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12-Jul-11 World View — In Brussels And Washington, Dysfunction Over Debt Issues


This morning’s key headlines from

China criticizes South China Sea drills in Mike Mullen’s visit

China's General Chen Bingde greets Admiral Mike Mullen in Beijing on Monday (Xinhua)
China’s General Chen Bingde greets Admiral Mike Mullen in Beijing on Monday (Xinhua)

In recent weeks, the United States has conducted joint naval exercises in or near the South China Sea with other countries, including the Philippines, Vietnam, Japan and Australia. As Admiral Mike Mullen, chairman of US Joint Chiefs of Staff was visiting Beijing, his Chinese counterpart, General Chen Bingde, chief of the general staff of the People’s Liberation Army, spoke at a news conference criticizing the naval exercises. “On various occasions, the US has expressed that it does not intend to intervene in South China Sea disputes. The US is actually sending out the opposite signal. We have observed the latest joint exercises between the US and other countries, for example, the Philippines and Vietnam.” Chen also criticized the U.S. for spending too much money on the military. China Daily

Panicked EU officials watch bond yields spike to fresh highs

Eurogroup finance ministers meeting in Brussels on Monday to discuss the debt crisis in Italy and Greece, as yields (interest rates) on Spain’s 10-year bonds smashed through the 6% barrier, yields on Italy’s 10-year bonds jumped 44 basis points to 5.7% and yields on Greece’s 2 year bonds rose to 31.1%. German Chancellor Angela Merkel called for more “frugality” in Italy. Increasingly, officials are coming to the conclusion that Greece will default (something that the European Central Bank still bitterly opposes, since they stand to lose the most), and now the talk has gone from avoiding default to reducing the impact of a default. Telegraph

Greece's 2 year bond yields at 31.1% (Bloomberg)
Greece’s 2 year bond yields at 31.1% (Bloomberg)

As Eurogroup ministers discuss the next bailout of Greece, which will be dependent on Greece implementing austerity measures and meeting revenue targets, it now turns out that Greece is likely to miss its 2011 revenue targets by an enormous 3 billion euros. One reason is that Greek tax collectors have only three months to find 800,000 taxpayers who are newly liable to pay taxes under the austerity rules. Even worse, the recession is likely to be worse than expected. Kathimerini summarized by EuroIntelligence

Washington debt negotiations still at square one

President Barack Obama told the Republicans on Monday that it’s time to “pull off the Band-Aid” and “eat our peas,” as his way of saying the same thing that everyone’s been saying for months – that the debt ceiling negotiations are running out of time, and the country either will or will not suffer a catastrophe if agreement is not reached by August 2. The Republicans are saying that raising taxes will just give money to the government that will just be pissed away, and they’re right about that. The Democrats are saying that cutting spending will devastate old and poor people, and they’re right about that as well. Same as in Europe, a way will be found to “kick the can down the road,” until a major crisis forces taxes to be raised AND spending to be cut. CNN

Shanghai completes the San Francisco-Oakland Bay Bridge

On Monday, China’s Shanghai Zhenhua Heavy Industry Co Ltd in Shanghai finished the final four pieces of of fabricated steel for the San Francisco-Oakland Bay Bridge, under a contract valued at more than $350 million. It’s part of a $7.2 billion project to replace the Bay Bridge that was destroyed in the 1989 San Francisco earthquake. The pieces will be assembled in San Francisco. China Daily

Mideast Quartet fails to find common ground for peace talks

The Mideast Quartet, which consists of the United States, the United Nations, the European Union and Russia, met in Washington on Monday with the objective of restarting the Mideast peace process. However, Both Israeli and Palestinian officials have decided that there’s no common ground to restart the peace talks, and the Palestinians are more determined than ever to pursue the recognition of an independent Palestinian state at the United Nations in September. Haaretz

Istanbul performance of Iannis Xenakis’ Oresteia on YouTube

“Oresteia,” composed by my late cousin Iannis Xenakis, was performed at the Istanbul Music Festival on June 21, 2010. The oratorio is sung in three acts with “electrifying” choral work. It’s based on the trilogy of Greek tragedies that celebrate the birth of democracy out of destruction in ancient Greece. The Istanbul venue for the performance has historic significance because it was Istanbul’s first Christian (Orthodox) Church, which the Ottoman Turks turned into a weapons storage facility shortly after they conquered Constantinople in 1453. (See “Works by Iannis Xenakis gain wider prominence and recognition”)

[youtube v3biAAGX0fw nolink]



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