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Posts Tagged ‘Crisis’

‘Big lender’ China urges US to avoid bankruptcy

Posted by Ram Kumar Shrestha on October 8, 2013

China's Vice Finance Minister Zhu Guangyao (Reuters)

China, the US government’s largest foreign creditor, is “naturally concerned about developments in the US fiscal cliff”, as Reuters quoted Vice Finance Minister Zhu Guangyao giving the Chinese government’s first public response to the Oct 17 US deadline for raising the debt ceiling.

China currently holds 22.85 percent of the US $16.7trln debt, which makes it the biggest US creditor.

Treasury Secretary Jacob Lew calculated the US would run out of money by October 17 and have less than $30 billion cash in hand if Congress fails to agree on its spending plans. Read the rest of this entry »

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EU mobilizes €120 billion for growth

Posted by Ram Kumar Shrestha on June 29, 2012

EU officials have agreed to spend €120 billion “for immediate growth measures” to aid the most vulnerable countries of the eurozone. The announcement comes during the latest EU summit that has started in Brussels.

European Council President Herman Van Rompuy made the announcement at a summit press conference on Thursday. The leaders of Spain and Italy were reportedly blocking a final agreement on a stimulus package until they won promises of immediate help in reducing their borrowing costs, AP reports.

However, after a tough night of bargaining, an agreement was reached that would allow loan money to be provided directly to troubled banks, circumventing European governments as middle men in the bailout process.

Allowing money to be funneled directly to the banks was seen as a way to keep investor interest rates down by removing the debt from European governments; loans provided to governments might cause investor doubt, therefore driving interest rates to unsustainable heights. The move was beneficial for Spain, which has been seeking €100 billion in loans for its troubled banks.

Another key part of the agreement was a reversal of EU policy stating that any new bailout applications would not be met with the same strict conditions that were imposed on previous bailout requests. This move was seen as one designed to placate Italy, who insisted that despite its troubled economy, it was not seeking a bailout at this time. Read the rest of this entry »

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Americans impoverished back to 1992

Posted by Ram Kumar Shrestha on June 12, 2012

Families wait in line to receive aid from Feed The Children in Hoffman Estates, Illinois (Scott Olson/Getty Images/AFP)

Families wait in line to receive aid from Feed The Children in Hoffman Estates, Illinois (Scott Olson/Getty Images/AFP)

An average American family’s income has fallen to the level of Bush Sr. presidency, the Survey of Consumer Finances published on Monday. America’s middle class has been affected the most, losing 12.1 per cent of income in just three years.

The Fed reports that if in 2007 the wealth of American middle class family exceeded $126,000, but by 2010 the figure had dropped to $77,300, the minimum index since 1992. The survey notes that the wealth of the poorest families has fallen by 7.7 per cent, whereas the wealth of the richest has dropped only 1.4 per cent.

One of the reasons the wealth has dropped so significantly is that the median housing prices dropped to $75,000 in 2010 from $110,000 in 2007. And this is no secret that home equity has scarcely recovered since then.

The richest 10 per cent of American households in 2010 still earned an average of $349,000 a year. These families still had an average net worth of $2.9 million in 2010. Read the rest of this entry »

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Athens burns, buildings on fire as chaos, riots flare up (VIDEO, PHOTOS)

Posted by Ram Kumar Shrestha on February 13, 2012

The worst riot damage in years has struck Athens as MPs pass harsh new austerity measures. Dozens of historic buildings were set ablaze after riots turned chaotic overnight in Greek capital with protesters looting shops and clashing with riot police. Read the rest of this entry »

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Obama’s new fairytale: Peace and prosperity for war-bent US

Posted by Ram Kumar Shrestha on January 25, 2012

As the US presidential race picks up pace ahead of November’s vote, Barack Obama is trying to ratchet up support for re-election. In his third State of the Union speech, he pledged another program for change.

President Obama’s Tuesday night address to Congress was his final State of the Union speech before he runs for re-election. It was crafted by the White House to set the tone for the 2012 congressional session, and for the re-election campaign. Obama’s goal was to highlight his achievements, and lay out his promises.

The president started his address praising those who fought in Iraq, “generation of heroes” who “have made the United States safer and more respected around the world.”

Indeed, the speech was full of success stories.

“For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al-Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home,” the president said.  Read the rest of this entry »

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Congressmen’s incomes triple while America gets poorer

Posted by Ram Kumar Shrestha on December 28, 2011

The US Capitol (AFP Photo / Karen BLEIER)

If you feel like Congress fat cats can’t relate to their fellow Americans anymore, the truth behind the matter might just be that they can’t.

While Americans have seen a recession ravage savings accounts, lawmakers on Capitol Hill have only gotten richer.

Between the US Senate and House of Representatives, the median net worth for a member of Congress is around $913,000, reports The New York Times. That man in the middle is Ed Pastor (Dem-AZ), and although he makes a pretty penny nowadays, his income today is gigantic when gauged with what he was worth when he first came to Washington. Twenty years earlier, Pastor pulled in enough to have only $100,000 saved up, a figure he has magnified nearly tenfold in the two decades since.

Comparing the mean in 2009 with the mean for lawmakers’ assets in 1984, the figure has tripled.

Off of the Hill, however, others aren’t so lucky. Taking into account all of America, the median net worth today is roughly $100,000 — what Congressman Pastor pulled in 20 years earlier. And while lawmakers have seen their wallets only fatted in recent times, the incomes of average Americans have dwindled as a recession and depression downturned the American economy. Read the rest of this entry »

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Global Financial Collapse: What makes it tick?

Posted by Ram Kumar Shrestha on December 6, 2011

A trader works in front of a board displaying the chart of German share index DAX at the stock exchange in Frankfurt/M., western Germany, on November 2, 2011 (AFP Photo / Daniel Roland)

The mind becomes confused and dismayed when confronted with chaotic situations it can hardly figure out – situations such as today’s Global Financial Woes. Maybe we’re looking too close-up. Let’s take a step back and look again…

Complexity is often engineered into what are basically simple problems by people who benefit from manufactured complications and have the power to control them. When money is involved, the powerful people who benefit from ripping off untold millions of hard workers make sure that their “money machine” will just keep steaming ahead. Take the ongoing Global Financial Crisis.

Firstly, it is not a “crisis” at all: what the world is confronted with today is a full-fledged, irreversible and unsustainable Global Financial Collapse that, if not properly addressed, may bring down the whole global economy with it.

Secondly, this has pushed the Real Economy into a “crisis” from which, if proper measures are taken, it can – and must! – be saved.Because all national economies are basically intact (although many have been badly clobbered!) they can be brought back to health.

Thirdly, the real core of today’s problem is that Finance – that virtual world of banking, fractional lending, usury compound interest, fraudulent derivatives, casino-like speculative “investments” and other parasitic and anti-social activities – has illegitimately risen above the Real Economy which is the world of work, production, manufacturing, effort, toil, sweat and creativity.

In numbers, we see that today Finance has grown to be 20, perhaps 30 times larger than the Real Economy. Read the rest of this entry »

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Merkel gives EU the FU

Posted by Ram Kumar Shrestha on December 2, 2011

German Chancellor Angela Merkel has urged for “a Fiscal Union with strict rules” to address the root causes of the “Europe’s widening financial crisis.” Though she said the process will take years.

Germany and France, which are the key players of the eurozone, are pushing forward the idea of creating a Fiscal Union which would include all 17 eurozone states or even all members of the EU. It would bring more centralization of power, more control over state budgets, and more importantly over their debts.

“The European crisis will not be solved in one fell swoop,” said Merkel to the lower house of the German parliament on Friday. “There are no quick and easy solutions.”

She compared the process of solving the debt crisis to the marathon runners saying that “the one who starts fastest isn’t necessarily the most successful. It is the one who is aware of what is involved in running the full distance.” Read the rest of this entry »

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US vs. China: Who rules?

Posted by Ram Kumar Shrestha on November 14, 2011

As politicians and financiers bring their different perspectives to the APEC summit in Honolulu, a single idea is proving a unifying force. With global economic power shifting eastwards, the chorus of anti-China rhetoric is growing ever louder.

If there is one US state where the Occupy movement has little chance, it is probably Hawaii. Despite a high concentration of politicians and Wall Street bigwigs mingling at the APEC summit, the only place people are willing to occupy en masse here are the beaches. With one exception. The few protesters allowed in downtown Honolulu were speaking out against greed and social injustice. They were against economic inequality. They were against China.

Coincidentally or not, the mood on the podium was similarly hostile. Employing some of his sharpest language yet, US President Barack Obama threatened Beijing with punitive economic steps unless it started “playing by the rules.” His political opponents were even more belligerent.

“I happen to think that the Communist Chinese government will end up on the ash heap of history if they do not change their virtues,” Rick Perry, Republican presidential candidate, said in the course of the debates.

“We have to have China understand that, like everybody else on the world stage, they have to play by the rules!”responded his rival for the Republican nomination, Mitt Romney.

Rules, rules and again rules. As the country that has been ruling the roost for decades, the United States has never been shy of policing others. But as China’s GDP continues to grow at a rate of nine per cent a year, against two-and-a-half per cent growth in the US, the reprimand seems to be internally driven.

Conformity is one of the top values in the Chinese view of the world – also reflected in the country’s political and economic policies. So it is not that China does not play by the rules, it is actually quite the opposite. What the United States seems to have an issue with is that, increasingly, China rules and that is a privilege Washington would prefer to keep for itself.

As his signature achievement at APEC 2011, Barack Obama has put forward the Trans-Pacific Partnership, a regional free trade pact being negotiated by the United States and eight other countries. White House officials even speculated that the deal could become a template for an eventual APEC-wide free trade zone.

Yet what seems a win-win to the US is taken in China as a somewhat predatory effort to change rules mid-game. Beijing remains wary of the deal that Washington is proposing to some of China’s neighbors, seeing it as an effort to provide a counterweight to China around the Pacific Rim.

“Free trade tends to be in the eye of the beholder – it’s free for you, but protectionist for me, provided I get to protect my precious industries, my own personal national interest. So it’s always a dilemma as to how free it is,” said George Koo, the founder of International Strategic Alliances.

As the euro crisis continues metastasizing throughout the world and China is asked to shoulder the load, many analysts say the West should keep in mind its old adage – “He who pays the piper calls the tune.”

“The US is a declining power and having trouble adjusting to that status,” CEO of Country Risk Solutions, Daniel Wagner, believes.

Many Chinese proverbs are difficult to translate into English, although those about money usually have exact equivalents. One of them is “Money makes the world go round” – a concept experientially familiar to Washington and, progressively so, to Beijing.

Professor Julan Du from the Chinese University of Hong Kong told RT that America’s domestic problems are  driving Washington’s criticism of Beijing.

“They accuse China of unfair trade and currency policies. I think it is unfair. The current difficulties of the US government in creating jobs lie in the fact that the US has lost the competitive advantage in most of the traditional manufacturing industries,” Professor Du said.

“The wage rate is too high to justify moving production back to the US,” he added. “So even if China reduced its exports to the US by increasing its exchange rates, other low-wage emerging countries would step in to replace China.”


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Greek bailout referendum could sink Eurozone

Posted by Ram Kumar Shrestha on November 1, 2011

The decision to call a referendum on Greece’s bailout has rocked markets around the world. But while the Greek PM seeks

Anti-austerity protesters hold a Greek flag reading 'not for sale' during a student parade in Athens, attended by the Greek minister of education (AFP Photo / LOUISA GOULIAMAKI)

political support for the highly unpopular deal, critics argue he is putting both his country’s and Europe’s futures on the line.

A Greek deputy’s defection from the ruling party is only the latest consequence of Prime Minister George Papandreou’s decision to hold a surprise referendum on last week’s Greek bailout package.

Milena Apostolaki’s move, which leaves the governing socialist party with a slim two-seat majority, highlights the risky game Papandreou is playing with Greece’s financial future.

Struggling with rioters at home and growing dissent from within his own political party, Papandreou’s populist maneuver has cast a dark cloud over the eurozone’s future.

While the country is due to receive an 8 billion-euro tranche in mid-November, it is likely to run out by January, just in time for the referendum, leaving the government with no funds if there is a “no” vote, Reuters reports.

And while Greece is desperately in need of the 130 billion-euro lifeline and a 50-per cent write-down on its enormous debt (which would amount to an additional 100 billion euros), more austerity measures are a pill that many find too bitter to swallow.

This reality is reflected by recent opinion polls which show some 60 per cent of Greeks view the bailout in a negative light.

However, the majority also want to stay within the euro, an ambivalence which has created obvious frustration within the Greek government. Read the rest of this entry »

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Professor Cornel West arrested in DC

Posted by Ram Kumar Shrestha on October 19, 2011

Acclaimed professor and activist Dr. Cornel West was arrested with 18 others on the steps of the Supreme Court building in Washington DC on Saturday during a local demonstration with the growing Occupy Wall Street movement.

Dr. West says that he was in Washington earlier in the day to witness President Barak Obama’s dedication of the Martin Luther King Jr. Memorial, only to join protesters hours later at Freedom Plaza on Pennsylvania Avenue. It is there that activists have been congregating for over a week down as part of the October 2011 Stop the Machine protest that hopes to draw attention to the ongoing war in Afghanistan — which earlier this month reached the 10-year mark, making it the longest-going American war ever.

Once at Freedom Plaza, West and dozens others marched through Washington to the Supreme Court building. A spokesperson for the high court confirmed that West was one of 19 people arrested for refusing to the leave the grounds. Video shows that protesters remained peaceful as they sat on the steps of the courthouse awaiting arrest. Read the rest of this entry »

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Naomi Wolf arrested at Occupy Wall Street

Posted by Ram Kumar Shrestha on October 19, 2011

Photo by Thomas Good / NLN

Author and activist Naomi Wolf has been added to the list now hundreds of names long of protesters arrested during the ongoing Occupy Wall Street demonstrations.

Wolf, a popular writer perhaps most known for her book The Beauty Myth and frequent articles in the Huffington Post, was arrested Tuesday night in Manhattan along with a handful of other Occupy Wall Street protesters.

A group of around 50 participants in the movement, including Wolf, had been in attendance outside of a gala that was honoring New York Governor Andrew Cuomo at New York’s Skylight Studios. While Gov. Cuomo was being lauded as “Game Changer of the Year” at the awards ceremony, Occupy Wall Street protesters were expressing their detest over the politician’s opposition to extending a tax on millionaires and his support of hydraulic fracking.

Wolf says that her participation in the protests outside the event was “peaceful, respectful, law-abiding and orderly,”and insists that the NYPD officials that apprehended her were wrong in doing so.

“I was arrested for not backing down when a police officer told me contrary to what I knew about the law and the permit process that a private entity owned the sidewalk,” Wolf writes on her website following her arrest. “He was mistaken and I was correct,” she adds.

In a separate article written today for the UK’s Guardian, Wolf writes that “Police keep inventing this right to barricade people in and tell people where to protest, but in the United States this is wrong: it’s against the first amendment rights of freedom of assembly.” Read the rest of this entry »

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‘EU’s actions could lead to revolutions in Greece and Portugal’

Posted by Ram Kumar Shrestha on October 16, 2011

The expanded bailout fund will not help if Italy or Spain is dragged into the economic crisis, and the austerity packages are driving Greece and Portugal to revolutions, warned British European Parliament member Nigel Farage.

“They are having austerity packages pushed upon them, which is forcing them into downward deflation, which in my opinion could lead to revolution in Greece and possibly in Portugal, too,” Farage told RT. “What we are doing is stupid, and very, very dangerous indeed.”

“If Italy goes down, they would need a couple of trillion to bail it out,” he said. “And what it the point of bailing these countries out anyway? Are these bailouts helping people in Greece or Portugal? No, they’re not!”

“What they are actually doing,” he continued, “is giving money to these countries to give back to our banks, who over-lent to them in the first place. I mean, the whole thing is mad. What these countries trapped inside this economic prison called the Eurozone need is to devalue.” Read the rest of this entry »

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‘Modern capitalism has reached the end of its rope’

Posted by Ram Kumar Shrestha on October 5, 2011

There is barely a corner of the globe that has not been touched by the current financial meltdown. But a senior sociology scholar at Yale University thinks the crisis is far wider than the economic crash – it is capitalism itself which is collapsing.

Immanuel Wallerstein explained his theory to RT.

“Modern capitalism has reached the end of its rope. It cannot survive as a system,” Wallerstein said. “And what we are seeing is the structural crisis of the system. The structural crisis goes on for a long time. It really started more or less in the 1970s and will go on for another 20, 30, 40 years. It is not a crisis of a year or of a short moment, it is the major structural unfolding of a system.  And we are in transition to another system and, in fact, the real political struggle that is going on in the world that most people refuse to recognize is not about capitalism – should we have or should we not have it – but about what should replace it.” Read the rest of this entry »

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Americans face new recession

Posted by Ram Kumar Shrestha on September 18, 2011

People look at a list of companies attending the job fair (Joe Raedle / Getty Images / AFP)

Hold onto your money, folks. It’s going to be a bumpy ride. Economists predict that the odds of entering another recession are pretty good — or pretty terrible, depending on how you look at it.

The latest survey from the Wall Street Journal suggests that the odds of entering another economic recession are at one-in-three, the most likely they’ve been since the United States rebounded from the last one and went into recovery.

That recovery, however, has been a staggering one, marred with an unemployment epidemic and a schizophrenic market. Now, says The Journal, odds of going into a double-dip recession are 4 percentage points higher than they were last month,

John Ryding, chief economist at RDQ Economics, tells the Fiscal Times that if the unemployment problem in America continues, another recession seems inevitable. “The trend in jobless claims is an important input into our recession probability model, and if this trend were to continue for a number of weeks it would raise a warning flag on the state of the economy,” Ryding says.

Figures released this week from the Labor Department show that applicants filing for unemployment benefits in America surged last week up to 417,000 claims; earlier predictions on Wall Street had signaled a number substantially less. A total of 7.144 million Americans are currently receiving governmental benefits. Read the rest of this entry »

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