World View: Investors Go Gaga as France, Germany Vow to Save Euro

World View: Investors Go Gaga as France, Germany Vow to Save Euro

This morning’s key headlines from

  • Russia considering naval bases in Vietnam, Cuba, Seychelles
  • Turkey’s alarm grows over PKK terrorists in northern Syria
  • From China: A piranha hunt turns into a fiasco
  • Investors go gaga as France, Germany vow to save the euro

Russia considering naval bases in Vietnam, Cuba, Seychelles

Vietnam’s President Truong Tan Sang announced on Friday that Russiawill set up a naval base for ship maintenance at its port of Cam Ranh.I would guess that this puts Russia squarely on the side of Vietnam inthe South China Sea dispute. And with American support for thePhilippines, there’s plenty of room for military conflict. Russia hasonly one naval base outside of Russia – the one at Tartus, Syria — soone can see why they’re not anxious to lose it. According to Russia’snaval chief, Vice Admiral Viktor Chirkov: 

We are indeed continuing work to ensure thestationing of Russian Navy forces outside the Russian Federation.As part of this work at the international level, we are discussingissues related to the creation of [ship] maintenance stations inCuba, in the Seychelles and in Vietnam.

It was just a few months ago that I reported China was considering a naval base in theSeychelles, off the eastern coast of Africa, though apparently nothinghas come of that. As for a Russian base in Cuba: blockade, anyone?Ria Novosti and Voice of Russia and International Business Times

Update: The BBC is reporting that Chirkov is denying that he made thisstatement.

Turkey’s alarm grows over PKK terrorists in northern Syria

Although the issue of the Kurds in Syria is considered a sideshow bypeople in the West, it’s clear that Turkey is becoming increasinglyalarmed by the ability of the terrorist Turkistan Workers Party (PKK)to take advantage of the chaos of the Syrian war to build a base inSyria for launching terrorist attacks in Turkey. Turkey has beenbombing PKK terrorist camps in northern Iraq for years, and may soonbegin bombing PKK camps in northern Syria. Reuters

From China: A piranha hunt turns into a fiasco

A man had his palm bitten by a piranha fish in a river in southernChina, alarming officials who realized that the South Americanflesh-eating fish had somehow reached China. So local officialsdecided to offer 1,000 yuan ($160) to the public for each piranhacaught, in the hope of ridding the river of the fish. China’s leadingonline trading platform, Taobao, began offering piranhas for expressdelivery at $1.80 per fish. Sooooooo, people began ordering piranhasonline and turning them in the collect that $160. Want China Times

Investors go gaga as France, Germany vow to save the euro

Excited investors pushed stocks up again on Friday, after GermanChancellor Angela Merkel and French President François Hollande vowedto do “everything” to save the euro, a day after European CentralBank (ECB) president Mario Draghi made the same vow: “Germany and France are deeply committed to theintegrity of the euro zone. They are determined to do everythingto protect the euro zone.”

Investors are interpreting “do everything” as an intention to allowthe ECB to “print money” and use it to purchase Spanish and Italiandebt, even though that’s illegal under existing European Union treaties,and even though much of the German public is opposed to it.

It’s now been about five years since Fed chairman Ben Bernanke’s GreatHistoric Experiment was put into operation. “Bernanke’s historic experiment takes center stage” It was a truly remarkable time, because Bernanke wasgoing to put his life’s theory to the test — that the GreatDepression could have been avoided if only the Fed had loweredinterest rates by a small amount. It was a truly historic moment, andfive years later we know that the experiment was a total failure. TheFed lowered interest rates pretty much to zero, which is where theyare now, and supplemented those steps with massive monetary and fiscalBank of England, the People’s Bank of China, and other central banks.And the global economy is still slowing down. Ben Bernanke’s GreatHistoric Experiment has been a failure. 

On Thursday, Britain announced the worst recession in its history. OnFriday, the U.S. Commerce Department showed that the U.S. economy iscolling quickly, at a time when “experts” and politicians wishfullyhad hoped that the recovery would be “self-sustaining.” Germany issupposed to be the savior of Europe, but German newspapers arereporting an “uncomfortable and bitter truth”: profits, sales andearnings of Germany companies are also cooling.

Bernanke’s Great Historic Experiment never had a chance because, as Iwrote in 2007, it overlooks generational changes in the U.S. and theworld population. If you don’t believe this, Dear Reader, then askyourself the following question: Would you go back into debt today theway you did in 2003-2007? Or are you saving your pennies, for fear oflosing your job or your savings? Most people would agree to thesecond option, and that’s the point. You can’t have areport that the economy is cooling is based on evidence that peopleare spending less than they used to. People have been badly burned,and they will never go back to their old ways for the rest of theirlives. That’s why it won’t be until the 2020s that aReuters and Bloomberg and Spiegel

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