By Asian nations looking to ‘lead world’ in an EU-style community, does they mean China and India run Asia at the cost of the other nations?

Asian nations discussed plans at a major summit Saturday to “lead the world” by boosting economic and political cooperation and possibly forming an EU-style community.

The prime ministers of regional giants China and India also looked to foster unity on the sidelines of the summit in Thailand after months of trading barbs over long-standing territorial issues.

But nuclear-armed North Korea and military-ruled Myanmar were also set to top the agenda in the royal beach resort of Hua Hin, underscoring the challenges still facing the region.

The European Union is, basically, a French jockey riding a German military horse.  If Asia created a EU style government, I would expect something very similar; however, I have a hard time seeing China giving up political or military control to India (or any other country).

With the world now watching, the news is full of information on the events of Iran. Here are a number of new bits to fill you in:

The Mood In Tehran

Mohammad Sagha, a Chicago blogger, is in Tehran visiting his family for the summer, he has some interesting reports about what is going on that the Western press is not showing. Here is a great comment that, I think, shows something about the mentality of Iranians within the country:

This morning’s Tehran Times, an english publication inside Iran, had this following headline: “Candidates and followers are different from rioters: Larijani.” Larijani is the current speaker of Iran’s parliament, or Majles. This isn’t the first time a high official has made such a statement, but I think it is extremely important to reiterate; it shows that people look at opposition inside Iran as legitimate as long as they aren’t violent and there are powerful elements inside Iran which are serious about compromise and recognizing dissent.

In the end, if the government starts the violence, how should the opposition react? Kind of a catch 22.

Nico Pitney, of the Huffington Post, has a GREAT live blogging archive of events.

The BBC asks… where did all the votes come from?

Another good article by the BBC that breaks down the three potential areas where the “extra” votes could have come from, assuming they are legit votes.

1) Voter turn out

Result – reported turnout figures are problematic.

2) So where did the new votes come from?

Result – in order to get to the total declared of 765,000 votes from the provinces 44% of former reformist voters would have had to have voted for President Ahmadinejad. Unlikely according to the report.

3) Do rural voters support Ahmadinejad?

Result – his increase in support for Ahmadinejad amongst rural and ethnic minority voters is out of step with previous trends, extremely large in scale, and central to the question of how the credibility of Ahmadinejad’s victory has been perceived within Iran.

Angela Merkel, Chancellor of Germany, said….

“Germany stands on the side of those people in Iran who want to exercise their right to freedom of expression and freedom of assembly. I strongly urge the Iranian leaders

• to allow peaceful demonstrations;
  
• not to use force against demonstrators;
  
• to release political prisoners;
  
• to allow free reporting by the media; and
  
• to recount the votes cast in the presidential election.

What is true for the rest of the world is also true for the Iran: general human and civil rights must be fully respected!”

Seems to be a lot more than what President Obama is willing to say.

China wants Ahmadinejad election recognized

China is throwing thoughts about the Iranian election into the mix:

Last Thursday, an editorial in the state-owned English-language China Daily called on the international community “to leave Irans internal problems to the Iranian people and accept their verdict.

“Attempts to push the so-called color revolution toward chaos will prove very dangerous,” the editorial continued. Opposition candidate Mir Hossein Mousavi “refuses to accept defeat. Win and loss are two sides of an election coin. Some candidates are less inclined to accept defeat.”

China Daily pointed to a pre-election poll that showed President Mahmoud Ahmadinejad ahead by a 2 to 1 margin.

You think Tiananmen Square may be haunting some members of the Chinese government? Maybe it’s the fact that if a revolution could break out in Iran, it could also happen in China. Oh, and the “pre-election poll” the China Daily pointed to is very, very suspect. According to the BB,C 1,731 people contacted and well over half either refused to participate (42.2%) or did not indicate a preferred candidate (15.6%).

UPDATE #1: The IBTimes is reporting Revolutionary Guards commander defies Khamenei’s orders to use force on protestors

General Ali Fazli, who was recently appointed as a commander of the Revolutionary Guards in the province of Tehran, is reported to have been arrested after he refused to carry out orders from the Iranian Supreme Leader Ayatollah Khamenei to use force on people protesting the controversial re-election of President Mahmoud Ahmadinejad.

If recent events are any indication of what may happen to Ali Fazli, you know it won’t be good.

UPDATE #2 0n 6/24/09: Iranian footballers who wore green armbands to support protesters forced to retire

Four footballers who wore green armbands in solidarity with Iranian protesters have been forced to retire from the national team.

Their gesture in a recent World Cup match in Seoul attracted worldwide attention last week.

But the authorities have now taken revenge revenge by imposing life bans on Ali Karimi, 31, Mehdi Mahdavikia, 32, Hosein Ka’abi, 24 and Vahid Hashemian, 32. According to the paper, they have been ‘retired’ from the sport.

When the news came out that President Obama, essentially, fired GM CEO Rick Wagoner I was blown away – and HIGHLY worried that the lines between government and business had finally blurred too much. I strongly believe the government should not tell a company how it should function. If the company cannot function on its own, the company should cease to exist.

My level of concern jump yet again as I found out the Obama Administration refused the repayment of TARP loans from a number of small banks. Why? I think Stuart Varney has hit the nail on the head:

The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell ‘em what to do. Control. Direct. Command.

It is not for nothing that rage has been turned on those wicked financiers. The banks are at the core of the administration’s thrust: By managing the money, government can steer the whole economy even more firmly down the left fork in the road.

If the banks are forced to keep TARP cash — which was often forced on them in the first place — the Obama team can work its will on the financial system to unprecedented degree. That’s what’s happening right now.

Paranoid? Maybe. Until one sees even more indicators of what the administration has in mind. On “Face The Nation”, Treasury Secretary Tim Geithner said the following:

When, in the future — or I’ll just say, if, in the future, banks need exceptional assistance in order to get through this, then we’ll make sure that assistance comes with conditions, not just to protect the tax payer but to make sure this is the kind of restructuring necessary for them to emerge stronger. And where that requires a change of management of the board, we’ll do that.

While I can understand conditions on assistance, there are a large number of fiscally sound financial institutions forced to take TARP cash. Yes, Forced. If the company was forced to take cash from the government, this implies any company forced to take cash will also be forced to change management as the government sees fit. Something is not “conditional” when you have no options to begin with.

Why does the Administration want significant control of the financial markets? I my opinion, it is not due to the current recession, it is due to Europe and the G20.

G-20 leaders declared a crackdown on tax havens, tighter regulation of hedge funds and a new supervisory body to flag problems in the world financial system.

A sweeping G-20 communique appeared to bridge the gap between the United States and major European countries over how far to push changes on regulation to curb the market excesses that led to the current crisis.
Marco Annunziata, chief economist of the UniCredit Group in London, said the G-20 accord gives the U.S. “very little” while Europeans got most of what they wanted.

The agreement out of the G20, essentially, gives regulatory power over our economy and finical system to international interests – mainly France and Germany. This is huge as EU interests and priorities regarding economics are NOT the same as US interests.

If you thought the Bush administration was power hungry, and it was, you need to wake up and see what is going on now. The current administration is not looking out for U.S. interests, as it said it was going to under the “change” mantra; no, the administration is marching free enterprise and capitalism right into the hands of European controlled socialism.

International news wires are covered with a very interesting story – The EU will not bailout Eastern Europe.  I believe this quote sums up the view the powers of the EU have quite well:

“Saying that the situation is the same for all central and eastern European states, I don’t see that,” said Merkel, adding “you cannot compare” the dire situation in Hungary with that of other countries. 

Two thoughts come to mind with this statement, but I fully admit that my understanding the European Economic climate is limited to Germany, France, Poland and Hungary, so I may be missing key counterarguments.  

The first problem I see with the bail out on a case-by-case basis for Eastern European countries is much like the U.S. faces with banking and financial institutions.  When one situation pops up, you beat it down like a “whack-a-mole” but another one pops up in place of the original.  The governments of the EU end up trading one problem for another as the financial distress ripples from one country to another.  

What the U.S. needed to do at the outset of this crisis was establish a fund that addressed all the toxic debt in the financial system.  They failed to do so and each financial institution has become an endangered animal as a result.  The EU in the same position as the US, only months later and with the opportunity to do it right.  Instead of preventing the collapse of governments by proactive solutions, the EU elite will allow the smaller countries to suffer (and so will their people).

The second problem comes down to a matter of politics. What if the EU does not wish to see Eastern European countries succeed?  What if the European Union is looking for a reason to NOT admit additional Eastern European countries into the EU.  What better way to keep a county out because they do not qualify to join because of their economic status?

What if the EU is attempting to keep countries like the Ukraine, Belarus or Georgia out of the EU due to pressure from Russia?  

Think about this – Russia is against former Soviet Union countries from gaining further independence. As a result, Russia reminds the EU that the majority of energy resources the EU consumes comes from Russia.  The EU has strict policies on finical requirements in order to join the Union, and what better way to impede a countries entry into the Union than hitting their pocketbook.  

If the European Union truly feels each country needed help on a case by case basis, they risk creating a larger financial crisis, much like the U.S. intensified the situation by not creating a blanket solution.  On the other hand if this is a political move by Russia and the EU, it was created to break the back of smaller former soviet states which would allow Russia the opportunity to regain the territory.

Economic Musings – The US

Driving in today I heard that the latest GDP numbers for the 4th quarter and it turns out that the U.S. economy contracted 6.2% in the last three months of 2008. This ends up being significantly weaker than the 3.8% originally predicted at the beginning of the month.

Not only this is the worst GDP drop in 25 years, but the magnitude of the revision is truly astounding. When one looks at the unemployment numbers and the large waves of layoffs in the last two months, Q1/2009 could easily be on par – if not worse than – Q4/2008.

Economic Musings – International

Two days ago I commented that people need to look beyond our boarders for additional indicators of the economic climate. I specifically singled out Japan and Germany. Both countries saw significant contraction in recent months, but what about other countries?

Chilean industrial production fell the most in 10 years as output declined 8.9% year over year, another country we can add to the recession list.

By now it should be clear that this is a world wide recession and no country is safe.

Don’t understand the credit crisis? Watch this.

I know a number of people who do not fully understand the credit crisis and how the economies of the world ended up where they are today. Here is an outstanding cartoon that manages to explain a rather complicated situation in a very simple, yet effective method.

This is a must watch!

• In German, Opel workers stage a mass rally demanding that GM (the Parent Company) keep their plant open.
• Saab, who just filed Bankruptcy in their home country last week, is also staging a protest against GM closing production facilities.
• The Latvian Government is on the verge of collapse due to the financial crisis.
• Greek farmers shut down airports and public services as a form of protest to the current economic conditions they face.

And the final random thoughts for this post…

It’s the weekend and I need a break – time to get away from the stresses of work, the world, and life in general.

I’ll be having dinner with my Parents on Sunday, which will be enjoyable, and I expect to watch The Curious Case of Benjamin Button as well.

There will be no cooking, exotic or otherwise… though I do have a few new things I want to try. One specifically is the Paprika Chicken Roast over @ ReTorte! Wandering Coyote really has some good food selections.

Finally, my review of The Prodigy’s Invaders Must Die will come this evening…

Until then!

One short term benefit to being a consumer based economy is not being on the supply side when the sudden changes in economic conditions take place.  To get a clearer picture of the economic reality, a picture that is not only focused on the pain the U.S. economy is facing, look beyond our borders to the countries that count on exporting goods in order to sustain economic growth.

Japan

The second largest economy in the world contracted at an annual pace of 12.7% last quarter.  By the very loose definition of an economic depression (10% or greater of negative growth), the Japanese are facing what the world fears most.  The contraction was accompanied by a decrease in exports by 45.7% from a year earlier, and a 31.7% decrease of imports.

This suggests three very obvious things – The Japanese consumer is not spending, the countries Japan exports to are not purchasing goods, and result further contraction is highly likely.

While still low, it would be reasonable for unemployment to start rising in Japan as companies, mainly manufacturing, begin slowing output or laying off staff in order to “right size” to the challenging environment. Toyota, a company known from not laying off staff during rough economic periods, will begin offering buyouts to employees. It’s just a matter of time before Honda and Nissan follow suit.

Germany

Germany, Europe’s largest economy, also fell victim to a decline in exports.  As a result, the country was the largest economic contraction in about twenty-two years.

While not as drastic as the numbers out of Japan, Germany’s decrease in exports by 7.6% is quite significant considering most look at the German economy as the beating heart of the Euro-zone.  Companies are halting production, laying off workers, and preparing for a significant decline in growth as economists expect the German economy to contract by 2.25% this year.

Seems to be a common theme, no?

Looking at this information makes me wonder…

So, have I stopped purchasing?

Hell yes!

I cannot even begin to remember when I spent a significant amount on an item that would be considered “discretionary”.  If I really put my mind to it, I would say last December I spend $150 on 3 pairs of Wool pants.  Everything else I purchase would fall into the category of household goods (weekly groceries) or entertainment costs (weekend brunch or a movie).  Any excess that I have goes immediately to paying off debts as I fear about my future, and I fear about my ability to provide for myself as I look at the events unfold around me.

While the U.S. economy is consumer based, we can see that the consumer – namely you and I – have stopped spending on goods.  As a result, we are no longer importing goods from our trade partners.  Once the economic data coming from Japan and German begin to stabilize, and only once the data stabilizes, will the world truly know economic conditions are beginning to improve.