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Generational Dynamics Web Log for 25-Nov-2011
25-Nov-11 World View -- Massive confrontation in Egypt expected on Friday

Web Log - November, 2011

25-Nov-11 World View -- Massive confrontation in Egypt expected on Friday

A quick overview of economics in the Euro Zone

This morning's key headlines from GenerationalDynamics.com.

* Massive protester confrontation with Egypt's army expected on Friday
* Four people killed in clashes in Saudi Arabia
* Saudi Arabia may limit remittances of foreign workers
* China's South China Sea aggression is leading to military buildup
* Germany's Angela Merkel repeats her opposition to 'Euro Bonds'
* German resistance to the 'Euro Bond' may be shrinking
* Town of Filettino declares independence from Italy
* Fitch Ratings cuts Portugal's credit rating to junk status
* A quick overview of economics in the Euro Zone

Massive protester confrontation with Egypt's army expected on Friday

Medics complain a lot of injured protesters, like this one, have been shot in the eyes by Egypt's security forces (Reuters)

Medics complain a lot of injured protesters, like this one, have been shot in the eyes by Egypt's security forces (Reuters)

A massive protest and confrontation with security forces is planned for Tahrir Square in Cairo, Egypt, on Friday. Over 30 political parties and groups have called for a million-man march on Friday in Cairo and across the country to articulate a single demand: that the ruling Supreme Council of the Armed Forced (SCAF) – along with its head, Field Marshal Hussein Tantawi – immediately hand over executive power to a civilian authority. Notably, the Muslim Brotherhood movement will be conspicuously absent from Friday’s planned protest. The group's younger cadres are objecting to the policies of its octogenarian leadership. Al-Ahram

Four people killed in clashes in Saudi Arabia

Saudi Arabia has so far escaped the "Arab Spring" demonstrations and riots that have occurred in countries around the region, largely by spending large sums of money on housing and other public benefits. But four people were killed in Thursday in clashes with Saudi security forces. Saudi Arabia is a Sunni Muslim country with a minority Shia population in the eastern region closest to Iran. CNN

Saudi Arabia may limit remittances of foreign workers

There are an estimated 9 million foreign workers and dependents in Saudi Arabia, taking nine out of 10 private sector jobs. Last quarter, they remitted $7.1 billion to their families in the home countries, amounting to the equivalent to 17 percent of Saudi Arabia’s current account surplus at a time of historically high oil revenues. Now, with the growing global financial crisis, Saudi officials is looking for ways to control and reduce these remittances. However, this could backfire, since most foreign workers come to Saudi Arabia for no other purpose than to send their salaries back to their families, and these foreign workers are essential to keeping the economy running. Al-Arabiya

China's South China Sea aggression is leading to military buildup

China has been making aggressive claims to the entire South China Sea, including regions historically belonging to other countries, and has backed them up with threats of military attacks. The purpose of these bellicose statements was to convince nations like Philippines and Vietnam to back off, or to negotiate individually with China to resolve boundary disputes, so that these countries won't "gang up" on China. However, China's Asian neighbors have instead formed a "united front," and have sent vessels to claim sovereignty over islands claimed by China. Thus, according to an Indian analysis, China has failed in its objectives and has antagonized most of its neighbors. Instead, China has become increasingly isolated, with the result that most nations, plus the United States, have built up their own military capabilities in the region to confront the Chinese. Institute for Defence Studies & Analyses (India)

Germany's Angela Merkel repeats her opposition to 'Euro Bonds'

At a press conference on Thursday, German Chancellor Angela Merkel repeated her opposition to euro bonds. These would be issued by the eurozone as a whole, in the belief that investors would feel confident enough in them to invest in them. Merkel said, "Nothing has changed in my position," indicating her continued opposition to exposing the German taxpayer to guaranteeing eurobonds issued by any country in the name of the eurozone.

One analyst said, "The market would be euphoric to get euro bonds," and this shows what the problem is. No one is arguing the fundamentals -- that somehow euro bonds would solve the EU's massive structural debt problem. The only argument they have is that investors would be "euphoric." And that's true, but these periods of euphoria have been getting shorter and shorter. If anyone really believed that eurobonds would solve Europe's problems, then probably Merkel would agree to them. But Merkel has seen what's happened, and now she's not willing to jeopardize Germany's economic future for a few hours or a couple of days of market euphoria. Bloomberg

German resistance to the 'Euro Bond' may be shrinking

Despite the above, press reports indicate that some officials within German Chancellor Angela Merkel's government have begun discussing the conditions under which they might accept them. The conditions would be to give the EU government, and therefore Germany, much greater fiscal control over "profligate" EU nations that fail to meet strict budgetary requirements. It was just last week that the Irish parliament was in an uproar, worrying that "Germany is our new master." If this concern spreads to other European countries, it could cause quite a situation. Spiegel

Town of Filettino declares independence from Italy

Filettino, Italy, a small town 70 km east of Rome, has declared its intention of seceding from Italy and minting its own money. Italy's tough austerity drive includes plans to force local authorities to merge, in a bid to rein in public spending. The tiny village of Filettino faces such a prospect - but its mayor is fighting back. According to Mayor Luca Sellari, "We want to manage our resources independently. This town is rich in natural resources and this could provide great economic opportunities. We have about 8,000 hectares of land, and forests that we could cut, but the state doesn’t allow us to do it. We have water resources, but these are managed by a company in Rome, and we don’t receive any money." VOA

Fitch Ratings cuts Portugal's credit rating to junk status

Portugal’s credit rating was cut to below investment grade by Fitch Ratings due to the country’s rising debt level and weakening economy. "The country’s large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook mean the sovereign’s credit profile is no longer consistent with an investment-grade rating," said Fitch's statement. The yield on Fitch's 10-year bonds rose to 12.14% after the announcement. Bloomberg

A quick overview of economics in the Euro Zone

A friend in Portugal sent me the following as her assessment of how things are:

A quick overview of economics in the Euro Zone
Some years ago a small rural town in Spain twinned with a similar town in Greece. The Mayor of the Greek town visited the Spanish town. When he saw the palatial mansion belonging to the Spanish mayor he wondered how he could afford such a house. The Spaniard said; "You see that bridge over there? The EU gave us a grant to build a two-lane bridge, but by building a single lane bridge with traffic lights at either end this house could be built."
The following year the Spaniard visited the Greek town. He was simply amazed at the Greek Mayor's house, gold taps, marble floors, it was marvelous. When he asked how this could be afforded the Greek said; "You see that bridge over there?" The Spaniard replied: "No."

(Comments: For reader comments, questions and discussion, see the 25-Nov-11 World View -- Massive confrontation in Egypt expected on Friday thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-Nov-2011) Permanent Link
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Generational Dynamics Web Log for 25-Nov-2011 25-Nov-11 World View -- Massive confrontation in Egypt expected on Friday

Massive protester confrontation with Egypt's army expected on Friday

Four people killed in clashes in Saudi Arabia

Saudi Arabia may limit remittances of foreign workers

China's South China Sea aggression is leading to military buildup

Germany's Angela Merkel repeats her opposition to 'Euro Bonds'

German resistance to the 'Euro Bond' may be shrinking

Town of Filettino declares independence from Italy

Fitch Ratings cuts Portugal's credit rating to junk status

A quick overview of economics in the Euro Zone

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Generational Dynamics Web Log for 25-Nov-2011
25-Nov-11 World View -- Massive confrontation in Egypt expected on Friday