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Showing posts from July, 2011

"Think it possible you may be mistaken"

Oliver Cromwell is one of the more quotable political figures in history. From his instruction to Sir Peter Lely to "Paint me as I am, warts and all", to his irate dismissal of the rump Parliament: "You have sat here too long for any good you have been doing lately. Depart I say, and let us have done with you. In the name of God, Go!", Cromwell is still widely quoted, even if people may not be conscious of the source. It was this last quote that came into my head as I contemplated the self serving cant put out by the Tea Party Congressmen in the seemingly never ending debate to increase the US debt ceiling. As various of the malcontents noisily slipped away to various chapels to commune with their Creator in a hypocritical display of discount piety, I began to believe that it might be impossible for any bill to be passed by the House of Representatives. In the end, one has been, passed, albeit an unworkable one and even that only by the slimmest of margins. I was n

What happens after a US debt default

The US Republicans are in real danger of not being able to deliver any deal at all. There is a better than 60% chance that no deal can be done to raise the US debt ceiling before August 2nd. In which case the US AAA debt rating is now 80% going to fall this week. We are being constantly bombarded with the quote from the half American, Churchill: "the US always does the right thing, after it has exhausted the alternatives". Yet, what happens if the House Republicans do not do the right thing and the United States of America defaults on its debts? I think the enormity of that question provides its own answer. We are seven days away from a fundamental break down in American power. If the US defaults, it is not the same as previous crises: it will substantially and permanently degrade US standing in the world. All of the U-S-A chanting fans will be chanting for a degraded power. Those politicians who pretend that the US is an untouchable power will be seen for the frauds that th

Right Wing Nutters

I see Glenn Beck has managed to show a fine display of human fellow feeling by comparing the Norwegian victims of the right-wing murderer to the Hitler Youth . Nice. But then again the US ultra-rightists are not noted for tact or, indeed, intelligence. His fellow travelers continue to hold the World hostage through their manufactured deadlock of the negotiations to raise the US debt ceiling in the US Congress. Vince Cable, in his usual blunt way, has called those Congressman and Senators responsible "Right Wing" nutters. Hard not to disagree, when we hear that the leader of the refuseniks would not even take the telephone call of his head of state. The US AAA debt rating is now quite likely to go. If the deadlock continues, then the damage of a default will be permanent. Once it becomes clear that the leverage created in the Western world since 1945 is now no longer sustainable, even by the US Federal Government, then a major financial reordering is set to take place. In 19

Latvia raises its voice and takes a decision

It is not often that a country has the constitutional right to dissolve a Parliament by referendum. It is even rarer that this right is exercised. Thus the decision by the Latvian voters,to dissolve the Latvian Seima , and by a fairly substantial margin is a fairly unique set of circumstances.. But then again Latvia is a fairly unique country. Latvia came under intense pressure as the Great Recession began- its largest domestic bank went under, and the government budget fell out of control. The result was not chaos but determination. The technocratic government of Prime Minister Valdis Dombrovskis slashed the budget, rescued the bank with the assistance of the IMF, and set about getting Latvia's economy in order. The result was a recovery nearly as rapid as the initial collapse: a classic V shaped recession. More impressively still, the Prime Minister was able to be re-elected. Unfortunately that government was forced to rely on a disparate party: the "Greens and Farmers"

Britain needs an ideology

In the face of the repeated shattering blows to the old order: the Royal divorces, the Parliamentary expenses scandal, the Police failures in the NoTW scandal, and indeed the Murdoch scandal itself, it is easy to pronounce that Britain is a country in an inevitable decline. There is even the prospect of the dissolution of the UK in the near future, if the separatist agenda of the SNP gets its way in Scotland. The national debate is incoherent, with much evidence of retrenchment in hard power: our armed forces; soft power: our foreign ministry and overseas broadcasting; and financial power: the decline in the power and role of global finance, where London remains a global centre. Yet Britain remains a highly significant power, albeit that we only acknowledge our strengths in a rather sideways kind of way: "Britain can still ...". This, of course, still suggests decline, because the implication is that once upon a time, Britain could do so much more. Yet fifty years after the r

Another day, another resignation

The Murdoch scandal. The sky is dark with chickens coming home to roost. Rebekah Brooks resigns and a day later is arrested. Les Hinton resigns. Further arrests are on the way. The noose grows tighter ever tighter around James Murdoch. Meanwhile Sir Paul Stephens resigns as the Met Police commissioner- inevitable sooner or later, but interesting that it was sooner. Some of the more excitable may say that Cameron himself is under threat, but in the political game of mutual assured destruction, he is no more guilty than most, and a lot less guilty than many. Tony Blair has probably not been sleeping too well recently either. In fact, although not good for the PM, it would take a far more dramatic escalation for his position to be under real pressure. Cameron may have made some new enemies, not least Sir Paul Stephens, apparently, but that is the swings and roundabouts of politics. Meanwhile the Liberal, Democrats came under attack for being the only party with completely clean hands -no

Murdoch: into the Endgame

Two weeks ago Rupert Murdoch-controlled News International has a minority holding in BSkyB and full ownership of four national Daily and Sunday newspapers. True, He had explored turning his Dailies into seven day operations, but that looked to be a little while away. Also true, he was bidding for 100% control of BSkyB. Now he has a minority holding in BSkyB and full ownership of three Daily and Sunday newspapers. A seven day Sun looks to be only a few weeks away and although the current bid for BSkyB has been shelved, another bid could be tabled within a few months, if need be. It rather looks as though Murdoch has lost a battle, but not yet lost the war. Yet there is still the ongoing political shitstorm to get through. Though the pressure from the BSkyB bid may take some of the heat away, there is still the ongoing police investigation and the political and judicial inquiry and the real possibility of a backlash in the US. From the point of view of the UK, Murdoch has had a small de

The Coming Debt Meltdown.

The Sovereign debt crisis is finally exploding. As usual the Anti-Euro nutters are out in force- I see someone has let Ambrose Evans Pritchard out again- but just they always do, they totally miss the point. Of course the Euro is in crisis, but it is not the Euro that caused the crisis- it is a level of government debt in Europe and the US and Japan which is simply not sustainable. It may well be that the Euro is damaged or even destroyed- through that causes more problems than it solves- but the crisis is: that Western governments have been living beyond their means for decades. The bill is coming due- and this is a bill that embraces all the major currencies: the US Dollar, the Yen and the Pound as well as the Euro. No where is safe: the US Federal government is poised on the brink of shut-down as the political deadlock in Washington deepens. The Japanese government is essentially leaderless and directionless, and the governments of Italy, Greece and Spain are under critical strain.

Murdoch: it is still getting worse

The revelations for the beleaguered Murdoch Empire just keep coming. The exquisitely timed released of information that the medical records of Gordon Brown's children had been stolen by NI hacks. The growing realization that the Sunday Times , The Times and the Sun are also to a greater or lesser degree involved not only in phone hacking, but also in computer hacking and the theft of personal information on an industrial scale. That payments to the Police were routine. What does Murdoch do next? Despite the referral to the Competition Commission, the bid for BSkyB remains on the table, but short of actually closing his whole newspaper business in the UK, with a loss of jobs that would itself be highly unpopular (not least in the wider media), it is hard to see how the bid could now be allowed in the teeth of overwhelming public opposition. The point is that even if Murdoch did sell or even close News International in its entirety- as some are suggesting that he might- the legal

London Calling

Another week and another shuttle trip to London. My purpose is to support the fundraising for a new investment vehicle for Central and Eastern Europe, and although slow, there is steady progress towards raising a fairly modest €100 million. Yet London is not what it was as far as investment in CEE is concerned. The City is ruled by fashion as much as anywhere, and in the emerging markets world what's hot and what's not can change in a very quick order. Despite the generally impressive performance of the region over the past two decades, for all practical purposes CEE ceased to be of general interest after the August 1998 default of Russia. ironically it is now only Russia that seems to capture the imagination of those who are not specialists. Yet Russia remains incredibly challenging both as a market and as a place. Never mind that Poland or Estonia have turned in economic numbers that put Russia in the shade, the fashionable investors will track Moscow but not Warsaw. In fact

End of the line for Rupert Murdoch

Rupert Murdoch is not a figure who inspires affection. He is now, as he has always been, a ruthlessly efficient businessman. He promotes the interests of himself and his family above all else, and when those interests are threatened, he acts without compunction. However he is now 80. The fact is that, no matter what, his day is passing. For those who value freedom that is a happy thought. Murdoch has been a pernicious enemy of a free democratic process, calling politicians to heel through threats or through promises of support. Although his newspapers are a relatively small part of his empire- so much so that he has been able to close a centuries old newspaper without a second thought- the control he has exerted has made even Prime Ministers quake. That is not a power that an Australian, naturalized American should have in Britain. Though he exercises his power through an international business: through News Corporation into News International, nevertheless it is a very personal power.

Why I live in Estonia... The XI Young Song festival, held last weekend. A choir of 30,000 schoolkids and students watched by over 120,000 of the rest of the country. Magnificent and of course not one instance of bad behaviour recorded in the whole three day event. What land is this? No mountains vastly tower Just woodlands without end and mires in throngs but the people here are filled with wonderous power and strange the tales in their songs... What land is this? At times the day is eaten At times it lasts so long, it swallows the night The two pass us by regardless of season When outsiders rest, the local has to fight What land is this? Is here a Man's stature fit only for when a slave he became? All this hurt, who would gather so that love would come and bring an end to pain What land is this, where mercy is defenseless (what land is this) where freedom's buried deep underground Where's the justice, where's the justness where i

News International faces Nemesis

James Murdoch has not cooled public anger with his closure of the News of the World . In fact the large number of sackings that this tactical move involves makes his own position, not just that of the indefensible Rebekah Brooks, increasingly precarious. He may also- simply as collateral damage- have wrecked industrial relations in the rest of Wapping. Certainly there are rumours of sympathy strikes at The Sun . More importantly though, the radical move has been greeted with a mixture of cynicism and cold fury in the wider world. Cynicism, because creating a seven day Sun has clearly been a Murdoch goal for some time and cold fury, because the 400 or so NoTW workers lose their jobs while Brooks- for the moment- still keeps hers. The rest of the media are uniting to give the entire Murdoch business the biggest kicking that they can muster. James Murdoch's strategy: sacrifice NoTW now, Brooks later, looks pretty threadbare, indeed is so transparently an attempt to save his own sk

Has Murdoch junior closed the NoTW too soon?

Well, the Murdoch scandal is becoming the gift that just keeps giving. The announcement by James Murdoch that the News of the World will close after Sunday's edition was one of several ideas that have been running round the blogosphere- after all the idea of separate Sunday titles has been unpopular with newspaper managements for some time. At one extreme is the steady death of the Observer as a separate title, at the other the increasingly full integration of the two Independent titles. So the closure of the NoTW has probably been discussed by News International in various contexts long before now. However it was probably not discussed in the context of the kind of scandal explosion that has now taken place. However, while it may be good business for Murdoch to take the opportunity to do what he may have wanted to do anyway, it may not- yet- get News International off the hook. By taking such a drastic step at what is still a relatively early stage in the crisis, it may refocus

NOTW scandal: everyone is running for cover

As I suggested a couple of days ago, the News International phone hacking scandal is emerging as a humdinger - very much the British Watergate. The Management of NI is implicated, and there is now an increasing focus on the relationship between the Police and NI which links corrupt payments made for information directly to the initial cover-up of the extent and scope of the phone hacking. As advertisers now run for cover, as those whose phones were or may have been hacked express increasing outrage, life at the top of News International seems set to become very lonely. Jeremy Hunt's rightful decision to delay his decision on integrating BSKYB with the rest of the News International organisation may the first of many blows to hit the Dirty Digger. The fact is that the scandal is gaining stronger momentum as the politicians realize that they are finally free of the pressure from Murdoch. All of the dirt on all of the politicians in the world will now avail News International nothin

Making the Best Better

Estonia is a model for many economic policies. A pioneer in simple taxation and the open economy, there is much for other countries to admire and to emulate. Yet there remain several issues in the micro economy that hurt Estonian competitiveness. The relative isolation and northern geographical location of the country is something that will always place limits on the Estonian economy, but there are clearly things that can be done to improve the transport links. However one of these is not a high-speed rail line. Even if the billions could be found to fund a high speed line to Warsaw, it would still be a journey of three-four hours. This is never going to be competitive with flying. While freight rail links could be improved, the fact is that the existing line to Riga makes a giant dog-leg via Tartu and Valga and thus passenger traffic will tend to prefer the direct route by bus, which at present takes three hours to get to Riga. It would be quicker, of course if the road were upgr

The British Watergate Scandal finally breaks

It has been common knowledge for some time that News International routinely hacked mobile phones. Many of the great stories of the past 15 or 20 years have probably been the result of this illegal activity. Even the "Squidgy-gate" story of 1990 now appears to have been the direct result of illegal journalistic snooping. The Milly Dowler phone hacking was a new low, but in precisely the same tradition of illegal and immoral activity. News International has a clear case to answer, but they are not the only ones. Why did the initial Police investigation into phone hacking conclude that only a few "bad apples" were responsible, when that was quite clearly not the case? The evidence is strong that politicians and the police were placed under intense pressure by the News International organisation to curtail the investigation. In other words there has been a deliberate cover up. The question is now: who is complicit in this extraordinary scandal? How did the Murdoch

The Archduke Otto

Upon his first official visit to Hungary in the 1970s, the Archduke Franz Josef Otto Robert Maria Anton Karl Max Heinrich Sixtus Xavier Felix Renatus Ludwig Gaetan Pius Ignatius, heir to the Imperial throne of Austria and the Apostolic Royal Throne of Hungary, the Royal Thrones of Bohemia, Dalmatia, Slavonia, Croatia, Lodemeria and Illyria. Heir to the titular kingdom of Jerusalem, the grand Duchies of Tuscany and Krakow, the Duchies of Lorraine, Salzburg, Styria, Carniola and Bukovina, the Grand Principality of Transylvania, the Margravate of Moravia and many dozens of other titles, was greeted with a rapturous reception. Indeed he was asked to extend his stay and attend an international football match. He was told it was Austria-Hungary. Without missing a beat he asked "who are we playing?". The -by then- civilian "Archduke Otto" was more usually referred to simply as Dr. von Habsburg, yet he still carried some of the mystique of the lost Imperial era as well as a