Month: February 2015

Greek Economic Reform Pledges to Europe

Greece’s government has pledged reform to try and satisfy the demands of creditors in Europe while maintaining its pre-election pledges.

Below are some of the main points from Greece’s list of reforms – contained in a letter from the Greek government to its European partners – alongside analysis and comment from BBC economics correspondent Andrew Walker.

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Fiscal structural policies

Greece's main port at Piraeus
Many of Greece’s assets – such as the port at Piraeus – have been earmarked for privatisation

Tax policies

  • Broaden the definition of tax fraud and evasion, making it harder to avoid taxes
  • Improve the collection of VAT, fighting evasion using technology
  • Create “a new culture of tax compliance” to make sure that all sections of society – particularly the wealthy – “contribute fairly to the financing of public policies”
  • Work with European and international partners to establish a database that helps tax authorities assess the veracity of previous income tax returns

Andrew Walker: Improving tax collection has been a persistent theme in the discussions between Greece and its bailout lenders. It’s an area where it’s easy to see a shared view between the two sides. The idea of getting the well-off to contribute to the financing of public policies is right in line with Syriza’s wider agenda. Anything that brings in more revenue and so helps stabilise the government finances is likely to be welcome to the lenders as well. Creating a new culture of tax compliance is a bit “motherhood and apple pie”. Who could object? But it will take a long time to achieve.

Public spending

  • Work towards improving the efficiency of central and local government departments
  • Identify cost-saving measures through a thorough spending review of every ministry, reorganising non-salary and non-pension expenditures which account for “an astounding 56% of total public expenditure”
  • Use cross-checking to validate benefits to “help identify non-eligible beneficiaries”
  • Control health expenditure and improve medical services, while granting universal access to healthcare

Andrew Walker: The lenders are also likely to welcome the commitment to review every area of government spending and to identify cost savings.

Pensioners at a rally in Athens, December 2014
Pensioners have been among those hardest-hit by the crisis

Social security

  • Take measures to continue modernising the pension system, reducing the social and political pressure for early retirement

Public administration and corruption

  • Make the fight against corruption a national priority
  • Target the smuggling of fuel and tobacco products, and tackle money laundering
  • Activate legislation to ensure that media outlets pay market prices for the broadcast frequencies they use

Andrew Walker: There is more motherhood and apple pie on tackling corruption, smuggling and money laundering. The aim is not controversial. But will they be able to achieve significant improvements?

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Financial Stability Instalment schemes

  • Improve enforcement methods for collecting unpaid taxes
  • De-criminalise lower income debtors with small liabilities

Banking and non-performing loans

  • Collaborate with banks to avoid auctions of the main residence of households that are below a certain income threshold, while “punishing strategic defaulters”
  • Take measures to support the most vulnerable households, and modernise bankruptcy laws
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Policies to promote growth

A man plays music in front of a sign saying IMF Go Home, Athens, 24 Feb 2015

Privatisation and public asset management

  • Commit not to roll back privatisations that have been completed, and to respect tender processes that have already been launched
  • Review privatisations that have not yet been launched with a view to maximising the state’s long-term benefits

Andrew Walker: The line on privatisation is striking – accept those that have been completed and respect those that are underway. New cases are not ruled out, far from it. The letter only calls for an emphasis on maximising public revenue – which is after all one of the reasons there is a privatisation programme in the first place. How will this go down with Syriza, especially the left of the party? Even so the IMF Managing Director Christine Lagarde isn’t impressed on this point. Privatisation is one of a number of areas where she notes “a lack of unequivocal undertakings to continue already agreed policies”.

Labour market reforms

  • Phase in “a new ‘smart’ approach to collective wage bargaining that balances the need for flexibility with fairness”
  • Over time, to raise the minimum wage in a manner that safeguards competitiveness and employment prospects

Andrew Walker: Also on that list is labour market reforms, another area that Ms Lagarde of the IMF regards critical for Greece. Even so, the party is likely to be suspicious at best of some of the labour market stuff that is included. Linking the minimum wage with productivity and competitiveness could well limit the scope for raising it, which was a central element in the party’s election offer.

Statistics

  • Maintain the institutional independence of Greece’s statistical agency, ensuring that it has adequate resources and that its next president is chosen in a transparent manner

Andrew Walker: The independence of the statistical authority might play into the debt debate later. One idea has been to use growth-linked debt payments. That has more chance of getting off the ground if the growth data come from a genuinely independent and adequately resourced agency.

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Humanitarian crisis

Greeks queue for free onions, 25 January 2012
Many in Greece have seen a lack of cash leave them dependent on handouts (file pic)
  • Address needs arising from the recent rise in absolute poverty though measures such as food stamps
  • Evaluate a pilot minimum income scheme, with a view to extending it nationwide
  • Ensure that the fight against the humanitarian crisis does not have a negative effect on the finances

Andrew Walker: The humanitarian crisis had to be in there in some form. It was so central to Syriza’s political campaign. But the commitment to use non-pecuniary measures and to ensure the fight has no negative fiscal effect shows how hemmed in the Greek government is. It will be hard to land many blows with such constraints on how they can fight.

BBC- February 24th, 2015

 

Putting a Price on Simon Kuznets’s Nobel in Economics

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Simon Kuznets, right, receiving his Nobel medal in 1971. Bidding for the award, set to close on Thursday, opened at $150,000. Reportagebild/Associated Press

James D. Watson’s sold for $4.76 million while the one owned by William Randal Cremer, a member of Parliament and labor activist, fetched just $17,000.

Now another Nobel medal — this one awarded to the economist Simon Kuznets in 1971 — is on the auction block. The unusual sale presents an intriguing, if not quite Nobel-worthy, economic puzzle: How do you set the price of an item with barely any market history?

After all, only a handful of the 889 medals awarded since 1901 have ever been sold. And none of them were for economic sciences, a stepchild, since the category was belatedly endowed by the Bank of Sweden in 1968 in honor of its 300th anniversary. The original five prizes established in Alfred Nobel’s will included the peace prize, which Cremer won in 1903, and medicine, which Dr. Watson took home in 1962 for his co-discovery with Francis Crick and Maurice Wilkins of the structure of DNA.

Pricing is “both an art and science,” said Laura Yntema, auction manager at Nate D. Sanders Auctions in California, which is handling the online bidding, scheduled to end on Thursday at 8 p.m. Eastern time. In other words, you consult the sale history and then you consult your gut.

Simon Kuznets’s Nobel medal is on the auction block. Nate D. Sanders Auctions

For the medal awarded to Kuznets, who died in 1985, the opening bid is $150,000.

The seller, Kuznets’s 83-year-old son, Paul, is himself an economist, but in this case, he sidestepped any fancy modeling. He said the auction house “suggested a price range, and I settled halfway between the bottom and the top.”

The 23-karat medallion is worth about $8,700 in gold alone. But the value of a Nobel, or any prize for that matter, has as much to do with its mystique — who won it and why — as it does with its raw materials or rarity.

David O. Selznick’s Oscar statuette for “Gone With the Wind” sold for $1.542 million. Compare that to the Best Song Golden Globe for “I Feel Love” by Euel Box from the 1974 film “Benji,” which sold for $23,116. The 1953 Footballer of the Year trophy awarded to Nat Lofthouse went for $30,819 while the Presidential Medal of Freedom that Lyndon B. Johnson gave in 1968 to his defense secretary, Robert McNamara, sold for $47,652.

So the question is whether bidders consider Kuznets more of a “Gone With the Wind” or a “Benji.”

Though far from a household name, Simon Kuznets helped lay the foundation of the modern field of economics by creating standard measures of national income and economic growth. Kuznets wanted to figure out a way to describe what was happening both in industrial and developing nations, and he grounded his investigation in the historical record.

“I started out with the general notion that economics is the basis of all social problems,” he said when he was awarded the Nobel in 1971.

Born in Ukraine in 1901, Simon Kuznets briefly worked in the labor statistics office there before coming to the United States, where he attended Columbia University. His work during the 1930s helped John Maynard Keynes’s ideas of stimulating the economy to pull the country out of the Depression gain acceptance.

During World War II, Kuznets served as the chief statistician at the War Production Board. His calculations helped decide whether the American government was going to focus on building tanks or planes.

James D. Watson took home a Nobel Prize for his co-discovery of the structure of DNA. His sold for $4.76 million. Fred R. Conrad/The New York Times

Although all of the economic statistics churned out by the Commerce Department can trace their lineage back to Kuznets, the department did refuse to accept one of his key recommendations, that the value of unpaid housework be included in the nation’s productive output.

Paul Kuznets said he began to think more seriously about a sale after a call from the Nate Sanders auction house. “It’s been sitting in a safety deposit box for what, 40-something years, and it’s not doing anyone much good,” said Mr. Kuznets. “I’ve got among other things, photos of the ceremony. I’ve even got tape recordings and that sort of thing, and I have memories of many years with my parents. I think those are more important to me than what is essentially a piece of jewelry.”

It was the posthumous sale in 2013 of Crick’s piece of jewelry for $2.27 million that prompted the recent spate of Nobel medal auctions.

“I knew I would soon auction off my 1962 Gold Nobel Medal the moment I learned that Francis Crick’s Gold Medal, May 2013, had been sold for more than two million dollars,” Dr. Watson wrote in Christie’s auction house description. After being widely reviled for comments he made about the inferior intelligence of blacks, Dr. Watson said he would donate some of the proceeds to charity as a way of rehabilitating his reputation.

The Russian billionaire Alisher Usmanov bought the prize for $4.76 million (which included the auction house’s cut) in December, and returned it to Dr. Watson. Francis Wahlgren, international director of books and manuscripts at Christie’s, commented that the price was not necessarily about the Nobel itself, but rather reflected “the growing strength in the market for the iconic pieces related to the early understanding and development of the implications of DNA and its growing relevance today.”

Two other Nobel medals were sold in 2014. The 1936 peace prize awarded to Carlos Saavedra Lamas, the Argentine finance minister who persuaded his country to join the League of Nations, sold for $1.16 million. The Nobel Prize in Physics, awarded to James Chadwick for his discovery of the neutron, went for $329,000 last year. Cremer’s peace prize sold for $17,000 in 1985.

In 2012, William Faulkner’s estate hoped to sell his 1949 Nobel Prize in Literature for at least a half-million dollars. But the sale was called off when the bids topped out at $425,000.

“Putting up Nobels is a fairly recent thing, and I’m not sure how long it’s going to last,” said Richard Austin, head of books and manuscripts at Sotheby’s. “Everyone knows what Watson and Crick were famous for. Once you get to more specialized Nobels, it’s more difficult.”

For the Kuznets sale, the Nate Sanders auction house is hoping to attract universities that have a connection to the economist, collectors and perhaps a Wall Street mogul or two.

Ms. Yntema of the auction house said the opening bid ideally should be set a little below what you think the item will actually sell for, but in the end, as any economist can tell you, the fair market value is what someone is actually willing to pay.

Correction: February 25, 2015
An earlier version of this article misstated the role in which David O. Selznick received an Oscar for “Gone With the Wind.” He was the film’s producer, not its director.

http://www.nytimes.com/2015/02/25/business/putting-a-price-on-simon-kuznetss-nobel-in-economics.html?ref=business&_r=0

Walmart joins Ikea, Aetna, Gap in raising wages for lowest-paid workers

When Walmart posted its quarterly earnings on Thursday, one announcement stole the spotlight. It wasn’t about the company’s shares or revenue, but about its wages.

The retail giant announced that within the next six months, it will start paying all of its workers at least $9 an hour. That’s $1.75 more than the federally mandated minimum wage of $7.25 per hour, and on par with the mandated minimum wage in at least 20 states.

Walmart is not alone. Even as the federal and state governments have struggled to pass increase their minimum wages, some of the biggest US companies have been leading by example and setting wage floors – minimum hourly wages applied throughout a company – higher than legally required minimums. Other companies that have set wage floors above the federal minimum include warehouse club Costco Wholesale, clothing retailer The Gap, furniture seller Ikea and health insurance agency Aetna.

Walmart’s pay hike puts the earnings of its lowest-paid workers above that of other companies still paying the bare minimum. But while welcome, the move was also met with some disappointment. Some workers, who have spent the past year lobbying for a living wage of $15 an hour, insist that $9 an hour – while an improvement – isn’t enough.

“With $16bn in profits and $150 bn in wealth for the owners, Walmart can afford to provide the good jobs that Americans need – and that means $15 an hour, full-time, consistent hours and respect for our hard work,” says Emily Wells, a Walmart worker and member of OUR Walmart who earns $9.50 an hour and is only able to get scheduled for about 26 hours per week.

Walmart hadn’t responded to a request for comment by press time.

However, the company also announced it plans to raise its wage floor another dollar to $10 an hour in February 2016. That would still be less than the $10.10 per hour proposed by President Obama, but 38% above the current federal minimum.

Some companies have set even higher wage floors more in line with living wage expectations. Most recently, for example, Aetna set its floor for US workers at $16 an hour, twice the current federal minimum wage.

Higher wages are exactly what the financial doctors have ordered to cure America’s ailing economy. According to the Economic Policy Institute, it would take a wage growth of at least 3.5% to 4% for workers to feel the impact of the recovery. In 2014, the average hourly pay went up by just 1.7%.

“Raising wages among low-wage workers shifts income into the pockets of workers and families that are highly likely to quickly spend every additional dollar they earn,” says David Cooper, economic analyst at the Economic Policy Institute.

“So even though some businesses have to pay their workers more, they see more customers coming through the door because now there’s additional dollars rippling out through local economies in a way that doesn’t really happen if those dollars just go back into the bank accounts of corporate shareholders.”

Wanted: companies to help spur a broader recovery

Unable to count on the Republican-held Congress to raise minimum wage, President Obama might have to look elsewhere to help drive America’s recovery. CEOs of companies like Gap and Aetna might prove to be worthy-allies.

“Since I became CEO, one of my goals has been to help re-establish the credibility of corporate America,” Aetna CEO Mark Bertolini said in a statement. “With these investments, we are leaning into the recovering economy and working to bring everyone along instead of just a few.”

Aetna’s decision to increase its minimum base wage and reduce out-of-pocket health care costs for its employees comes at the time when many low-wage workers are still not reaping the benefits of the recovery. In addition to building a healthier and more productive workforce, the company hopes to increase its employees’ financial security, says Cynthia Michener, a spokesperson for Aetna.

Aetna estimates that about 5,700 workers will see bump in pay when its new floor takes effect in April. On average, that increase should be about 11%. For some, it will be as much as 33%. In 2016, the company will also cover more health care costs for about 7,000 of its employees, saving some as much as $4,000 annually.

Obama Gap shopping
President Barack Obama sure likes this Gap sweater. He also like high wage floors. Photograph: Pablo Martinez Monsivais/AP Photo

Customer service: better-paid workers are happier workers

Last year, Gap also got attention – not just from the media, but also from the White House – with its Do More campaign, in which the clothing retailer announced that it would raise hourly pay for its US employees to at least $10 an hour by June 2015. Obama visited a New York-based store to “congratulate the Gap for doing the right thing”.

Doing the right thing wasn’t Gap’s main reason for raising its wages, though; improving its customer service was. Better pay will help attract and retain “great talent” and provide better in-store and digital experience, says Paula Conhain, a spokeswoman for Gap.

“Raising the minimum wage is like any strategic investment we may make, such as investing in marketing or technology,” Conhain explains. Since the announcement, Gap has seen a double-digit percentage increase in the number of employment applications it has received. The announcement also led to an increase in employee pride, according to an internal employee opinion survey.

Aetna, a health insurance provider, also acknowledges that customer service is an important component of its business model.

“As healthcare moves to a consumer industry, Aetna is investing in the employees who interact with our customers every day,” Michener says.

worker IKEA
An employee is at work at a warehouse of world’s largest furniture retailer Ikea. Photograph: JEFF PACHOUD/AFP/Getty Images

Besides happier staff and customers, companies that have raised their wage floors have reaped other benefits such as lower turnover and higher productivity. Businesses could also spend less recruiting, hiring, and training new workers, Cooper says.

It might take some time for those benefits to become apparent. For Ikea, which raised its US wage floor by 17% to $10.76 an hour starting 1 January, it’s still too early to tell if the raise is affecting staff turnover, says Tracey Kelly, corporate communication manager for Ikea US. But she says the staff has been “very pleased” with the increase.

The values-led business hub is funded by SC Johnson. All content is editorially independent except for pieces labelled “brought to you by”. Find out more here.

http://www.theguardian.com/sustainable-business/2015/feb/19/companies-raise-minimum-wages-pay-walmart-ikea-aetna-gap

Oscar Nominee Highlights the Links Between Development and Conflict in Eastern Congo

Nominated for Best Documentary Feature, Virunga highlights the many complex connections that exist between development, specifically involving foreign investment in this film, and conflict. It shows how foreign investors have the ability to influence internal politics and may encourage conflict through corruption and bribes in order to achieve their business goals. This film also sets the stage for this story by providing a quick but in-depth background on colonialism and development in Africa. A must see if you want to better understand the ongoing situation in the Congo.


Taken from the Virunga website:
VIRUNGA IS THE INCREDIBLE TRUE STORY OF A GROUP OF BRAVE PEOPLE RISKING THEIR LIVES TO BUILD A BETTER FUTURE IN A PART OF AFRICA THE WORLD’S FORGOTTEN AND A GRIPPING EXPOSE OF THE REALITIES OF LIFE IN THE CONGO.
In the forested depths of eastern Congo lies Virunga National Park, one of the most bio-diverse places on Earth and home to the planet’s last remaining mountain gorillas. In this wild, but enchanted environment, a small and embattled team of park rangers – including an ex-child soldier turned ranger, a caretaker of orphan gorillas and a dedicated conservationist – protect this UNESCO world heritage site from armed militia, poachers and the dark forces struggling to control Congo’s rich natural resources. When the newly formed M23 rebel group declares war, a new conflict threatens the lives and stability of everyone and everything they’ve worked so hard to protect, with the filmmakers and the film’s participants caught in the crossfire.
A powerful combination of investigative journalism and nature documentary, VIRUNGA is the incredible true story of a group of courageous people risking their lives to build a better future in a part of Africa the world’s forgotten, and a gripping exposé of the realities of life in the Congo.

US/South Africa Trade Dispute

gohttp://www.nytimes.com/2015/02/18/us/at-heart-of-us-south-african-trade-dispute-a-serious-game-of-chicken.html?ref=business

This article discusses soon-to-expire trade agreement between South Africa and the US. Delaware is one of the main exporters of chicken to South Africa, and some 14,000 Delaware residents depend on this industry for income. The US has argued that if South Africa continues to place tariffs on US chicken in order to protect their own chicken industries, the US will discontinue the imports of specialty wines and luxury automobiles. South Africa argues the US is dumping chicken products into their market, driving out local competitors.

Connections can be drawn to chapter four of Desmarais in that food is discussed as an economic trading good instead of a basic human right. While the chicken imported from the US to South Africa may still provide for the population, this article fails to discuss the difference in the quality of US chicken, and its impact on the South African farmers and their culture.

Food sovereignty is the main issue throughout this article, and while farmers from the US are being represented by government officials such as the Senator of Delaware, the voice of South African farmers is not present here. Also, the threats placed by the US on all South African trade is simply another way of establishing an international hierarchy amongst nations trading between the global North and South.

Will US-EU trade deal dissolve EU-Turkey customs union?

Author Mehmet Cetingulec Posted November 18, 2014

Translator Sibel Utku Bila

Turkey has reached a critical point in its participation in the EU Customs Union, driven by anxiety over the implications of the Transatlantic Trade and Investment Partnership (TTIP), a free-trade deal being negotiated by the European Union and the United States to integrate their markets, a total population of 800 million.

TTIP talks, which began in July 2013 and convened for a fifth round in May, are expected to be completed in late 2016 or early 2017. Once the agreement takes effect, customs barriers between the United States and EU countries will fall. The agreement will be unilaterally binding for Turkey because of the customs union deal it struck with the EU in 1996. In accordance, US products would be allowed onto the Turkish market free of tariffs, while levies on Turkish products sold to the United States would remain in place. Thus, not only would Turkey lose revenues from customs tariffs, it would also struggle to protect its economy and industry against an influx of tariff-free goods.

The import of cheap goods will boom, while Turkish exports will suffer. Many enterprises in Turkey would be forced to close or reduce their capacity, which would of course stoke unemployment. The chain reaction promises to deal a blow to the country’s economic indicators, including economic growth and the current account deficit.

That is the “nightmare scenario” behind the anxiety gripping Turkey, which is also angry about being shut out of the EU’s planned economic integration with the United States despite their 18-year-old customs union. Only EU member countries will benefit from the US deal, and Turkey is still in the stage of accession talks. Because Turkey’s eventual EU membership is only a distant prospect, Ankara is left with two options: negotiating an independent free trade agreement with the United States or persuading the EU to have Turkey included in the TTIP.

The idea of a free trade agreement between the United States and Turkey has been under discussion for some time, but no tangible progress has ever been made; thus, its prospects are not particularly rosy. Turkey is therefore trying to deal with its impending trade problem from the EU side. This is why Turkish officials have begun speaking more frequently about pulling out of the EU customs union or suspending the agreement. If the EU fails to deepen the customs union in a way that the TTIP covers Turkey, suspension of the customs union is likely to emerge as a serious option.

The prospect of Turkey quitting the customs union was first raised on March 26, 2013, by Economy Minister Zafer Caglayan. Speaking in Germany, Caglayan slammed Turkey’s exclusion from the preparations for a US-EU agreement and signaled that Ankara might leave the customs union. More recently, EU Minister Volkan Bozkir, speaking Nov. 11 at a meeting of the EU-Turkey Joint Parliamentary Commission in Brussels, again warned that the signing of the TTIP could lead Turkey to suspend its customs union accord. He stressed that his statement was not blackmail, but an attempt to draw attention to a serious problem.

Impact on Turkey

The head of the Turkish Exporters’ Assembly, Mehmet Buyukeksi, has asserted that the prospective EU-US deal would involve a total trade volume of $650 billion on two continents and stressed that a simultaneous free trade agreement between Turkey and the United States would give a huge boost to Turkish exporters. In November 2013, Turkey’s Central Bank released a study on the likely impact of a US-EU free trade agreement on Turkey. The report outlined a number of implications:

  • Turkey’s exports will increase 7% if it is given the opportunity to sell tariff-free goods to the United States.
  • Turkey’s gross domestic product (GDP) will decrease by $4 billion if it is excluded from the US-EU free trade agreement.
  • If Turkey is allowed to join the pact, its GDP will increase by $31 billion. If including the $4 billion loss that would be avoided, the total benefit would reach $35 billion.
  • The US-EU agreement is expected to boost prosperity by 2.6%-9.7% in EU countries and by 13.4% in the United States. In Switzerland, Canada, Mexico and Turkey, if excluded from the agreement, prosperity will decrease by 3.75%, 9.48%, 7.24% and 2.5%, respectively.

While meeting with a German trade delegation Nov. 17 in Ankara, Economy Minister Nihat Zeybekci remarked, “The TTIP represents negotiations for a full-fledged economic and political integration. If materialized, it will mean the redrawing of the global economic map. We cannot tolerate that. We cannot bear the consequences. The customs union, too, will become unsustainable.”

Rising worries about unemployment

Turkey’s business community is equally anxious. In statements earlier this month, leading business people lent support to the EU minister’s warning. Kenan Yavuz, chief executive of SOCAR, the State Oil Co. of Azerbaijan, said the petrochemicals sector would suffer the heaviest blow if Turkey were left out of the TTIP agreement, stressing that the zero-tariff environment would lead the highly developed US chemicals industry to flock to Turkey.

Yavuz warned, “In its current form, the [prospective] agreement would result in increased Turkish imports of intermediate goods. Sectors of added-value manufacturing would take a severe blow. Many products would cease to be manufactured in Turkey because of competition disadvantages. Companies would be closed down and unemployment would increase. Moreover, Chinese and other Asian manufacturers would lose markets in the United States and the EU and would then turn to Turkey, posing a further threat to local manufacturers.”

The head of the Istanbul Ready-to-Wear and Apparel Exporters Union, Hikmet Tanriverdi, suggested, “We could freeze the customs union and transform our relationship with the EU into a free trade agreement, which would allow us to get rid of obligations to third parties.”

The annual trade volume between Turkey and the United States is about $18 billion, which Deputy Prime Minister Ali Babacan says is insufficient, even though it represents a threefold increase over the past decade. In the first nine months of 2014, Turkey’s exports to the United States were worth $4.59 billion, while its imports amounted to $9.7 billion. The disparity in the United States’ favor was expected to greatly increase with the TTIP because Turkey’s imports would increase.

The TTIP is not only about trade, but also involves investment. It is a far-reaching project that would control about half of global trade, unite Europe and the United States and generate political power through their economy. The foundation is being laid for a new global structure based on high-quality output reminiscent of the EU’s creation decades ago. This structure will halt the Chinese commercial invasion, and economic activities outside it will likely have little chance of success.

Strauss-Kahn, Former I.M.F. Chief, Goes on Trial in Sex Case

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PARIS — Dominique Strauss-Kahn, the former head of the International Monetary Fund, went on trial Monday on accusations that he participated in a prostitution ring that extended from the north of France to Brussels, Washington and New York.

In a case that has riveted France, Mr. Strauss-Kahn, 65, who was once seen as a presidential contender, stands accused in Lille, France, with 13 other defendants, including Dominique Alderweireld, a sex-club owner known as Dodo la Saumure.

Mr. Strauss-Kahn is charged with “aggravated procurement in a group,” or pimping, and using his subordinates to obtain prostitutes for lavish sex parties.

In addition to shining a spotlight on a clandestine world of Champagne-fueled sex parties that prosecutors say were attended by lawyers, judges, police officials, journalists and musicians, the case is also spurring debate about sexual morality in France and the extent to which the private lives of public figures should remain private.

In France, having sex with prostitutes is not illegal, but soliciting and pimping are.

Dominique Strauss-Kahn, in a 2011 photo. François Guillot/Agence France-Presse — Getty Images

Mr. Strauss-Kahn has acknowledged being present at sex parties but has vehemently denied the charges, saying he was not aware that some of the women present were prostitutes.

His defenders say that the prosecution is seeking to criminalize sexual ardor, and that Mr. Strauss-Kahn is the victim of a puritanical, politically motivated witch hunt. Moreover, they argue that the sex parties reflect a long tradition of libertinage, and that consensual sex between multiple partners behind closed doors is a matter of private taste and morals.

Mr. Strauss-Kahn resigned as head of the International Monetary Fund in 2011 after he was accused of sexually assaulting a housekeeper at a hotel in New York. The charges were later dropped. He has since been seeking to rehabilitate himself, working as a consultant, lecturing and advising foreign countries as well as large companies in Russia, Africa and Latin America, among other places.

Prosecutors say exclusive orgies were organized in major world cities by businessmen who were seeking favor with Mr. Strauss-Kahn, and that their money was used to finance prostitutes, including for Mr. Strauss-Kahn, who sometimes sought out sex with several partners in one evening.

Mr. Strauss-Kahn’s name first appeared in the Lille inquiry by chance, in May 2011. French investigators had wiretapped the phone of Mr. Alderweireld.

If convicted, Mr. Strauss-Kahn could face up to 10 years in prison and fines of more than 1.5 million euros, or $1.7 million.

Didier Specq, a veteran court reporter who has written a book about the case, said that while the trial was a blow to Mr. Strauss-Kahn, he could emerge emboldened if found innocent.

Mr. Specq said Mr. Strauss-Kahn was still popular among some French people who considered the sexual choices of their politicians to be a private matter.

“Morally, he will take a hit,” Mr. Specq said. “But after a few weeks of this trial, people will realize that the evidence against him is thin. It will raise questions as to whether the case was politically motivated.”

But others said the trial would have a more damaging effect.

Michel Taubmann, a biographer of Mr. Strauss-Kahn, told BFMTV that Mr. Strauss-Kahn had lost his status and connections and was now a man “alone.”

http://www.nytimes.com/2015/02/03/world/europe/prostitution-trial-begins-for-dominique-strauss-kahn.html?module=ArrowsNav&contentCollection=Europe&action=keypress&region=FixedLeft&pgtype=article

Continue reading Strauss-Kahn, Former I.M.F. Chief, Goes on Trial in Sex Case

Has the IMF annexed Ukraine?

Michael Hudson, an economist at the University of Missouri-Kansas City and author of the upcoming book “Killing the Host: Financial Parasites and Wall Street’s War on Capitalism,” says the terms attached to the loans made by the IMF to Ukraine are likely to turn its people into penniless serfs of international banks.

In the video above, Sharmini Peries at The Real News Network asks Hudson, “In a recent interview [by former State Department official James Carden] published in The National Interest magazine you said that most media covers Russia as if it is the greatest threat to Ukraine. History suggests that the IMF may be far more dangerous. What did you mean by that?” Continue reading Has the IMF annexed Ukraine?

The best of capitalism is over for rich countries – and for the poor ones it will be over by 2060

One of the upsides of having a global elite is that at least they know what’s going on. We, the deluded masses, may have to wait for decades to find out who the paedophiles in high places are; and which banks are criminal, or bust. But the elite are supposed to know in real time – and on that basis to make accurate predictions.

Just how difficult this has become was shown last week when the OECD released its predictions for the world economy until 2060. These are that growth will slow to around two-thirds its current rate; that inequality will increase massively; and that there is a big risk that climate change will make things worse. Despite all this, says the OECD, the world will be four times richer, more productive, more globalised and more highly educated. If you are struggling to rationalise the two halves of that prediction then don’t worry – so are some of the best-qualified economists on earth.

Continue reading The best of capitalism is over for rich countries – and for the poor ones it will be over by 2060

China Joins the International Finance Community

One thing I find useful for seeing the global political economy at work is look at The Economist as often as possible — sure, it has a very strong pro-liberal state narrative, but it can be seen as the publication in which one can read the regime of truths that the liberal state is espousing at the time. I came across this article within their website.

In the article, The Economist is praising China’s efforts to put forth a development bank to a certain extent. On one hand, the correspondent supports the better use of their savings, but China is basically throwing away their money by following, to use McMichael’s language, The Development Project by issuing loans to Venezuela, for example, who ended up just “wasting the money,” according to this author. What is interesting is that in this example of The Economist, we see the push for China to use these development loans, instead, by “hewing closer to the model of the Bretton Woods institution…” That, I feel, is a strong statement. Essentially, it is calling for China to jump on board to the “Globalization Project.”

China’s emergence into the development lending provides insight into what could be China’s pathway into either resurrecting the Development Project or perhaps into a quasi-privatization in which they are allowed to enter another country’s economy for resource extraction for their gain. In the case of Venezuela, China does have a interest in energy, so they probably expect to give up some of their oil resources to the thirsty Chinese economy — which looks like is already happening.