This morning’s key headlines from GenerationalDynamics.com.
* German neo-Nazis are apparently very well armed
* US Fed makes dollars available to Europe as global panic is threatened
* A desperation move and a humiliation for Europe
* People’s Bank of China cuts interest rate as economy slows
* Syria’s Christians side with Bashar al-Assad out of fear
* Attack on UK Embassy in Iran creates diplomatic chaos
* America and China compete for the affections of Burma (Myanmar)
* Turkey announces economic and weapons sanctions against Syria
German neo-Nazis are apparently very well armed
The recent discovery of an anti-Muslim anti-immigrant neo-Nazi terror cell that had been killing people for ten years and getting away with it has been a shock throughout Germany. And now, a new report indicates there are numerous neo-Nazi groups in Germany and that they’re very well armed. Authorities have confiscated 811 weapons from right-wing extremists in the two-year period from 2009 to 2010. Since 2001, 13 such extremist groups had been investigated under German laws prohibiting the creation of a terrorist organization. The groups had names such as “National Movement for Eternal Loyalty to Hess,” “The New NSDAP,” “The German Anti-Jewish Fighting Association” and the “Brown Army Faction.” Spiegel
US Fed makes dollars available to Europe as global panic is threatened
Major central banks — the U.S. Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank — took coordinated actions on Wednesday to increase dollar liquidity for European banks. Swap lines, which European banks can use to swap euros for dollars, were not increased in size, but pricing was reduced on existing swap lines. Euphoric stock traders pushed the DJIA up almost 500 points in a drunken orgy. However, the move by the central banks does not provide any sort of bailout to Europe, and does not change the fact that Europe is insolvent. The most that the move can do is buy time. Wall Street Journal (Access)
A desperation move and a humiliation for Europe
Analysts on CNBC and BBCTV were grinning from ear to ear on Wednesday morning. They obviously believed that this was going to have the same effect as quantitative easing. What QE did was nothing for ordinary people or businesses, but it poured huge amounts of money into banks, financial institutions, and the stock markets, allowing bankers and brokers to award themselves million dollar bonuses.
It’s hard for me to imagine what traders were thinking on Wednesday. My guess is that they didn’t understand what was going on, and they assumed that the bull market that began in March 2009 was about to be repeated.
On the other hand, I’ve heard several analysts say that this central bank action isn’t a good move. Some are questioning why America is bailing out Europe (which isn’t true anyway), but more importantly, some are saying that this is a move of desperation and indicates how catastrophic the situation in Europe really is. Telegraph
The problem that’s going on today is what I’ve been writing about for years–that thanks to deleveraging, there’s less money in the world every day than there was the week before. By the law of supply and demand, the cost of money (bond yields or interest rates) is going up, and the value of money is increasing, resulting in a deflationary spiral. In addition, as people and businesses hoard cash and avoid spending and investing, the velocity of money is plummeting, making the deflationary spiral into a vicious cycle.
People’s Bank of China cuts interest rate as economy slows
China’s central bank, the People’s Bank of China (PBOC) cut interest rates for commercial lenders on Wednesday for the first time in three years, a policy shift that was announced just hours before the above action by Western central banks. The PBOC joins the central banks of Brazil, Indonesia, Thailand and the euro zone, among others, in easing monetary policy, a reflection of the alarm that the euro zone debt crisis and a sluggish U.S. economy could drag the world back into a recession. Reuters
Syria’s Christians side with Bashar al-Assad out of fear
|Two Syrian Orthodox priests|
supporting Bashar al-Assad (AFP)
Many of Syria’s 2.5 million Christians are supporting President Bashar al-Assad amidst ongoing protests in the country and the slaughter of at least 3,500 protesters since March. They prefer a brutal dictator who guarantees the rights of religious minorities to the uncertain future that Assad’s departure would bring. The president is exploiting their fears by threatening a government takeover by anti-Christian Islamists who would burn churches. “We’re a nation of 23 million,” Tabé says, “and no law can ever satisfy everyone. That’s true in every country — there are always 10 percent who are sacrificed.” It’s a state of affairs he can accept, as long as Christians aren’t the segment of the population being sacrificed. Spiegel
Attack on UK Embassy in Iran creates diplomatic chaos
The British government waited until its Tehran embassy staff was safely out of Iran’s airspace, then announced that it was closing the Iranian embassy in London, giving the the diplomats 48 hours to leave the country. Foreign Secretary William Hague said, “If any country makes it impossible for us to operate on their soil, they cannot expect to have a functioning embassy here.” He accused Iranian officials of providing “some degree of regime consent” for the Tuesday attacks on the UK embassy, calling what happened “shameful.” Germany, France and the Netherlands have all recalled their Iranian ambassadors for consultation, while Norway has closed its embassy as a precaution. This all comes as EU foreign ministers are meeting in Brussels to discuss new sanctions on the Iranian regime. Independent (London)
America and China compete for the affections of Burma (Myanmar)
The fallout is still increasing from Burma’s (Myanmar’s) recent decision to halt the huge Myitsone dam joint project with China. China is anxiously trying to improve relations, pushing Burma for closer military ties. However, U.S. Secretary of State Hillary Clinton is making a landmark three-day visit to the formerly pariah nation to improve the country’s ties to the U.S. and Europe. China’s relationships with its Asian neighbors have been getting increasingly hostile, especially in the cases of countries who are contesting China’s aggressive and bellicose claims to the entire South China Sea. Global Post and LA Times
Turkey announces economic and weapons sanctions against Syria
Turkey’s Foreign Minister Ahmet Davutoglu joined the Arab League and the West in imposing a series of nine economic sanctions against the Syrian regime of Bashar al-Assad on Wednesday. The sanctions include: blocking arms and military shipments to Syria over Turkish soil, a travel ban for Syrian officials, sanctions on businessmen “strongly supporting” the regime, suspending ties to the Syrian Central Bank, freezing Syrian assets in Turkey, and suspending loan deals. Davutoglu also said the Syrian regime has reached its end by ignoring calls from the international community to stop its bloody crackdown on protesters. “Every bullet fired, every bombed mosque has eliminated the legitimacy of the Syrian leadership and has widened the gap between us. Syria has squandered the last chance that it was given.” Zaman (Istanbul)