinians at the United Nations set a deadline for an Israeli withdrawal from lands captured nearly 50 years ago by the end of 2017.

In Geneva, the international community delivered a stinging rebuke to Israel's settlement construction in the West Bank and east Jerusalem, saying the practice violates Israel's responsibilities as an occupying power.

The declaration adopted by the conference of the Fourth Geneva Convention, which governs the rules of war and military occupation, emphasized a prohibition on colonizing occupied land and insisted that international humanitarian law be obeyed in areas affected by the conflict between Israel and Palestinians. It called for "all serious violations" to be investigated and those responsible for breaches to be brought to justice.

"This is a signal and we can hope that words count," said Swiss ambassador Paul Fivat, who chaired the one-day meeting. The U.S. and Israel did not take part.

Israel's U.N. Mission blasted the gathering, saying: "It confers legitimacy on terrorist organizations and dictatorial regimes wherever they are, while condemning a democratic country fighting terrorism in accordance with international law."

In Luxembourg, meanwhile, a European Union court ordered the Palestinian group Hamas removed from the EU terrorist list for procedural reasons but said the 28-nation bloc can maintain asset freezes against Hamas members for now.

The Islamic militant group, which calls for the destruction of Israel, hailed the decision, but Israeli Prime Minister Benjamin Netanyahu expressed outrage.
Read more{ Israel suffers sharp rebuff in Europe | The Columbian

Disparity: Fueled by Recession, U.S. Wealth Gap Is Widest in Decades, Study Finds - by Patricia Cohen

A report released on Wednesday by the Pew Research Center found that the wealth gap between the country’s top 20 percent of earners and the rest of America had stretched to its widest point in at least three decades.

Last year, the median net worth of upper-income families reached $639,400, nearly seven times as much of those in the middle, and nearly 70 times the level of those at the bottom of the income ladder.

There has been growing attention to the issue of income inequality, particularly the plight of those earning the federal minimum wage of $7.25 an hour or close to it.

But while income and wealth are related (the more you make, the more you can save and invest), the wealth gap zeros in on a different aspect of financial well-being: how much money and other assets you have accumulated over time, including the value of your home and car plus any investments in stocks, bonds and the like.


Think of it as “a measure of the family ‘nest egg,’ ” as Pew calls it — a hoard that can sustain a household during an emergency, like the loss of a job, and in the long run can see someone through retirement.

Read Fueled by Recession, U.S. Wealth Gap Is Widest in Decades, Study Finds - NYTimes.com

Wars:The myth of the good war - by Geoffrey Wheatcroft

This year has been such a miserable and violent one in so many parts of the world that it can scarcely end too soon. But for many Europeans, it has also been a year of remembrance: the centenary of another terrible conflict.

The intensity of public feeling about what those who survived it called the Great War has surprised some, and annoyed others, but it has undoubtedly been a dominant element in the public mood. Apart from all the books and articles, television and radio programmes, an astonishing 5 million people visited the sea of poppies around the Tower of London.

Although there are few still living who have even childhood memories of the war, Paul Cummins and Tom Piper’s 888,246 ceramic flowers – one for every dead British soldier – which steadily filled the moat over three months, provided a reminder that scarcely any family in Britain was unaffected by that war. It is a deeply ingrained folk memory.

Next May sees another milestone, the 70th anniversary of VE Day; it will also mark the 75th anniversary of Winston Churchill’s appointment as prime minister. For all the deep and sincere mourning this past year, there has long been an implied contrast between the first and second world wars. In crude terms, we have come to think of them – haven’t we? – as the Bad War and the Good War.

After 1945, Europe seemed to have at last achieved what had been falsely promised in 1918: a war to make the world safe for democracy, and a war to end wars. That was how it felt during the glorious western postwar half-century of peace and prosperity, when no European countries fought each other, and when finally the cold war ended without armies clashing in Europe.

But so far from an eternal age of peace, we have not only returned to fighting wars – we have returned to fighting a kind of war grimly prefigured not by the supposedly evil Great War but instead by the seemingly noble Good War. From 1914 to 1918 as many as 18 million people died, while more than 70 million died from 1939 to 1945.

The immensely important difference was that almost all of those killed in the first world war were soldiers in uniform, while the peculiar – and peculiarly horrible – distinguishing feature of the second world war was that up to 50 million of the dead were civilians. That would be the true face of the new war.

Read more: The myth of the good war | Geoffrey Wheatcroft | News | The Guardian

12/17/14

Wall Street: The Coin of the Realm: How Inside Traders Are Rigging America - by Robert Reich

A few years ago, hedge fund Level Global Investors made $54 million selling Dell Computer stock based on insider information from a Dell employee. When charged with illegal insider trading, Global Investors' co-founder Anthony Chiasson claimed he didn't know where the tip came from.

Chiasson argued that few traders on Wall Street ever know where the inside tips they use come from because confidential information is, in his words, the "coin of the realm in securities markets."

Last week the United States Court of Appeals for the Second Circuit, which oversees federal prosecutions of Wall Street, agreed. It overturned Chiasson's conviction, citing lack of evidence Chiasson received the tip directly, or knew insiders were leaking confidential information in exchange for some personal benefit.

The Securities and Exchange Act of 1934 banned insider trading but left it up to the Securities and Exchange Commission and the courts to define it. Which they have - in recent decades so broadly that confidential information is indeed the coin of the realm.

Read more: The Coin of the Realm: How Inside Traders Are Rigging America | Robert Reich

US-Cuba Relations: Obama hails 'new chapter' in US-Cuba ties

US President Barack Obama has hailed a "new chapter" in US relations with Cuba, announcing moves to normalise diplomatic and economic ties.

Mr Obama said the plans represented the "most significant changes in US policy towards Cuba in 50 years".

The US is looking to open an embassy in Havana in the coming months, he said. The moves are part of a deal that saw the release of American Alan Gross by Cuba and includes the release of three Cubans jailed in
Florida for spying.

Mr Gross arrived at Andrews Air Force Base near Washington  from Cuba on Wednesday. Footage showed him disembarking from a US government plane onto the tarmac where he was met by a crowd.

The US president announced measures that he said would end an "outdated approach that for decades has failed to advance our interests".

The plans set out in a White House statement also includes:

Reviewing the designation of Cuba as a state sponsor of terrorism
  • Easing a travel ban for US citizens
  • Easing financial restrictions
  • Increasing telecommunications links
  • Efforts to lift the 54-year-old trade embargo
Note EU-Digest:  Bravo President Obama - this was long overdue and will be fantastic for business and eventually lead to democratization in Cuba. This normalization is not any different from the relationship the US has with China, Russia or any other communist or dictatorial regime .

Read more: BBC News - Obama hails 'new chapter' in US-Cuba ties

12/16/14

Russia:The Ruble Crash And Putin's Choices - by Armin Rosen

Russian Ruble Free fall
This week's plunge in the value of the ruble adds another layer of uncertainty to the ongoing faceoff between Russia and the West.

The currency crisis, precipitated by US and EU sanctions against Moscow and a global decline in oil prices, threatens to crater the country's lucrative state-owned enterprises and send the economy into a nosedive.

The question is how an ever-unpredictable Vladimir Putin will respond.

Putin's nationalistic and often-aggressive policies have appealed to Russians' post-Cold War sense of grievance and won him soaring approval ratings at a time when the Russian president is loathed in most western capitals.

But the ruble dive threatens to radically shift the conditions that have allowed Putin to maintain his internal popularity in spite of the western powers' opposition to him.

As New York University professor and Russia expert Mark Galeotti explained to Business Insider, Putin's rule is predicated on a "social contract" that most Russians have found acceptable: "You stay out of politics.

You show enthusiasm but don't think you actually get a meaningful say in government. In return for that your life will improve and continue to improve."

Under Putin, Russia achieved perhaps the highest standard of living in the country's history while the government was able to replenish its coffers after periods of actual bankruptcy under Boris Yeltsin in the 1990s. Weaknesses remained:

The new prosperity was largely distributed through Putin's hand-picked former KGB colleagues and much of the country's wealth depended upon robust oil prices and access to European markets. Record military spending also threatens to sap resources and hamstring any government response to a future economic crisis.

The recent decline in oil prices, along with the economic consequences of international sanctions, could bring Putin's arrangement crashing down around him. "This social contract is being torn up," says Galeotti. "But Putin could tear it up more quickly and more assiduously if he's still determined to maintain his aggressive geopolitical stance. It really is one of those guns or butter moments."


Read more: The Ruble Crash And Putin's Choices - Business Insider

Spanish Court To Consider Paternity Claims Against Former King - by Norm Ornstein

The reputation of the former King of Spain, Juan Carlos, for being something of a playboy, has always been well known in European society.

Indeed, it is alleged by one writer that the former King has had over 1,500 lovers - and he once even made a pass at Princess Diana (she turned him down).

Given his philandering reputation, it is perhaps unsurprising that there are several people who claim to be his offspring.

But while he was King, there was nothing that those who suspected they had royal parentage could do about it; article 56.3 of the Spanish constitution baldly states that, "The person of the King is inviolable, and not subject to responsibility."

Read more: Spanish Court To Consider Paternity Claims Against Former King - The Daily Beast

Belgium: Wage Cuts And Austerity Have Come To Belgium

Today, trade unions in Belgium are organising a general national strike. This will come on top of 3 days of regional strikes as well as a national manifestation, all of which have been massively followed up by workers over the past month. Moreover, the trade union leadership is considering to continue with such actions in the new year. For Belgium, with its tradition of social dialogue, this is rather unheard of and to see similar intense trade union action one has to go 20 years back.

Belgian workers have however every reason to be upset. The conservative government, having taken up power recently, is applying an austerity program of such depth that it reminds one of the brutal austerity policies that have been pursued in in many other European member states. Policies that have triggered the long European recession of 2011-2012. The total austerity package proposed amounts to some 11 billion euro or close to 3% of GDP.

Looking at the measures that are in the pipeline, both workers and unemployed people will face austerity from the cradle to the grave. There are cuts in childcare benefits, substantially increased childcare costs and (higher) education fees as well as swinging cuts in the educational budget and public services in general. Next year, workers will be forced to undergo a real wage cut of 2% while collective bargaining on wage increases is outlawed for the coming two years. Unemployment benefit systems are being hollowed out in many different ways and at the end of their active life, workers will have to work longer (to the age of 67) before being entitled to (reduced) pensions.

In all of these measures, the pressure is on wages while income from capital is not touched at all. On the contrary! On top of the 2% imposed cut in real wages comes a huge reduction in employer social security contributions. Business will enjoy a transfer of 4 billion euro or more than 1% of GDP.

Read more: Wage Cuts And Austerity Have Come To Belgium

USA: Rasmussen Poll Says Voters See A Sinking America

U.S. voters are less bullish on America’s role in the world and see a diminished United States in the decades to come.

Just 27% of Likely U.S. Voters believe the United States will still be the most powerful nation in the world by the end of the 21st century, down from 37% in January 2009 shortly after the Wall Street meltdown and just before President Obama took office.

 A new Rasmussen Reports national telephone survey finds that 48% disagree and believe the United States will not be the number one world power, a 14-point increase from 34% six years ago. Twenty-four percent (24%) are not sure. (To see survey question wording, click here.)

Read more: Voters See A Sinking America - Rasmussen Reports™

Energy: The Dangerous Energy Poker Game:Between Saudi Arabia, Iran, Syria, Russia and the USA

Geo-Political Poker Game Or Saudi Blackmail?
"After two years of stable prices at around $105 to $110 a barrel, Brent blend, the international benchmark fell from $112 a barrel in June to around $65 on Friday, December 12 . “What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. His answer? “To harm Russia.” - says Mohamad Bazzi in a report he wrote for Reuters

That is partially true, but Saudi Arabia’s gambit is more complex.

The kingdom has two targets in its latest oil war: it is trying to squeeze U.S. shale oil—which requires higher prices to remain competitive with conventional production—out of the market. More broadly, the Saudis are also punishing two rivals, Russia and Iran, for their support of Bashar al-Assad’s regime in the Syrian civil war. Since the Syrian uprising began in 2011, regional and world powers have played out a series of proxy battles there.

While Saudi Arabia and Qatar have been arming many of the Syrian rebels, the Iranian regime—and to a lesser extent, Russia—have provided the weapons and funding to keep Assad in power.

Russia and Iran are highly dependent on stable oil prices. By many estimates, Russia needs prices at around $100 a barrel to meet its budget commitments. Iran, facing Western sanctions and economic isolation, needs even higher prices. Already, Iran has taken an economic hit from Saudi actions.

On Nov. 30, as a result of OPEC’s decision not to increase production, the Iranian rial dropped nearly six percent against the dollar.

The Saudis believe it can protect itself from the impact of the price drops. It can always increase oil production to make up for falling prices, or soften the blow of lower profits by accessing some of its $750 billion stashed in foreign reserves.

Still, Saudi Arabia is playing a dangerous game—there is little evidence that authoritarian regimes like Russia and Iran would change their behavior under economic pressure. Worse, the Saudi policy could backfire, making Russia and especially Iran more intransigent in countering Saudi influence in the Middle East.

In the meantime  OPEC Gulf members and crisis-hit producer Russia held the line on resisting oil output cuts, a message that helped send oil to a fresh five-year low on Tuesday December 16.

A near-$20 drop in prices since OPEC declined to cut output at a Nov. 27 meeting has yet to prompt the Gulf members - who overruled calls for output cuts by poorer members such as Venezuela - to reverse course.

Russia has said it would not cut production even if oil prices fell below $60 per barrel - far below some $100 a barrel it needs to balance its budget - a message reinforced on Tuesday by energy minister Alexander Novak arriving at a gas producers summit in Qatar.

"If we cut, the importer countries will increase their production and this will mean a loss of our niche market," he told reporters, speaking through an interpreter.

"We plan to preserve the plan for 2014 production without any increase or decrease," he said.
His comments came as the rouble fell to a new all-time low despite the central bank's steep rate hike on Monday.

Oil prices dropped to below $59 per barrel on Tuesday for the first time since 2009 and are now down almost by a half since June due to weak demand and growing supply from the United States.

The collapse of the rouble and plunging oil revenue present one of the biggest challenges for President Vladimir Putin during his 15-year rule at a time when the Russian economy is already struggling under Western sanctions over Ukraine.

Novak said Russia, the world's second largest oil exporter after Saudi Arabia, will maintain its output levels even if there was no guarantee prices would not go much lower.

"No one will tell you this," Novak said when asked what was the floor for oil prices.
He also said Russia agreed with the view of Saudi Arabia that the oil market would eventually stabilize itself.

What is certain however is that the oil market and the world economy  faces an uncertain outlook in 2015 as tumbling oil prices resulting from global oversupply stoke geopolitical tensions in key producers of crude, analysts say.

In fact, if no one eventually blinks in this rapidly deteriorating volatile energy based geo-political dispute, it potentially has the ability to escalate on a global scale and turn into a military conflict involving all super powers which, without any doubt, would mean the end of civilization as we know it.

EU-Digest

North Sea Oil Exploration: Falling oil price could hit planned North Sea projects, analyst warns - by Magnus Gardham

Major new North Sea oil projects could be shelved as a result of plummeting prices, a leading industry analyst has warned.

James Webb, of global energy consultants Wood Mackenzie, said 32 untapped fields in the North Sea and across Europe were at risk if prices stayed below 80 dollars per barrel.

The benchmark price of Brent crude settled at 62 dollars per barrel at the end of last week, down 45 per cent since June.

Nearly three quarters of the new fields require a price of 60 dollars per barrel if oil companies are just to break even, Mr Webb said.

He added: "Major projects and investment in the UK and across continental and Mediterranean Europe could be at risk if prices stay below 80 dollars per barrel."

The 32 projects he identified are awaiting the green light on investment that would total 69 billion.

Read more: Falling oil price could hit planned North Sea projects, analyst warns | Herald Scotland