Investment bankers salivate over North Africa

Investment banking is usually thought of as a field that values stability. Yet the greatest rewards are often attained through destabilization.
North African regimes and leaders have their obvious faults and flaws. Autocracies have an inherent weakness in their tendency to ossification. This basic reality is reflected not just in the obvious lack of democratic institutions, but also in the economic structures of the North African states. Regimes which have persisted for many decades tend to retain many of the economic characteristics of the era in which they were formed.
In the developing economies, during the decades prior to the neo-liberal reforms of the 1990′s, state owned industries were fostered in order to provide basic services such as telecommunications, transport and public utilities. Local manufacturing industries were protected from offshore competition as a means of furthering development goals and enhancing balance of trade accounts. These well established practices have come to be seen by today’s promoters of ‘free trade’ and privatization as an impediment to maximizing profits. Once established, these industries are in many cases difficult to dislodge.
Therefore, a clean break is required for restructuring primary domestic industries in order for international investors to reap a greater share of locally generated profits. This process is referred to as ‘creative destruction’. To facilitate the emplacement of the new order, the old order must first be swept aside. This requirement of upending the existing order explains why Western neoconservatives have been promoting the revolutionary uprisings in North Africa. Neoconservative think tanks and publications are closely associated with the banking interests. Evidence of their designs on North Africa is abundant.
A 2010 Bertelsmann evaluation titled Transformation Tunisia reported:

Tunisia’s decision makers have once again advanced transformation too sluggishly. Despite the formal abolition of trade barriers for industrial goods with the European Union as of 1 January 2008, in practice, Tunisia has seen too little progress in terms of trade liberalization [emphasis added].
[The] Tunisian banking sector and capital market are regularly cited as one major hindrance to the country’s economic modernization. Although they have been formally brought up to international standards, financial supervision and regulation remain subject to political influence. This is partly due to direct state control over financial flows and partly to the state’s direct involvement therein. Although it sold its stakes in two banks in 2002 and 2005, respectively, the state remains the controlling shareholder in at least four other banks because it controls 50% of their assets. Under these conditions, top-rank bank executives are de facto appointed by the president through a controlling body.

On January 7, 2011, Elliott Abrams wrote for the Council on Foreign Relations:

“Tunisia, whose literacy rate has long been the highest in Africa at nearly 80% and whose per capita GDP is about $8,000, should have the ability to sustain a democratic government—once the Ben Ali regime collapses [emphasis added].
“Tunisians are clearly sick of looking at all the giant photos and paintings of Ben Ali that appear on walls, posters, and billboards all over the country. [...]
“If Tunisia can move toward democracy, Algerians and Egyptians and even Libyans will wonder why they cannot. This kind of thing may catch on [emphasis added]. In fact, in Algeria it may already be catching on.” (Elliott Abrams: Is Tunisia Next?)

On February 13, the New York Times described Robert Kagan as “a Brookings Institution scholar who long before the revolution helped assemble a nonpartisan group of policy experts to press for democratic change in Egypt.” [emphasis added]
Maidhc Ó Cathail has noted that:

Arianna Huffington … was prescient in a December 13, 2010 op-ed in Lebanon’s Daily Star titled “Social media will help fuel change in the Middle East.”

And also that:

Robert Kagan, who co-founded the Project for a New American Century with William Kristol in 1997, was joined on that “nonpartisan group” by PNAC founding member Elliott Abrams and PNAC deputy director Ellen Bork. Bork is currently “democracy and human rights” director at PNAC’s successor, Foreign Policy Initiative, where Kagan and Kristol are directors. Not surprisingly, Kristol wrote in the Weekly Standard on January 29 that he was “in complete agreement” with his fellow PNACers’ Working Group on Egypt in its demands that the U.S. suspend aid to Mubarak. [...]
Appearing on ABC’s This Week, Kagan looked positively sanguine about the prospects for a post-Mubarak Egypt. Like George Soros, he seems confident that Israel has “much to gain from the spread of democracy in the Middle East.”

It should be recalled that many of these same individuals and institutions were principle actors in the promotion of the ‘color revolutions’ in many of the former Soviet Republics as well as in Iran’s failed ‘green revolution’ during the summer of 2010.
Former CIA officer Philip Giraldi points out that the direction that events take is not being left to local forces:

Former Secretary of State Madeleine Albright was interviewed by Rachel Maddow several weeks ago and revealed that Washington has already begun meddling.  Albright denounced Egyptian ex-president Mubarak … and then confirmed that the National Endowment for Democracy was already hard at work in Egypt, even though Mubarak had not yet stepped down, building up infrastructure and supporting party development.  Recall for a moment that Albright believes that a heavy fist is an essential part of diplomacy and that US interests always trump whatever suffering local people have to endure. [...]
Those who are aware of the insidious activities of the National Endowment for Democracy or NED, an ostensibly private foundation that spreads “democracy” and is largely funded by the government, will not be surprised to learn that it is already active in North Africa because it is almost everywhere.  NED, which has a Democratic Party half in its National Democratic Institute, and a Republican Party half in its International Republican Institute, was the driving force behind the series of pastel revolutions that created turmoil in Eastern Europe after the fall of communism.  Remember when the Russians and others complained about the activities of NGOs interfering in their politics?  NED was what they were referring to.
Albright is in charge of the NED Dems while John McCain leads the NED GOP. [...]
Neoconservative Ken Timmerman has identified the core NED activity overseas as “training political workers in modern communications and organizational techniques,” surely a polite way to describe interfering directly in other countries’ politics.

On February 27, John McCain and Joe Lieberman visited Cairo. As reported by Politico:

Sen. Joe Lieberman (I-Conn.), who’s on a quick trip through the Middle East, said Sunday he found Cairo to be a “very exciting place.”
“We went to Tahrir Square today. Got a warm, enthusiastic welcome,” he said of his visit to Cairo with Sen. John McCain (R-Ariz.).

Of course, to suggest that the uprisings have been orchestrated solely by these interests would ignore genuine grassroots concerns. Nothing here is meant to suggest that conditions for unrest were not present or that sacrifices for social change have not been made by the peoples of North Africa. This article is only meant to inform as to the activities of the interventionists. The real accomplishments of the uprisings may yet predominate.
Within a month after demanding cessation of military aid to Mubarak, the very same neocon cabal was demanding military intervention in the less pliable Libya. Jim Lobe reports for IPS:

In a distinct echo of the tactics they pursued to encourage U.S. intervention in the Balkans and Iraq, a familiar clutch of neo-conservatives appealed Friday for the United States and NATO to “immediately” prepare military action to help bring down the regime of Libyan leader Muammar Gaddafi and end the violence that is believed to have killed well over a thousand people in the past week.
The appeal, which came in the form of a letter signed by 40 policy analysts, including more than a dozen former senior officials who served under President George W. Bush, was organised and released by the Foreign Policy Initiative (FPI), a two-year-old neo-conservative group that is widely seen as the successor to the more-famous – or infamous – Project for the New American Century (PNAC).
Warning that Libya stood “on the threshold of a moral and humanitarian catastrophe”, the letter, which was addressed to President Barack Obama, called for specific immediate steps involving military action, in addition to the imposition of a number of diplomatic and economic sanctions to bring “an end to the murderous Libyan regime”.
In particular, it called for Washington to press NATO to “develop operational plans to urgently deploy warplanes to prevent the regime from using fighter jets and helicopter gunships against civilians and carry out other missions as required; (and) move naval assets into Libyan waters” to “aid evacuation efforts and prepare for possible contingencies;” as well as “(e)stablish the capability to disable Libyan naval vessels used to attack civilians.”
Among the letter’s signers were former Bush deputy defence secretary Paul Wolfowitz; Bush’s top global democracy and Middle East adviser; Elliott Abrams; former Bush speechwriters Marc Thiessen and Peter Wehner; Vice President Dick Cheney’s former deputy national security adviser, John Hannah, as well as FPI’s four directors: Weekly Standard editor William Kristol; Brookings Institution fellow Robert Kagan; former Iraq Coalition Provisional Authority spokesman Dan Senor; and former Undersecretary of Defense for Policy and Ambassador to Turkey, Eric Edelman.
It was Kagan and Kristol who co-founded and directed PNAC in its heyday from 1997 to the end of Bush’s term in 2005.
The letter comes amid growing pressure on Obama, including from liberal hawks, to take stronger action against Gaddafi.
Two prominent senators whose foreign policy views often reflect neo-conservative thinking, Republican John McCain and Independent Democrat Joseph Lieberman, called Friday in Tel Aviv for Washington to supply Libyan rebels with arms, among other steps, including establishing a no-fly zone over the country.

By March 6, Reuters was already reporting the hoped for results:

As entrenched monopolies and patronage give way in the Middle East and North Africa, governments in the region could open their markets further and divest some state assets.
Wealthy Gulf states such Kuwait and Qatar have little cause to sell, but post-revolutionary states such as Tunisia will likely lower protectionist barriers…
“… this crisis is going to reveal some opportunities as structures linked to old regimes will be unwound,” said Julian Mayo, investment director at Charlemagne Capital. [...]
“When you have an economy moving from socialist dictatorship to full-fledged free market, the spider in the web of that transformation will be the banks,” [emphasis added] said Bjorn Englund, who runs an investment fund focused on Iraq.

~

Related video post:
Alliance for Youth Movements: The State Dept.’s New Vehicle for Regime Change
Update March 13, 2011:
US training quietly nurtured young Arab democrats
Update March 15, 2011:
A regional strategy for democracy in the Middle East

Zalmay Khalilzad | Washngton Post | March 15, 2011

… The Middle East uprisings that hold the greatest promise are in anti-American dictatorships. The immediate challenge is to ensure the ouster of Libyan leader Moammar Gaddafi. [...]
… Gaddafi’s overthrow and the consolidation of a liberal, pro-American regime would bolster prospects for reform in Iran and Syria by countering Iranian propaganda that the current revolts are Islamist in character and directed only at partners of the United States.
We can follow up with a variety of steps to foment democratic revolutions against Tehran and Damascus, beginning with clarion calls for change. These include: training and support for opposition forces in and outside the countries; pressure directed against regime officials who attack their own people, including targeted sanctions and referrals in international tribunals; surrogate broadcasting and other pro-democracy messaging; funds for striking workers; and covert efforts to induce defections by regime and security officials. …

Banks rigged €10 trillion derivatives market, Brussels says

1. By Benjamin Fox
2. 

BRUSSELS - Thirteen big banks colluded to shut out competition from the multi-trillion euro derivatives market, according to an investigation by the European Commission.
The EU's executive arm said that its investigation, which began in 2011, had uncovered anti-competitive practices during the 2008-9 financial crisis.
The commission investigation focuses on the credit default swap (CDS) market which allows banks and businesses to hedge against possible losses. However, more controversially, they were used by Goldman Sachs and others to speculate on the probability of a Greek debt crisis in 2010.
There are almost 2 million active CDS contracts with a joint notional amount of €10 trillion worldwide.
Most CDS contracts are negotiated privately between so-called 'over the counter' derivatives. However, critics of the practice say that the lack of transparency distorts the market and increases the risk of the parties being unable to meet their obligations.
EU lawmakers adopted legislation on derivatives trading in 2012 requiring all trades to be cleared through an exchange, making the practice more transparent and reducing risk.
The banks allegedly coordinated their behaviour to jointly prevent the Deutsch Bourse stock market and the Chicago Mercantile Exchange from being issued licenses allowing them to enter the CDS market. The two exchanges were allegedly shut out of the market between 2006 and 2009, covering the end of the credit boom and the financial crisis in 2008-9.
In a statement issued on Monday (1 July) the commission commented that its preliminary conclusion was that the banks had "delayed the emergence of exchange trading of these financial products because they feared that it would reduce their revenues."
The banks involved include a handful of Europe's largest financial institutions such as Barclays, BNP Paribas, Deutsche Bank and the Royal Bank of Scotland (RBS).
The UK-based Barclays and RBS were also involved in last year's Libor rate-fixing scandal which saw a handful of big banks rig the interest rate at which banks lend to each other, driving up the price of financial products to customers.
Speaking to journalists on Monday (1 July) EU competition chief Joaquin Almunia warned that fines would be meted out if the market manipulation was confirmed.
EU anti-trust rules allow the Commission to impose fines worth up to 10 percent of a firms annual turnover.
"Exchange trading of credit derivatives improves market transparency and stability," he added, in a nod to the new EU rules.

Section

1. Economic Affairs

Malay journalists leader lays out elaborate theory on another community, no guesses which

By Lee Shi-Ian

Forging alliances with Malay opposition parties and using the democratic parliamentary process has been the cornerstone for the DAP's slow but inexorable rise to power in Malaysia, said Dr Alias Mohamed.
Alias, who is the president of the National Association of Malay Journalists and Writers of Malaysia and the Kelantan Malay Journalists Association, wrote in Utusan Malaysia that Malay leaders were worried that years of compromising with the Chinese would eventually lead to the loss of Malay authority and influence.
"The smooth strategy employed by Chinese leaders, despite their numbers being less than 30 per cent of the nation's 29 million population, culminated in a golden opportunity when they allied with Parti Keadilan Rakyat and PAS in the 2008 general election," Alias said.
The Chinese leaders had learnt from their past mistakes in 1969 when their blatant attempt to wrest powers from the Malay community failed. Alias claimed that during the reign of Prime Minister Tunku Abdul Rahman, he was pressured several times into giving concessions and exemptions to the Chinese, including the allocation of additional seats.
"After 1969, the Chinese realised that only through the democratic process could their political ambitions become reality. The same problem plagued the next three Prime Ministers after Tunku, who were pressured to give the Chinese community universities and recognising their language," Alias said.
"The Chinese hope that the opportunity to rule will emerge once the democratic door has been opened for them to seize the chance. Whether it is through demographic changes, opportunities through weaknesses in the democratic system or through allying themselves with Malay and non-Malay political parties," Alias said.
"The Chinese are very well aware that they will not be able to control the country in a short space of time, especially without the support of Malay opposition parties such as PAS and PKR. DAP secretary-general Lim Guan Eng himself admitted before the election that he would be happy if they won 100 of the 222 parliamentary seats up for contest."
Lim, who is also the Penang Chief Minister, is alleged to have said he hoped that there would be chaos within Umno and BN which would point towards a change in the composition of parliamentary seats in the august House.
In this context, DAP calculated that they would rise to power through two methods, one, in the short term, the party hopes that power falls into their hands as chaos in Parliament would encourage BN MPs or other parties to jump ship and join DAP.
Second, in the long term, they hope that there will be a major change in the population demographic due to oversights from the Malay leaders in the ruling party who will continue to press for developments both urban and rural, hence, it will encourage the migration of Chinese communities to these areas.
In the 2008 general polls, with the cooperation of PAS and PKR and exploiting the dissatisfaction of urban voters with BN, DAP conquered Penang and for a short while, Perak. With the same modus operandi, DAP merged with PKR and PAS to rule Selangor.
DAP also won parliamentary seats in the Federal Territory as well. Excluding Perak, in the 13th general polls, they repeated their success from 2008 by winning in Penang, Selangor and Federal Territory where Chinese voters were the dominant force.
On the surface, the Malay votes shifted from PAS to Barisan Nasional. Although PAS returned to control Kelantan and almost snatched Terengganu, but its influence seems to be declining and in the May 5 polls, they sacrificed Kedah to BN.
Alias said the role played by Chinese-language newspapers and magazines in spreading their influence, such as language, culture and the interests of the community in the economy and politics, could not be denied.
In line with their race, whose numbers are increasing, besides the economic interests and political voice, which is getting louder, the Chinese community continues to plan and exploit the various channels of power and democratic instruments to strengthen and consolidate everything they have accumulated since 1957.
The journey began with citizenship issues in 1948 and 1957 which, in truth, had been smoothened by Umno and the Malay royalty. Step by step, the Chinese community began laying the foundation in the economy of Malaya/Malaysia until their numbers became 29 per cent of the total population. Now, their newest objective and agenda is focused on politics in Malaysia.
"The Chinese were intelligent enough to realise in the 1940s and 1950s that the democratic system founded by the Malay rulers in Malaysia in those years would one day be the ideal platform for their race to progress and actively participate in politics," Alias said.
"In truth, political Chinese organisations had planted their roots a long time ago in Malaya. The secret societies played an important role in giving birth to Chinese leaders who were conservative and cooperated closely with the British."
MCA, which was formed in 1949, then shifted their attention to the issue of citizenship. They realised that their party was not the only lobbyist, as Chinese leaders such as Tun Tan Cheng Lock was strongly supported by certain British administrators.
Although the Communist Party of Malaysia (CPM) and the Kuomintang were already in existence, but the traces of legacy left by China and Taiwan were rejected by conservative Chinese here who vowed to acknowledge Malaya as their country. The CPM was viewed as a party who was based on the community ideology which was built on the concept of violence and cruelty.
To function democratically in a conservative Malay country which had been based on British administration principles, the Chinese were initially content to use the MCA channel to achieve their objectives which were much bigger.
However, after achieving their citizenship and dominant economic might, the Chinese began to consider whatever was being given to them by the Malays was insufficient. Just like the Chinese community in other countries where they were the dominant population, the truth is they wanted to decide their own destinies.
So they began to reject the Malays who were controlling them, fighting the New Economic Policy, the Federal Constitution, the Islamic religion and Malay rulers. Their position as the dominant race in the country's economy is the main impetus that drives their political ambitions to control Malaysia.
In the 1960s, due to political tactics planted and played by then-Singapore prime minister Lee Kuan Yew, a group of Chinese in Malaysia left the mainstream MCA to form the Democratic Action Party (DAP) and inherited the same political ideologies from Lee's People's Action Party (PAP).
They also realised that their strengths depended on the urban city areas. Because of that, they used the propaganda of Malaysian Malaysia to spread the doctrine of equality among the public even though Malaysia had been founded on the basis of native history and political system and a different racial composition compared with Singapore.
Former prime minister Tun Dr Mahathir Mohamad explains Kuan Yew's arguments and ideologies at length in his famous book, The Malay Dilemma, and also in his latest book, the Doctor in the House. The slogan of the Chinese community has attracted and won over the sentiments of their supporters. -July 6, 2013.

Toronto Reviews Bid to Become Yuan Currency Trading Hub

Canada’s banks are considering a plan to make Toronto the first North American trading hub for China’s yuan, joining a global race for a share of trading in the currency of the world’s second-largest economy.
Some of Canada’s largest banks, insurance companies and pension funds met with government representatives and the Bank of Canada in Toronto on June 21 to discuss establishing a yuan trading hub, according to the Toronto Financial Services Alliance, an industry group that set up the meeting. Representatives of Chinese banks also attended the meeting, the group said, declining to name them.
“There’s been expressions of interest from some companies,” said Janet Ecker, president of the finance group, who attended the meeting. “We’ve seen what’s happened in London and Singapore and Hong Kong.”
The moves to set up a trading hub in Canada come as an organization representing Frankfurt’s financial industry predicts the European Central Bank is nearing a deal with China that will help the German financial center become a European yuan trading hub.
The Bank of England signed a similar but smaller agreement last month, joining other recent additions like Australia, Turkey, Brazil and South Korea as China pushes for greater use of its currency outside the mainland. To have a trading hub, a country’s central bank must have an agreement with China’s central bank to swap its currency for yuan.

German Plan

“By moving early, if in fact it happens, the Canadian financial sector has an opportunity to punch above its weight in currency trading,” said Finn Poschmann, an economist at the C.D. Howe Institute, a Toronto-based think-tank. “It’s a terrific opportunity for that reason, given the scale of trade between North America and China, and the financial flows that necessarily follow.”
The ECB may obtain an agreement with the People’s Bank of China that would allow it to exchange euros for up to 800 billion yuan ($130 billion) which it could then lend to companies, according to Frankfurt Main Finance, a lobby group. Former Bank of England Governor Mervyn King signed a three-year swap agreement with his Chinese counterpart Zhou Xiaochuan last month that will make 200 billion yuan available.
The agreements provide companies with a safety net that aims to give them more confidence in doing business with their Chinese partners.

Bankers Group

“The U.S. has a far more complicated relationship with China,” said Adrian Miller, the head of fixed-income strategy at GMP Securities LLC, by phone from New York. “Canada has a natural resource bias, which plays into Canada’s game plan as well. So it’s an easier sell to go forward with that. That’s why I think you’re seeing it go there first instead of the U.S.”
A representative of Ontario’s Minister of Finance attended the meeting as an observer, Scott Blodgett, a spokesman, said in an e-mail. Canada’s federal finance department does not comment on individual meetings, spokeswoman Stephanie Rubec said in an e-mail.
“At this point, our members are assessing the proposition, but we have no other information,” said Maura Drew-Lytle, spokeswoman for the Canadian Bankers Association, which represents the country’s banking industry.
The Bank of Canada doesn’t comment on private meetings, Alexandre Deslongchamps, a spokesman, said in an e-mail.
Spokesmen for Canada’s five-biggest banks, Royal Bank of Canada (RY), Toronto-Dominion Bank, Bank of Nova Scotia (BNS), Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce, declined to comment.

Nexen Sale

Fabrice de Dongo, a spokesman HSBC Holding Plc.’s Canadian unit, did not immediately respond to a request for comment.
Canada’s five largest banks, HSBC, Industrial and Commercial Bank of China and the Bank of China attended the meeting, the Shanghai Daily reported June 27, citing an unidentified banking industry person aware of the matter.
Canada’s trade deficit with China reached C$31.4 billion ($30 billion) in 2012, according to Statistics Canada. Prime Minister Stephen Harper has declared it a national priority to expand energy exports to Asia as it tries to reduce its alliance on U.S. markets.
Harper’s government last year approved Cnooc Ltd. (883)’s $15.1 billion takeover of Calgary-based energy producer Nexen Inc. (NXY) At the same time, the government said it would approve further acquisitions of businesses in Canada’s oil sands by government-backed companies only under “exceptional circumstances.”

Chinese Population

The TFSA’s Ecker cites growing trade with China as one reason Toronto, and Canada, would make a good yuan hub, along with the country’s large Chinese population.
There were 1.5 million people of Chinese ancestry in Canada as of 2011, or 4 percent of the population, according to Statistics Canada. Toronto is home to 40 percent of the country’s Chinese population. By 2031 there will be 2.7 million individuals of Chinese origin in Canada, or 6.4 percent of the population, according to Statistics Canada projections from 2006.
“Interest has been expressed by people within the industry and we’ve seen other centers move into this space quite assertively,” Ecker said in an interview. “We’ve certainly been told that some companies are saying, oh, let’s take a look.”

Dominant Economy

China’s Zhou pledged on June 28 to expand cross-border use of the yuan and encourage multinational companies to include the currency in their asset portfolios. China will allow direct trading between the yuan and foreign currencies and push forward on convertibility without giving up control of capital flows, Zhou said.
Switzerland is also seeking to be an offshore yuan-trading center, according to the Swiss Bankers Association, while Banque de France Governor Christian Noyer said in October that Paris has “all the conditions to become the renminbi offshore center of the euro zone.” He was referring to another term for the Chinese currency.
“If you think China is going to be a dominant economy and there are going to be a lot of financial transactions in (yuan) you want the ability to trade it,” said Nicholas Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics, by phone from Washington. “Everyone’s thinking, the train’s leaving the station, I better get on it. Even if it’s not big right away, everyone thinks there’s a first-mover advantage.”

Trading on Thin Air

Trading on Thin Air explains the methods used by the financial oligarchy in the past to extract the wealth of the nation and shows how the same strategy is being used today to subvert a movement for conservation and sustainability and harness it in order to create the next big bubble.

Keiser Report: Art of Debt Juggling - The Bond Apocalypse Is Upon Us

This Is Terrible: Only 47% of Adults Have Full-Time Job!

The release of the June Jobs’ Report Friday was something of a relief for the markets. The Labor Department reported that the economy gained 195,000 jobs in June, which beat economists’ expectations. The Department also reported that the economy gained 70,000 more jobs in April and May than it originally estimated. The report, however, also provides clear evidence that the the nation is splitting into two; only 47% of Americans have a full-time job and those who don’t are finding it increasingly out of reach. 
Of the 144 million Americans employed last month, only 116 million were working full-time. Friday’s report showed that 58.7% of the civilian adult population of 245 million was working last month. Only 47% of Americans, however, had a full-time job.
http://www.breitbart.com/Big-Government/2013/07/05/only-47-americans-have-full-time-job
Unemployment rate:
http://www.shadowstats.com/imgs/sgs-emp.gif?hl=ad&t=1373030154