Tuesday, April 15, 2008

300,000 March in Support of Chavez

While the capitalist press runs stories about small protests against Chavez in various parts of the world, on April 11th, over 300,000 march in support of the socialist revolution in Caracas:
Under the banner, “Never again will the people be betrayed,” some three hundred thousand people rallied outside the Miraflores presidential palace in Caracas on Sunday in a massive show of support for Venezuelan President Hugo Chavez. The rally was held to celebrate the anniversary of the popular uprising that defeated a US-backed opposition coup from April 11-13 in 2002, and restored the democratically elected Chavez to power.

Janicke, Kiraz. 15-Apr-2008. Massive Show Of Support For Venezuelan President Chavez On Coup Anniversary. VA.

Why Did William Fallon Resign?

The commander of U.S. forces engaged in Iraq and Afghanistan resigned Friday. He was denied testifying along with General Petraeus and Ambassador Crocker to Congress. Why? He disagreed with the Bush Administration and publicly stated that there would be no war with Iran "on his watch."

From the Voice of America:
The commander of U.S. forces in the Middle East, Central Asia and East Africa stepped down Friday, after just a year in command, following allegations he had disagreed with the Bush Administration on some key policies. VOA's Al Pessin reports from the headquarters of U.S. Central Command in Tampa, Florida.

It was the last day in command for Admiral William Fallon, and it came several months earlier than expected. The Florida sunshine, dress uniforms and upbeat music could not mask the fact that this ceremony was not expected to happen until later in the year, or even next year. That changed when Admiral Fallon was depicted in an Esquire magazine article earlier this month as the only man standing between the United States and war with Iran.

Indeed, Admiral Fallon did say several months ago that war rhetoric from some members of the White House staff was not helpful in his effort to ease tensions in the Middle East. And he has publicly opposed some other key policies, including, initially, the surge of U.S. forces into Iraq.

Pessin, Al. 28-Mar-2008. US Middle East Commander Steps Down After Controversy. Voice of America.

Monday, April 14, 2008

After Long Struggle, Maoists Win in Nepal

From Asia Times, M K Bhadrakumar:
The South Asian political landscape will never be the same again following the Maoist victory march in Nepal's elections to a new 601-seat constituent Assembly last Thursday. It may take several days before the election results are fully known, but available trends indicate that the Communist Party of Nepal (Maoist) is surging ahead. By Monday, the Maoists had secured 89 of the total declared 162 seats for which results were declared.

The established mainstream parties, such as the Nepali Congress and Communist Party of Nepal (Marxist-Leninist) are trailing far behind. The royalists, who rooted for the perpetuation of the 240-year-old Hindu monarchy, have been routed. A distinct possibility arises that the Maoists will secure a simple majority and lead the next government - an extraordinary feat for the former rebels who gave up a decade-long armed struggle and took to the democratic path hardly two years ago.

The impact is bound to be far-reaching on Nepal's political economy, South Asia's political landscape and the geopolitics of the region. Thursday's elections are primarily aimed at forming a constituent assembly to determine the contours of Nepal's political system. The results signify that the country is irrevocably set on the path of republicanism. Even the limited role of a constitutional monarchy seems out of the question.

The results signify pervasive popular disenchantment with the established political parties. Most expert commentators have to explain their lapse in not foreseeing such an outburst of popular opinion. Clearly, the people have voted for change. The groundswell of support for Maoists is fairly widespread, cutting across regions. Claiming victory, Maoist leader Pushpa Kamal Dahal (popularly called Prachanda) said his party's victory was a mandate for lasting peace, implementation of the democratic republic and rapid economic development. He frontally addressed the intriguing question: "People are asking, 'What is this Maoist party?' And the international community is asking, 'What will happen after the Maoists win?' All these fears are unnecessary."

Prachanda held out the assurance that his party's agenda would be to work with other political parties during the transition period. "We will establish greater national unity with all political parties after the election," he added. The Maoists received commendation from an unexpected quarter when former US president Jimmy Carter, who led a team of foreign observers, stated at a press conference in Kathmandu on Saturday his conviction that the former rebels were every bit wedded to the democratic path.

The poorest country in South Asia has suddenly catapulted itself to the vanguard of democratic reform and political transformation in the region. India, which basks in the glory of its democratic way of life, at once looks a little bit archaic and tired in comparison. After 60 years of uninterrupted democratic pluralism, vast sections of Indian society are yet to realize the potentials of political empowerment. The Nepalese people have come from behind and overtaken the Indians in expanding the frontiers of "bourgeois" politics.

Politics in India still meander through alleys of caste and parochialism and eddies of religious obscurantism and Hindu nationalism. The upper-caste Hindu elites in Nepal used to share social kinships with the Indian political elites. The Maoists have upturned Nepal's entrenched caste politics. The Indian electorate is yet to explore in full measure ideology-based secular political empowerment, which is the bedrock of democratic self-rule. Unsurprisingly, India's main opposition party, the right-wing Bharatiya Janata Party, which thrives on Hindu fundamentalism, has been stunned into silence. It feels let down that a country that it dearly cherished as the world's only "Hindu kingdom" has taken to secular democracy with such panache.

The Maoist government will proceed to dismantle the pillars of Nepal's feudal structure and will take recourse to radical economic and political reforms based on distributive justice and egalitarian principles. That is bound to catch the attention of impoverished Indians in the sub-Himalayan belt sooner or later. The Indian states (provinces) bordering Nepal are notorious for their misgovernance.

The Maoist victory in Nepal poses a challenge to the Indian establishment as well. Delhi is distinctly lukewarm about the prospect of an outright Maoist victory. The Indian establishment traditionally works with the Nepali Congress. Some elements within the establishment view with disquiet the prospect of the Maoists galvanizing revolutionary movements within India. Conceivably, Delhi didn't anticipate a tidal wave of popular will favoring the Maoists in Nepal.

All the same, Delhi allowed the democratic process in Nepal to take its course. It could not but take a keen interest in Nepalese politics and a completely "hands-off" approach was unrealistic to expect, but the real question was of not being intrusive to the point of interfering in Nepal's internal affairs. In the event, Delhi kept cool and maintained a delicate balance - watching developments closely while keeping a decent distance and reserving options to adapt to circumstances. However, a period of adjustment to the new political realities in Kathmandu becomes necessary and a thorough revamping of policy directions is inevitable. Nepal is far too important a neighbor for India. Its rapidly growing relations with China add to Delhi's policy calculus.

China's policy towards Nepal is not ideology driven insofar as Beijing kept in view the imperatives of inter-state relations almost until the end of King Gyanendra's direct rule. But Beijing swiftly adapted to the emergent democratic forces in Nepal with great pragmatism and forged working relations with all political parties, including the Maoists. China's interest in Nepal has increased almost exponentially. The overarching geopolitical reality is that the United States has become hyperactive in Nepalese politics. The developments in Tibet have added a further dimension. Tibetan activists in Nepal have been particularly strident.

Much depends on Prachanda's priorities. The Maoist leader has time and again shown he is not a dogmatist wedded to textbook Marxism and will give primacy to the implementation of his reform agenda. He has proved to be a brilliant tactician. He will tap into all available goodwill in Delhi and Beijing to the extent that his agenda of Nepal's rapid economic development benefits.

In his first post-election comments, Prachanda said Nepal will develop "new relations" with the Indian leadership. He stressed the close cultural and historical links between the two countries and pointed out it is "quite important" to have good neighborly relations with India. "A good understanding with Delhi can create a new basis of unity with India," he said.

But he clarified that Nepal will maintain equidistance between India and China in political terms. Beijing is certain to respond to him, given the criticality of Nepal to Tibet's security and stability. If China's Central Asia policy is anything to go by, it will put big money on the table in Nepal in the coming period so as to keep at bay the three "evils" - terrorism, religious extremism and separatism.

Besides, Nepal is resource-rich. There are any number of areas such as development of infrastructure, hydroelectric power or the manufacturing industry, where Nepal offers attractive business opportunities for enterprising Chinese firms. Nepal can also be a gateway to the Indian market.

The advent of the Maoists to power in Kathmandu, therefore, confronts Delhi with a creative challenge. The old days are gone when Delhi could take a complacent view that come what may, Kathmandu would remain wedded to cultivating Indian goodwill. The need arises now for Delhi to be proactive, efficient and competitive. China's "soft power" in Nepal is already very considerable, while Nepal is no exception to the latent "anti-Indianism" common to India's neighboring countries.

Any Indian assumption that Nepal is its security backyard or that it should be within India's "sphere of influence" will be untenable. If Delhi resorts to pressure tactics, sensing that the Maoists have a long way to go to consolidate their grip on political power, it might prove counterproductive.

On the other hand, the lengthening shadow of Chinese influence in Nepal should act as a spur goading India into creative diplomacy. Having said that, India is still left with vast leverage over Nepal spread over several inter-locking planes - geography, culture and common ethos, shared history, economic and social linkages, etc - and there is no real need to panic.

Almost certainly, the Maoists will want to jettison the 1950 treaty of peace and friendship with India, which they consistently viewed as an unequal framework. Equally, Delhi is conscious of the treaty's growing irrelevance, even though the treaty provides significant trade and transit advantages to landlocked Nepal and the Maoists, once in power, may come to better appreciate that. No doubt, the renegotiation of the treaty will bring to the fore the new impulses of the three-way equations involving India, Nepal and China.

Nepal has proved to be an unhappy experience for the United States and India in their newfound interest to coordinate and harmonize their regional policies. While India managed to keep its options open in a developing situation, the US policy finds itself in a cul-de-sac. It was predicated on the naive belief that Nepal could be made a geopolitical pressure point on China's soft underbelly. Nepal becomes the latest link in the chain of the George W Bush administration's foreign policy misadventures. The Maoists of Nepal still figure in the US State Department's list of terrorist organizations.

But Prachanda may offer Washington an exit strategy without loss of face. Responding to the media on Sunday, he said, "Yesterday, I had a very serious discussion with former US president Jimmy Carter, and I raised this question [of Washington regarding the Maoists as terrorists] ... It seems ridiculous to me."

M K Bhadrakumar. 15-Apr-2008. Nepal triggers Himalayan avalanche. Asia Times.

Saturday, April 12, 2008

The Great Unwind has begun

Note the word "begun." For all the talk of bulls and bears, when you get warnings like this from the biggest bank in the world, you can bet your life that the market has not bottomed, no matter what CNNfn and the host of TV idiots have to say about it.

If you are lucky enough to actually have a retirement account I have one word for you: TIPS. In other words, move your savings into an inflation-linked bond vehicle.

In an article characterized by Marketwatch as a "death-bed confession", Citibank warns on coming recession and massive shakeups in the financial world:
As markets and economies de-leverage across the globe, investors should avoid companies and countries that have grown to rely too much on borrowed money, they said.

That means favoring public-equity markets over hedge funds, private-equity and real estate, while leaning toward emerging market countries and away from developed nations like the U.S., the bank's global equity strategy team advised.

Within equity markets, the financial-services should be avoided because it's still over-leveraged, while other companies have stronger balance sheets, the strategists said.

"Steady growth, low inflation and rock-bottom interest rates encouraged economic and financial participants across the world economy to gear up over the past few years," Robert Buckland and his colleagues on Citi's global strategy team wrote in a note to clients. "Easy money encouraged many to buy a bigger house, a bigger car or a bigger speculative position."

"But now, any behavior that relied upon continued access to easy money is being dramatically reassessed," they added. "Leveraged banks must lend less, leveraged consumers must consume less, leveraged companies must acquire or invest less, and leveraged speculators must speculate less."

Financial-services companies are the most vulnerable to this reduction of borrowed money across the globe, they said.

During the last credit crisis in 1998, European banks were leveraged 26 to 1. In the early part of this decade, leverage grew to 32 to 1. Now the sector is geared 40 to 1 on average, according to Citi's European bank research team.

"The banks have a long way to go," the strategists said. "We would continue to avoid the sector while they are de-leveraging."

Other companies are in much better shape, having rebuilt cash from strong earnings since 2003. Emerging market companies have developed particularly strong balance sheets, having learnt hard lessons from the Asian financial crisis a decade ago.

However, even though some companies may not have much debt themselves, they may be exposed to over-leveraged customers or highly leveraged investors, Citigroup warned.

Automakers, home builders and electronics retailers benefited as customers borrowed money cheaply in recent years to buy cars, houses and flat-screen TVs. That attractive financing is now being withdrawn.

"There will be plenty of companies that have strong balance sheets, so may not be most immediately vulnerable to the credit crunch," Citi said. "But they may find that their leveraged customers are vulnerable."

The difference, or spread, between interest rates on investment-grade corporate bonds and Treasury bonds has jumped in recent months, even though most companies aren't very leveraged.

This widening may be caused by leveraged investors such as hedge funds having to sell good quality assets to meet margin calls, or requests for more cash or collateral.

"It is the leverage of the investors who hold these bonds that is now being brutally exposed," Matt King, a Citigroup credit strategist, said.

"We are now confronted by a broad bloodbath in the credit markets," Citigroup said. " The most leveraged paper is falling in value because it is leveraged, and now the least leveraged paper is also falling in value because it is owned by leveraged investors."

Investors should also avoid hedge funds themselves, along with private equity, Citi added. Both types of investment rely at least partly on borrowed money to generate returns.

"Private equity returns have been especially strong. Without leverage it will be much harder to meet excessive investor expectations [most surveys suggest 20% annual returns are expected from the asset class]," Citi warned. "Similarly, many hedge funds have generated healthy uncorrelated returns by adopting cautious underlying strategies, but applying significant leverage. Again, that looks unsustainable in the current environment."

Leveraged economies, like the U.S., should also be avoided, in favor of emerging market countries, which have reduced borrowing, the bank advised.

With less capital sloshing around the world, and the dollar falling, the U.S. may have to compete more to finance its deficits.

"The U.S. shows up as the world's greatest consumer of external capital," Citi noted. So it "has the most to lose as this capital becomes less freely available."

Food Crisis brought on by Capitalism

It should be remembered that the global left has been warning of a food and farming crisis for at least the past 50 years and especially since the rise of corporate agribusiness. In 2003, martyr Lee Kyung-hae (pictured on the left) gave the ultimate sacrifice of his life in protest of the WTO and the policies which were and continue to destroy the lives of farmers in South Korea and throughout the world.

Today, world food prices have increased by an average 200% since 1995, having posted most of that gain in 2007. The increases are directly a result of corporate agribusiness, "free-trade" policies, the "Green" revolution, the "GMO" revolution and the ongoing assault versus the global peasantry (e.g. land dispossession and financial ruin forcing them into the massive third world slums).

Food riots have become increasingly prevalent with recent examples in Haiti and Egypt. The UN reports that 33 countries are at risk of serious food shortages resulting in political unrest in 2008 including Cameroon, Côte d’Ivoire, Senegal, Burkina Faso, Ethiopia, Indonesia, Madagascar, Thailand and Pakistan. One UN official has gone so far as to call bio-fuels a "crime against humanity," a sentiment echoed by Fidel Castro in his series of biofuel articles from 2007, publicly derided by the capitalist press I might add.

From an interview in Al Jaazera:
Prices of basic foods have sharply increased amid a rise in costs of commodities.

The crisis has led to riots in poor countries by people who have limited access to food.

Dr. Vandana Shiva is a physicist, ecologist, activist, editor, and author of many books. She talks to Al Jazeera about the food crisis in India, and what can be done to overcome it.

Al Jazeera: One of the causes of the huge rises in India's food prices is the soaring rate of inflation. India is experiencing its highest rate of inflation in three years. What is behind this increase?

Dr Shiva: There are a number of reasons why the prices of food commodities are rising in India. The first is related to economic policies – the policies of integrating India with global markets.

There is a huge agrarian crisis but it's not from the beginning of our freedom, it's not a leftover of feudalism. The agrarian crisis is a result of globalisation.

The farmers who are committing suicide in India are precisely in those areas where genetically engineered cotton is being grown by Monsanto [a chemicals and agricultural science corporation].

This is a new crisis. A small farmer could make a living in this country a few years ago. Today, as a result of globalisation, agriculture is being run down.

We have grown enough wheat in the last few years – 74 million tonnes. We are still self-reliant in food, but we are being forced to import; both under the multilateral globalisation free trade agreements as well as under bilateral arrangements like a crazy treaty called the Agriculture Knowledge Initiative between the US and India.

It was signed at the same time as the nuclear treaty was signed. The nuclear agreement has had a lot of political attention. The agriculture treaty has had absolutely no attention.

Indian farmers are being paid 8,000 rupees [$200] for a tonne of wheat. When the farmers ask for more, to make a viable living, the government says it will cause a rise in inflation.

So the government goes to Cargill [a transnational agricultural corporation] and the United States because of this bilateral agreement and buys wheat at $400 dollars a tonne, which is 16,000 rupees a tonne – twice the price that Indian farmers can produce wheat for.

11-Apr-2008. The Recipe for Food Rights. Al Jazeera.

Thursday, April 10, 2008

US Truckers Block Freeways

From AlterNet:
Until the beginning of [April], Americans seemed to have nothing to say about their ongoing economic ruin except, "Hit me! Please, hit me again!" You can take my house, but let me mow the lawn for you one more time before you repossess. Take my job and I'll just slink off somewhere out of sight. Oh, and take my health insurance too; I can always fall back on Advil.

Then, on April 1, in a wave of defiance, truck drivers began taking the strongest form of action they can take: inaction. Faced with $4-per-gallon diesel fuel, they slowed down, shut down and started honking. On the New Jersey Turnpike, a convoy of trucks stretching "as far as the eye can see," according to a turnpike spokesman, drove at a glacial 20 miles per hour.

Outside of Chicago, they slowed and drove three abreast, blocking traffic and taking arrests. They jammed into Harrisburg, Pennsylvania; they slowed down the Port of Tampa, where fifty rigs sat idle in protest. Near Buffalo, one driver told the press he was taking the week off "to pray for the economy."

The truckers who organized the protests -- by CB radio and Internet -- have a specific goal: reducing the price of diesel fuel. They are owner-operators, meaning they are also businesspeople, and they can't break even with current fuel costs. They want the government to release its fuel reserves. They want an investigation into oil company profits and government subsidies of the oil companies. Of the drivers I talked to, all were acutely aware that the government had found, in the course of a weekend, $30 billion to bail out Bear Stearns, while their own businesses are in a tailspin.