World View-Luxembourg: Cyprus-Style Bailouts Will Kill Investment in Eurozone

World View-Luxembourg: Cyprus-Style Bailouts Will Kill Investment in Eurozone

This morning’s key headlines from

  • Russia warns that North Korean situation could spiral out of control
  • Luxembourg opposes using Cyprus as a ‘template’ for euro bailouts
  • Relationship between Gulf nations and U.S. at a crossroads

Russia warns that North Korean situation could spiral out of control

Russia’s Foreign Minister Sergei Lavrov called on both North Korea andthe United States for “all sides not to flex their military muscle.”He added: “We are concerned that alongside the adequate,collective reaction of the UN Security Council, unilateral actionis being taken around North Korea that is increasing militaryactivity.”

His remarks come a day after the U.S. flew B-2 bombers across SouthKorea as part of scheduled military drills. Russia and China havecriticized flying the B-2s, but refused to criticize North Korea in2010, when they attacked a South Korean warplane with a torpedo,killing 46, or when they attacked and killed civilians on a SouthKorean island. 

The U.S. has been following a strategy of “strategic patience,” whichmeans that we don’t respond to North Korea’s stream of belligerentactions, in the hope that if we’re patient long enough, then the NorthKoreans will stop doing them. That would require North Korea toexhibit a conciliatory mood and behavior, but from the point of viewof Generational Dynamics, such a mood would be extremely unusual duringa generational Crisis era. What’s actually happened is that the NorthKoreans have been raising the stakes and adopting an increasinglybelligerent attitude. 

Now the United States is raising the stakes as well with the B-2overflights, and with actions by the Treasury Dept. targeting NorthKorea’s banks and finances. This appears to signal that the policy ofstrategic patience is at least partially ending. 

Lavrov is right that the actions on both sides to cross redlines can spiral into full-scale war. In fact, from the point ofview of generational theory, that’s exactly the way that a violentcrisis war begins during a generational Crisis era. 

Many analysts are referring to the danger of a “miscalculation,” whichmeans that a war might begin because of carelessness on one side orthe other, but that’s not the real danger. Japan’s decision to bombPearl Harbor was not a careless decision. It was a thoroughly planneddecision, based on hallucinatory assumptions. That’s often the waygenerational crisis wars begin, and that’s the real danger today. Alot of people believe that Kim Jong-un is a maniac, and maniacs startthe worst wars. 

“Insanity in individuals is something rare – but ingroups, parties, nations and epochs, it is the rule.” — FriedrichNietzsche

Russia Today and Washington Post

Luxembourg opposes using Cyprus as a ‘template’ for euro bailouts

Leaders in Luxembourg are warning that if the Cyprus bailout model– a levy on bank deposits — is used in bailouts of other troubledeuro zone countries, then investors will pull out of Europe.According to the country’s finance minister: “This will lead to a situation in which investorsinvest their money outside the euro zone. In this difficultsituation, we need to avoid anything that will lead to instabilityand destroy the trust of savers.”

Luxembourg’s leaders have good reason to worry. Luxembourg isdescribed as a nation that’s like “Cyprus on steroids,” with a smallerpopulation but a much larger banking sector, in a great deal of debt. 

In fact, the idea of using people’s bank savings accounts to bail outcountries in debt is very much on the table. The trend is thatbailouts are getting more frequent and more serious, and the northerncountries, particularly Germany, do not feel an obligation to continuebailing out other countries in Europe. Is Germany’s money reallyEurope’s money? The Germans say that it’s Germany’s money. Bloomberg and Spiegel

Relationship between Gulf nations and U.S. at a crossroads

The Gulf Cooperation Council (GCC), comprising Kuwait, Saudi Arabia,the UAE, Qatar, Bahrain and Oman, was founded in the early 1980s, inthe shadow of the Iran/Iraq war. For the most part, the GCC statesand the U.S. have shared a clear common and mutual interest in thestability and security of the Gulf region. But now they’re growingfurther apart on an almost daily basis, with the two sides takingdifferent positions on several major issues: 

  • On Syria, the GCC position is that the Bashar al-Assad regime has lost all legitimacy and the conflict is spilling over into neighboring nations. The GCC states are supporting the armed resistance, but the United states is supporting a continued arms embargo.
  • With regard to Iran’s nuclear program, the U.S. favors a diplomatic approach, while the GCC nations see this as simply a way for Iran to stall for years to buy time to develop a nuclear program. The Arab Gulf states see this possibility as extremely dangerous, and view the U.S. position as underestimating the danger.
  • The U.S. has persistently failed to play an honest broker in the Arab-Israeli conflict. While the GCC states have repeatedly tried over the past decades to work toward a resolution of the crisis, including expanding diplomatic contact with Israel and sponsoring peace initiatives, the US has refused to take a more balanced position or undertake a concerted push for realistic Middle East peace.

Other areas of disagreement include Iraq, Yemen, and Bahrain. In theGCC view, the US fails to understand the overall strategicenvironment, and the dangers associated with the shifts taking place. 

The result is that the GCC states have no choice but to act on theirown and without consideration of US interests and concerns. Arab News

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