Monthly Archive for November, 2011

Putin’s Rasputin

Published on November 28, 2011 in News. 0 Comments

By Peter Pomerantsev, London Review of Books

The next act of Russian history is about to begin: Putin and Medvedev will pop off-stage into the Moscow green room, switch costumes, and re-emerge to play each other’s roles. Putin as president, again, Medvedev as PM. It’s the apotheosis of what has become known as ‘managed democracy’, and the ultimate triumph of the show’s writer-director, Putin’s chief ideologue and grey cardinal, Vladislav Surkov, the ‘Kremlin demiurge’. Known also as the ‘puppetmaster who privatised the Russian political system’, Surkov is the real genius of the Putin era. Understand him and you understand not only contemporary Russia but a new type of power politics, a breed of authoritarianism far subtler than the 20th-century strains.

There is something cherubic in Surkov’s soft, smooth face, something demonic in his stare. He trained as a theatre director then became a PR man; now his official role is ‘vice-head of the presidential administration’, but his influence over Russian politics is unsurpassed. He is the man behind the concept of ‘sovereign democracy’, in which democratic institutions are maintained without any democratic freedoms, the man who has turned television into a kitsch Putin-worshipping propaganda machine and launched pro-Kremlin youth groups happy to compare themselves to the Hitler Youth, to beat up foreigners and opposition journalists, and burn ‘unpatriotic’ books on Red Square. But this is only half the story.

In his spare time Surkov writes essays on conceptual art and lyrics for rock groups. He’s an aficionado of gangsta rap: there’s a picture of Tupac on his desk, next to the picture of Putin. And he is the alleged author of a bestselling novel, Almost Zero. ‘Alleged’ because the novel was published (in 2009) under the pseudonym Natan Dubovitsky – Surkov’s wife is called Natalya Dubovitskaya. Officially Surkov is the author of the preface, where he denies being the author of the novel, then makes a point of contradicting himself: ‘The author of this novel is an unoriginal Hamlet-obsessed hack’; later, ‘this is the best book I have ever read.’ In interviews he has come close to admitting to being the author while always pulling back from a complete confession. Whether or not he actually wrote every word of it he has gone out of his way to associate himself with it.

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Image: www.kremlin.ru

 

As Its Economy Sprints Ahead, China’s People Are Left Behind

Published on November 24, 2011 in News and Newsletter. 0 Comments

A shopkeeper napping on a busy shopping street in Jilin. While Western companies look at China as a potentially huge market, consumers in Jilin and other heartland cities mostly settle for what state-run department stores and mom-and-pop shops offer.

By David Barboza, The New York Times

JILIN CITY, China — Wang Jianping and his wife, Shue, are a relatively affluent Chinese couple, with an annual household income of $16,000 — more than double the national average for urban families.

They own a modest, three-bedroom apartment here in this northeastern industrial city. They paid for their son to study electrical engineering at prestigious Tsinghua University, in Beijing. And even by frugal Asian standards, they are prodigious savers, with $50,000 in a state-run bank.

But like many other Chinese families, the Wangs feel pressed. They do not own a car, and they rarely go shopping or out to eat. That is because the value of their nest egg is shrinking, through no fault of their own.

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Image: Shiho Fukada for the New York Times

Debating the Role of International Affairs and Political Science in the Public Sphere

Published on November 20, 2011 in News. 0 Comments

By Robin Varghese, 3QuarksDaily

Over at the SSRC’s Transformations of the Public Sphere, Stephen Walt, Rogers Smith and Lisa Anderson discuss the role that scholars of international affairs should play in the public sphere. Walt:

Social scientists are far from omniscient, but the rigor of the scientific process and the core values of academia should give university-based scholars an especially valuable role within the broader public discourse on world affairs. At its best, academic scholarship privileges creativity, validity, accuracy, and rigor and places little explicit value on political expediency. The norms and procedures of the academic profession make it less likely that scholarly work will be tailored to fit pre-conceived political agendas. When this does occur, the self-correcting nature of academic research makes it more likely that politically motivated biases or other sources of error will be exposed. Although we know that scholarly communities do not always live up to this ideal picture, the existence of these basic norms gives the academic world some important advantages over think tanks, media pundits, and other knowledge-producing institutions.

Yet the precise role that academic scholars of international affairs should play is not easy to specify. Indeed, there appear to be two conflicting ways of thinking about this matter.

On the one hand, there is a widespread sense that academic research on global affairs is of declining practical value, either as a guide to policymakers or as part of broader public discourse about world affairs.

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The Blizzard from Brussels: The European Commission Gets Busy

Published on November 16, 2011 in News and Newsletter. 0 Comments

From The Economist

THE Europeans can rouse themselves occasionally. Two initiatives emerged from the European Commission this week, one to improve the audit profession, the other to tax financial transactions. The first raises serious questions about how best to protect investors; the second serious questions about policymakers’ priorities.

Auditing first. A leaked proposal from the directorate-general for the European Union’s single market suggests that Michel Barnier, the commissioner in charge, thinks the industry needs reform from top to bottom. The proposal envisages forcing clients to change auditors every so often, so beancounters and bosses do not get too cosy (although the evidence on whether this helps is weak). It also wants two auditors to work together on the accounts of especially important companies.

But by far the most radical proposal in the leaked draft would be to forbid audit firms from providing non-audit services. In America providing most non-audit services to audit clients is already forbidden, under the Sarbanes-Oxley financial reform passed in the wake of the meltdown of Enron, an energy-trading company. In some European jurisdictions, selling both audit and (say) consulting to a client is still permissible. Mr Barnier’s leaked proposal would not simply go down the route of Sarbanes-Oxley and forbid this. It would force the creation of pure audit firms.

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Image: Pixomar

Is The World Too Big to Fail?

Published on November 12, 2011 in News and Newsletter. 0 Comments

By Noam Chomsky, Aljazeera

The democracy uprising in the Arab world has been a spectacular display of courage, dedication, and commitment by popular forces – coinciding, fortuitously, with a remarkable uprising of tens of thousands in support of working people and democracy in Madison, Wisconsin, and other US cities. If the trajectories of revolt in Cairo and Madison intersected, however, they were headed in opposite directions: in Cairo toward gaining elementary rights denied by the dictatorship, in Madison towards defending rights that had been won in long and hard struggles and are now under severe attack.

Each is a microcosm of tendencies in global society, following varied courses. There are sure to be far-reaching consequences of what is taking place both in the decaying industrial heartland of the richest and most powerful country in human history, and in what President Dwight Eisenhower called “the most strategically important area in the world” – “a stupendous source of strategic power” and “probably the richest economic prize in the world in the field of foreign investment,” in the words of the State Department in the 1940s, a prize that the US intended to keep for itself and its allies in the unfolding New World Order of that day.

Despite all the changes since, there is every reason to suppose that today’s policy-makers basically adhere to the judgment of President Franklin Delano Roosevelt’s influential advisor A.A. Berle that control of the incomparable energy reserves of the Middle East would yield “substantial control of the world.” And correspondingly, that loss of control would threaten the project of global dominance that was clearly articulated during World War II, and that has been sustained in the face of major changes in world order since that day.

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Image: Jared Rodriguez / t r u t h o u t

Adapted: mtsofan, FlyingSinger

Operation Twist and the Limits of Monetary Policy in a Credit Economy

Published on November 8, 2011 in News. 0 Comments

By Ashwin Parameswaran, Macroeconomic Resilience

The conventional cure for insufficient aggregate demand and the one that has been preferred throughout the Great Moderation is monetary easing. The argument goes that lower real rates, higher inflation and higher asset prices will increase investment via Tobin’s Q and increase consumption via the wealth effect and reduction in rewards to savings, all bound together in the virtuous cycle of the multiplier. As I discussed in a previous post, QE2 and now Operation Twist are not as unconventional as they seem. They simply apply the logic of interest rate cuts to the entire yield curve rather than restricting central bank interventions to the short-end of the curve as was the norm during the Great Moderation.

But despite asset prices and corporate profits having rebounded significantly from their crisis lows and real rates now negative till the 10y tenor in the United States, a rebound in investment or consumption has not been forthcoming in the current recovery. This lack of responsiveness of aggregate demand to monetary policy is not as surprising as it first seems:

  • The responsiveness of consumption to monetary policy is diminished when the consumer is as over-levered as he currently is. The “success” of monetary policy during the Great Moderation was primarily due to consumers’ ability to lever up to maintain consumption growth in the absence of any tangible real wage growth.
  • The empirical support for the impact of real rates and asset prices on investment is inconclusive. Drawing on Keynes’ emphasis on the uncertain nature of investment decisions, Shackle was skeptical about the impact of lower interest rates in stimulating business investment. He noted that businessmen when asked rarely noted at the level of interest rates as a critical determinant. In an uncertain environment, estimated profits “must greatly exceed the cost of borrowing if the investment in question is to be made”.

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Image: FreeDigitalPhotos.net

Frau Merkel, It Really Is a Euro Crisis

Published on November 4, 2011 in News. 0 Comments

By Ambrose Evans-Pritchard, The Telegraph

Angela Merkel told German industry today that we are not facing ”a euro crisis, but a debt crisis.”

She is wrong. Total levels of private and sovereign debt in the eurozone are lower than in the UK, the US, and far lower than in Japan.

Greece’s debt levels are around 250pc of GDP, at the lower end of the developed world.

Spain’s sovereign debt is admirably modest at around 65pc. Italy’s household debt level is the envy of the rich world. It has a primary budget surplus. Italy has many problems, but the budget deficit is not one of them.

So why is there such a destructive and long-festering crisis in the eurozone? Why have three countries required an EU-IMF bail-out? Why is the ECB having to shore the debt markets of five countries — soon to be six — with direct bond purchases, including Spain and Italy?

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Image Courtesy of The Telegraph