While everybody is fixated on Baltimore, the Middle East continues its slump into degeneracy. As Saudi slaughter of rebel Houthis ensues following a fierce altercation on the Saudi border Friday, hundreds of U.S. citizens remain trapped in Yemen amidst turmoil, as the Wall Street Journal reported last night.
On the home front, Baltimore basks in “victory” at the indictment of the six cops implicated in various crimes related to the death of Freddie Gray Meanwhile the Saudis, with the aid of the U.S. government, continue murdering civilians, and hundreds of U.S. citizens remain in the country.
According to the State Department, a rescue mission of U.S. citizens remaining in Yemen would place “U.S. military assets” at risk, and therefore is too risky given the involvement of the local al Qaeda branch, not to mention the instability of the unmitigated calamity that is the crisis in Yemen.
The U.S. typically evacuates its own citizens from conflict zones as things start to heat up, but the fact that Uncle Sam is leaving Americans in Yemen high and dry is testament to the gravity of this situation.
The Saudi`s started bombing the allegedly pro-Iranian rebel forces after a fierce skirmish on the border, resulting in the deaths of three Saudi troops and dozens of Houthi rebels. The Kingdom, in retaliation for the rebel strike, exacted vengeance upon Sanaa, the Yemeni capital, resulting in the deaths of 20 civilians on Friday.
The fact that this mess is spilling across the Saudi border while the Saudi King, Salman bin Abdulaziz, is restructuring the Saudi government should do wonders in the commodity markets. That´s right, say ciao to cheap oil if this whole thing gets any more unstable; which it will if the Saudis continue to blow up the poorest nation in the region, which suffers from a strong al Qaeda presence and no active government.
“These are serious changes that will have repercussions not only domestically but also internationally,” warned Khalil Jahshan, the executive director for the Arab Centre of Washington from Fairfax, Virginia. This “Political earthquake,” like the earthquake in Nepal, is serious, and deserves more attention than it´s currently getting. “The Saudi Arabia we knew a few hours ago is no longer,” reported Al Jazeera, quoting Jahshan on Wednesday.
Hillary Clinton’s 2016 Presidential campaign is underway and her fund-raisers are focusing their attention on projecting Hillary as a global icon. Clinton’s global profile began soon after she became an American First Lady. In the summer of 1993 when the Bosnian crisis was boiling in Europe, Hillary was playing the role of policy advisor to her husband President Bill Clinton. Many on Capitol Hill were annoyed, as she was stretching her hands way too far in the affairs of the presidency, especially in policy making.
As Bosnian Muslims scrambled for their lives, Clinton was sketching a health care plan that the majority of Americans were not interested in. At the same time, she was nosily advocating to her husband that Bosnia was not his administration’s headache. As the Bosniaks began to die in hundreds in the Luka and Manjaca concentration camps and elsewhere across the region, and as many others were looking towards the United States for help, Bill Clinton was busy following orders from Hillary Clinton and her scrupulous domestic policy tantrums.
In November 1995 after more than three years of genocide and the loss thousands of Bosnian lives, American President Bill Clinton, with a nod from a fellow foreign policy incompetent Butrous Butrous-Ghali of the United Nations and other NATO members, signed an agreement in Dayton, Ohio to end the Bosnian war. In doing so, they caved in on Slobodan Milosevic’s monstrous trap and made way for an internal political partition of Bosnia and Herzegovina. It is widely thought that the intervention came way too late from the Clinton administration and the Dayton treaty was a dagger to the hopes of displaced Bosnian Muslims, as it negated any chance of them ever returning to Bosnian soil again. The flawed Dayton agreement also came at the wrong time, as Bosnians and Croats were gaining steam to finally win the war. The Dayton agreement meant many European powers got what they wanted: a Christian Europa version 2.0. To add to the disgrace of the Clintons, Hillary Clinton’s health care plan did not materialize. But her hopes of bigger political prize did not end with that debacle.
Years later in 2008, when Hillary Clinton was running for the democratic presidential ticket against then-Senator Barack Obama, she had the audacity to fake a story about her role in the Bosnian intervention. It is to be believed that during the peak of the Bosnian War, Hillary Clinton, accompanied by her daughter Chelsea, heroically flew to the war zone of Sarajevo to stand with the Bosniaks and were welcomed by sniper fire that they bravely withstood. The so-called Hillary-land danced to her tunes and even went further by adding Bosnia as a feather in Hillary’s foreign policy cap. The morning after Hillary Clinton cooked up the story, an American news channel ran the original clip from her Bosnian visit — to the contrary, young school children lined up to greet Clinton and her daughter with rosy hugs. After being caught lying red-handed, hapless Hillary quickly retorted by claiming she misspoke about her Bosnian visit, as she confused it with some other foreign trip. The author of the “The Bosnia List,” Kenan Trebincevic, a genocide survivor, laughed when asked about Hillary’s sniper story. He affirmed that the gun battle was happening in the hills far away from the airport.
Hillary Clinton’s 2016 presidential run reminds one of a Biblical decree. In the Bible it is said that the sins of the fathers are revisited upon successive generations, and in the case of Hillary Clinton, her sins and those of her husband in previous public tenures, are haunting her in her run, and foremost of her many foreign policy sins is her bogus Bosnian cure in the 90s.
American trend forecaster Gerald Celente’s quip that “As U.S. wages war, China wages business” is more reality than wit. The New York Times reported on Sunday that Xi Jinping visited Pakistan in preparation of a $46 billion investment in infrastructure projects. Meanwhile, the Obama administration remains mired in the backlash following the deaths of two Western hostages in a U.S. drone strike in Pakistan back in January.
The Chinese-financed infrastructure projects further solidify Chinese relations with Pakistan, one of the prospective founding members of the Chinese-led Asian Infrastructure Investment Bank (AIIB). The AIIB, a five-month-old initiative by the Chinese government to challenge the economic hegemony held by the U.S.-led International Monetary Fund and World Bank.
The AIIB emerged in response to the U.S.’s refusal to reform the Bretton Woods system and amplify China’s voting influence in the IMF. China, with a GDP of $10 trillion, holds less of a stake in the Fund than countries with significantly smaller economies such as France. In response to U.S. arrogance, Beijing decided to take matters into its own hands in the formation of the AIIB. Judging by the international community’s rush to get in on the action, the new China-led bank seems to be off to a good start.
Some of the prospective founding members of the AIIB include some of the U.S.’s staunchest allies, including the British, French, Italians and Germans. Even Australia, Taiwan and the Israelis applied to join the AIIB. The international community has effectively isolated the U.S.; many justifying their actions by claiming that they’d rather be onboard with the Chinese than not have a say at all.
The trend is a major setback for the Obama administration, which failed to persuade its own allies to forgo the Chinese-led initiative. The U.S. also claims that the AIIB cannot be expected to maintain the same ethical and environment protocols characteristic of the IMF and World Banks.
The AIIB’s emergence in the global economic arena symbolizes an enormous shift in power. The Bank threatens U.S. financial credibility and hegemony in the eyes of the international community, and the more influence the AIIB accumulates the more isolated the United States will become from the rest of the world. As the infrastructure at home rots at its foundations, the U.S. dedicates 3.5% of its GDP to military expenditures.
So while the U.S. invests in war, supporting the Saudis in Yemen, and sending troops to the Ukraine under the auspices of Operation “Fearless Guardian”; the Chinese invest in infrastructure. As Washington desperately tries to salvage what is left of its waning political and economic global hegemony, the East seems to be gaining ground. As the sun sets in the West, it begins to rise in the East.
Oh dear. Yesterday the Washington Post reported that al Qaeda successfully seized a strategic airport, sea port and al-Dhabah oil export facility in the south of Yemen after skirmishes with Yemeni troops.
According to officials who remained anonymous, al Qaeda combatants engaged one of the largest Yemeni infantry brigades on the outskirt of Mukalla, successfully driving the brigade away.
Apparently the military leaders in charge of the brigade fled at the sight of the combatants, and didn’t put up much of a fight. The fragmentation and multilateral war in Yemen is an ideal environment for al Qaeda to gain territory.
Al Qaeda also sprang one of its high-up officials from the Al Mukalla city prison after cleaning out the city bank. Al Qaeda’s principal rivals, the allegedly pro-Iranian Shiite Houthi rebels currently engaged with the Saudi Government, are too preoccupied to worry about the recent al Qaeda advance.
Essentially, the Saudis continue slaughtering innocents while allowing al Qaeda to run rampant and gain ground. The U.S. continues its support of the Saudi slaughter of the rebels, and at the same time U.S. drone strikes took out several al Qaeda members, including a high-ranking official, the New York Times reported. Uncle Sam is knee-deep in the game, and he isn’t fooling anyone.
This development in the Yemeni kerfuffle is big news, and certainly The President is losing some sleep over this one. One obvious reason being that it will indubitably lead to more instability in the already chaotic Middle East, and it’s safe to say that as this thing progresses, it’s ciao to cheap oil.
But wait. This thing keeps getting better and better. Today, Bloomberg reported that Yemeni loyalists to exiled president Abdurabuh Mansur Hadi have successfully wrestled control of yet another oil field in order to prevent it from falling into al Qaeda’s grasp, or Houthi hands at that.
As Yemen slumps further and further into degeneracy, and Saudi Arabia continues to blow the Houthi’s to smithereens and in the processes facilitating the advance of al Qaeda, this thing has the potential to get even crazier. It’s just a matter of time before the U.S. sticks its nose even deeper into the Yemeni chaos, delivering another solid dose of democratic drone therapy.
Russian President Vladimir Putin likened the U.S. to the post-WWII Soviet Union during his annual question-and-answer, saying that the West must respect Moscow’s interests if it wants to normalize diplomatic relations.
Putin spoke about, “certain big powers,” saying those powers “don’t need allies, they only need vassals.” He added that Russia would “never accept that role.”
“After WWII we tried to impose our development model on whole Eastern European nations, and that ended in nothing good — that wasn’t good, and we’ve got to admit it,” said Putin. He continued,” By the way, this is what the U.S. is doing across the entire world.”
When asked whether Russia had troops in Ukraine, Putin replied, ”No,” and also said that despite any friction with the West, “We don’t see anyone as enemy, and we don’t recommend anyone to see us as enemy.”
He added that Russians should not expect any further sanctions to be imposed by the West, insisting that the Ukraine crisis would end soon, and also insisting that Russia’s economy could remain strong for its people.
Even though Putin made the comments mainly in regard to the U.S. interfering in the Ukraine crisis, he was also asked if his friends exploited his kindness and his response was, “Not only friends!”
Why would he say that? Did he refer to people who are not his friends? I don’t know what he was insisting on, since he claims to have no enemies.
Although I agree with Putin on how the U.S. is acting — pushing its beliefs on the rest of the world — he also needs to stop.
In Putin’s annual Question-and-Answers he tried to get off the subject of this crisis by answering easier question, by moving to the subject of how much sleep a child should get per night or recalling how he took former German Chancellor Gerhard Schröder to a Russian banya (sauna). In my opinion, he should have been much more prepared to answer the tougher questions if this was an annual event in Russia.
His answers should have been more clear — then again so should every politicians — and less contradicting of each other, using both “big powers don’t need allies” and “we don’t see anyone as enemy,” for example. But overall his interview was very confusing and the president didn’t stay on the more important topics for long. He should have been more prepared. Some of the statements he made I could say that I agreed with, but others just didn’t seem appropriate because of his own actions.
The clock is ticking on the Greek debt agreement, and the smell of impending default fills the air. The Financial Times reported on Monday that the Greek government is prepared to forego €2.5 billion worth of payments due to the IMF in the next couple months, effectively plunging the nation into default.
The southern European nation could potentially be the first domino to fall in the dissolution of the eurozone. The default would send a serious tremor through Europe’s short-lived economic union, and the ECB is poised to cut off the cheap money spigot, leaving the Greek financial sector high and dry fomenting greater economic tumult.
Today the Financial Times reports that German finance minister Wolfgang Shäuble shot down any inkling that there might be an accord between the leftist Syriza government and its creditors. Further, Standard & Poor, a rating agency, announced that as a result of the junk status of Greek bonds, Greece is probably not going to be able to pay anybody back, let alone the IMF.
The gloom and doom factor here is that Greece is nearly incapable of paying out pensions and salaries for public sector workers, and as a leftist government, the decision to sell out the people to pay off the IMF is risky. With that being said, and due to the fact that the Germans wash their hands of this whole nasty thing, all that is really left to do is wait for the smoke to clear.
The question still remains of whether or not the Greeks will stay in the eurozone or if the “Grexit” will ensue. Public opinion in Greece indicates that an immense amount of Greeks, or 82 percent support Greece remaining in the monetary union.
With the Germans turning their backs on the “radical” Syriza government, and the ECB preparing to cut off the cash, all that that the cradle of democracy can do is to accept the honor of being the first deadbeat nation in the developed world.
The ballad of the Greek bust is an unprecedented story for the 21st century, and anybody not paying attention to this thing is missing history. The aftermath of this Greek financial tragedy has the potential to rock and roil the very foundations of the global financial system, and no doubt a great transformation is on the horizon.
The U.S. military is aiding the Saudis by way of searching ships en route to Yemen coming from Iran, in an effort to curtail the supply of arms to the Shiite rebels. The rebel Houthi forces, who destabilized the government and took control of the country in February of this year, blame Saudi Arabia for attacks resultant in 648 civilian casualties since the beginning of the Saudi engagement with the rebels.
Yesterday, Iran called for the installation of a new Yemeni government, which is certain to increase tensions with Saudi Arabia. The U.S. continues to council the King on how to deal with the pro-Iranian Houthi faction in an attempt to regain stability by reinstating Western-backed president, Abed Rabbo Mansour Hadi. The weird part of this story is that it is no secret that Iran and the U.S. are in bed together in regards to the containment of the Islamic State (IS). U.S. Iranian relations were further strengthened with last week’s nuclear deal, or in other words, Obama’s final swan song in his futile effort to create a lasting legacy as opposed to more global instability.
Nearly 12 years have past since the Bush administration invaded Iraq, toppling Saddam Hussein’s regime, and miring the U.S. in eight years of bloody conflict, but the Bush legacy lives on. Since president Barack Obama assumed office in 2009, not much has changed in regards to U.S. foreign policy, and in all reality, global instability is even worse than it was during the Bush years.
From the Syrian slump into civil war and the rise of the IS, to Libya, the Ukrainian crisis, and now Yemen, the Obama administration is scraping up quite a track record. The Yazidis trapped on the mountain were in trouble, and the U.S. sent in “military advisors”; now the Saudi’s need a hand, and the approval stamp from the U.S. to continue murdering civilians in Yemen. The U.S. supports Iranian foreign policy in one part of the world, while containing it in another, and yes, things are certain to get weirder and weirder. It seems as though the Obama administration has given the Bush legacy the “change” we all voted for in 2009.
You don’t have to look far on social networking or in the pub to find an old punk bemoaning the fact that the kids “have nothing to say these days.” He’s well aware that it’s not the summer of 1976 anymore, but what disturbs him more is that his kids are embarrassed by his somewhat pacified antisocial aggression.
The punks are now parents and the hippies often grandparents. And that’s ignoring the majority who were listening to ABBA or The Carpenters as opposed to the somewhat more media-stoked Jimi Hendrix or The Sex Pistols at their respective times. With a dynamic online petition to stop Kanye West playing Glastonbury as the most recent of many, it’s HIS fans who are in fact upping the social ante, unbearable as he is.
Thus, white punk rebellion, somewhat away from its Trotskyite/anarcho roots has filled out, sat down, and had to accept that only about 10 percent of the movement’s output was listenable in the first place. The rest of it was simply the sound of fury, replaced less by The Arctic Monkeys or Fat White Family and more by Skrillex or Eminem. Punk spirit wears Gucci and Puma, and headbutts you in a Wetherspoons for spilling its pint or looking at its bird.
Johnny Rotten’s main target in 1977 was the older generation, when the music industry was powerful enough to take aim at other demographics or other artists, and thus to become its own media outrage industry. Blur and Oasis’s feud in the mid nineties was the dying ember of this music press flames fanning technique. Now, with digital having decimated the traditional recording industry and deadened neighbours having music venues closed up and down the country, the enemy of music has changed. The enemy is now the lack of imagination of the consumer.
The enemy now is also the corporations who insist on their logos swamping festivals; record company focus groups who insist on legacy artist reissues; a generation of musicians who see it as a career, and think the apex of artistic success is Noel Gallagher; and a public who are so dumbed-down in their listening tastes that a new Muse album is greeted with wild enthusiasm.
The parents and grandparents are more outrageous and rebellious than their progeny, and their ‘cultural revolutions’ didn’t so much fail, as were co-opted into parody. Clever. It’s a relief that Thatcher’s years are gone, sure, we’re just left with the smiling fallout – and that this century’s version of anti-war sentiment is met with Daily Mail choruses of ‘traitor’ for somehow demoralising troops in the middle-east. There is an enemy all right, but it’s not mum and dad – they’re despairing for the passivity, apathy, ignorance and politeness of youth. As long as they’re not chavs. The enemy of music and spirit is big business collaborating with the government, validated by mainstream consumers. Ever get the feeling you’ve been pacified?
In a major victory for free speech, the Indian supreme court slashed the draconian provision in section 66A of the Information Technology Act. Session 66A had infringed the right of speech of Indian citizens since 2000. The IT Act of 2000 gave the Indian government the power to arrest an individual for posting “offensive” content online. Recently, the court struck off section 66A, stating that the definition in the rule book for deeming an act “offensive” is unclear and irrational and clarifying that what is offensive to one individual could seem appropriate to others.
This decision comes amidst a major public discourse in India during the past month, after the Indian government decided to ban the broadcast of the BBC documentary “India’s Daughter” about the 2012 rape of an young Indian girl in Delhi. As a democratic republic, India has been a free society since its independence in 1947, barring the brief emergency in 1975 imposed by then-Prime Minister Indira Gandhi. The founding fathers of India placed significant emphasis on freedom of speech when the Indian constitution was written.
The Delhi rape case has transformed India in numerous ways, and particularly on the questions of women’s rights and citizens’ freedoms. The girl Nirbhaya has become a social change icon in the country. But the banning of “India’s Daughter” is viewed by many Indians as a repression of free speech.
Benefits of Section 66A Draconian axing:
The striking of Section 66A means Indians can express their opinion in the written or speech form on almost anything without fearing prosecution. Most important benefit of this draconian removal is the fact that Indians can now fight the government in-case of free speech oppressions. But the sedition law still exists in the Indian Law, any person can still be prosecuted in India for anti-government activities such as hate speech or contempt towards the government establishment. Also, couple of major amendments, section 69A and Section 79 still remain as road blocks for a freer India. Under the Section 69A of the Indian Penal Code the government has power to block any information from the Internet or any electronic resource in-case of communal violence but, the alleged improper content should be submitted to court before the government may take action as per the Section 79.
Remaining Censorships in India:
Still work remains to be done in the quest for free India as Section 66A dismissal statement is still unclear on the point of freedom of “expression” i.e. cartoons, photographs and movies. This imprecision gives the government leverage in prosecuting a print cartoonist or a private filmmaker or an amateur photographer. After all, the law treats freedom of speech and freedom of expression as two different entities though it seems to understand that both are mutually inclusive.
The master of the enlightenment age Voltaire famously defended free speech by stating, though one may not agree about something but one ought to defend to death the right of that being expressed. A similar notion is picking steam in Indian society after the government’s “India’s daughter” documentary ban. The recent pro free-speech judgement from the Supreme Court adds zest in the fight for a freer India.
VANCOUVER, British Columbia — The new Vancouver exhibition “Material Future” is a great deal more than just haughty architectural designs embellished with simplistic elemental assemblies. It will be, according to the Vancouver Art Gallery, a showcase in “design philosophy.”
The famous architectural firm, Herzog & de Meuron, which has given rise to beautiful works of architecture across the globe, currently have their projects showcased in the VAG in a exhibition that opened on March 27. However, what is most interesting, at least to Vancouver residents, is the fact that a portion of the exhibition will focus on the designs, planning, and building of the future Vancouver Art Gallery. The actual conceptual design of the future building will be unveiled to the public in late spring.
Herzog & de Meuron is the Swiss architectural firm that designed the famous Tate Modern in London, the Young Museum in San Francisco, the National Stadium in Beijing, and the Schaulager in Basel, as well as current projects such as a new museum of visual culture in Hong Kong and the much anticipated M+. What makes the firm so well known is its uniqueness with particular attention to the materials, site and context of all of its buildings. It employs an international team of about 460 collaborators which works on projects across Europe, the Americas and Asia. The firm‘s main office is in Basel, with additional offices in Hamburg, London, Madrid, New York City, and Hong Kong.
“The firm is internationally renowned for their attention to materials, site, and context, which defines a practice that is astonishingly subtle and complex.” said a representative of the gallery in an email.
“Herzog & de Meuron has demonstrated their commitment to the new Vancouver Art Gallery project. Their research of Vancouver and British Columbia includes extensive travel throughout the province and significant time spent with Gallery stakeholders, including many artists in the Vancouver art community.”
Interestingly, the VAG has organized the exhibition in three key steps. First a preliminary introduction to the new VAG building project, which will include plans, introductions to the site architects, and different processes. The second will be a meticulous study space which will focus on the strategies and the process behind Herzog & de Meuron, and which will include monographs, as well as a projection room of the firm’s projects. The final step — and I dare say the most important — will be a lobby that will provide the visitors with the “context, plans and statues of the future gallery.”
“It has been a remarkable journey since last April when we started working closely with Herzog & de Meuron on the conceptual design of the new Vancouver Art Gallery building. This exhibition charts the history and the trajectory of the Gallery’s future growth, and it is an exciting prelude to the unveiling of the conceptual design of the new building,” said Kathleen S. Bartels, Director of the Gallery.
“Every step of the way, Herzog & de Meuron have demonstrated their commitment to this landmark project that will act as a catalyst for the city of Vancouver and beyond. Their research on Vancouver and British Columbia has been impressive, including extensive travel throughout the province.”
This whole process began in 2013, when the gallery launched an international RFQ-Request for Qualification — which means a call to firms around the world to step up and show their work so that the gallery could make a final decision on which they saw the best fit for what they wanted. Seventy-five companies from 16 different countries around the world responded to the call, until finally Herzog & de Meuron was given the job, which will work along with the Vancouver firm Perkins+Will.
Material Future Vancouver Art Gallery at 1145 West Georgia Street after refit, 1958 Vancouver Art Gallery Archives
When it comes to architecture the human mind is usually dazzled by the new and the thrilling, yet there is something rather interesting in the fact that the future gallery will no longer be the in the old provincial courts so fashionably renovated by architect Arthur Erikson in the early 1980’s. The art gallery has made it clear that they need more space for the ever-increasing collections. In fact it has reiterated that it needs a space of about 320,000 square feet, and the new location at West Georgia and Cambie is more than adequate.
Now the question remains: What are we to expect when the full design of the new building will be unveiled in late spring? Modern debauchery with cold glass and mystical complexities? Herzog & de Meuron has managed to astound people every time it first unveiled anything new, and even more so once the buildings actually came to life. This has been the case with the Allianz Arena in Munich Germany, and the Tate Modern in London which was one of the buildings that led the firm to win the prestigious Pritzker Prize in 2001.
We have been assured that the gallery is in competent hands, and, I dare say, Herzon & de Meuron are indeed a collection of the best talent in the world of architecture. Yet, as the romantic and classicist that I am, I feel remorse at the knowledge that the art gallery will move away from the old provincial courthouse which I think is much more providential, in the sense that it is more of an appropriate structure to house high works of art.
One thing which must be said is that perhaps what is more important to the Vancouver Art Gallery is the procuring of more works of art, that allude to greater artistic tendencies, rather than the formal and costly construction of a new building — one which will still undoubtedly be beautiful and worthy to be called an art gallery. Still the question remains: What will the art gallery fill it with? Even the recent Cezanne exhibition has proven in my view to be rather tediously discouraging.
It might be just my travels within the European landscape, in fact it might simply be my half-European lineage speaking out, but I assure you the collections which have graced the Vancouver Art Gallery throughout its existence, at least in my own opinion, are not much when compared the halls of art that fill Europe’s museums, and palaces.
Although I welcome the relocation with great delight, undoubtedly at the pleasure which will be procured from seeing a beautiful Herzog & de Meuron building in Vancouver, I will still feel almost as if the more important purpose of an art gallery is to grace its viewers with more alluring pieces before superb buildings. Infallibly, perhaps even in the context of art galleries what is on the inside is far more important than the outside, as the old bromide goes.
Preferably both, yet the reality of the situation is that this is not Europe, and its halls are very far away. We must satisfy our visual needs with what we have. This will not be the the first physical move of the VAG as we all know, and although we might have mixed feelings in regards to it, we must support the gallery’s decisions, for it is the most important source of the promotion of visual arts in Vancouver.
Feature Image Source: Installation view of Material Future: The Architecture of Herzog & de Meuron and the Vancouver Art Gallery, exhibit at the Vancouver Art Gallery, March 27 to October 4, 2015 Photo: Rachel Topham, Vancouver Art Gallery
Second Image Source: Vancouver Art Gallery Archives
On Wednesday, March 18th, the Federal Reserve released an official statement and held a press conference regarding monetary policy and current economic conditions. In this statement, the Fed projected a decline in its inflation expectation, and revised projected GDP growth downward. These are both signs of a slowing economy, not the accelerating economy required to actually raise interest rates. Janet Yellen reiterated, as she has since October, that the decision to raise rates is entirely data dependent, and not at all based on a specific calendar date. When labor market conditions improve and inflation reaches the targeted 2%, the Fed at that time would consider raising rates. The FOMC’s projections estimate that labor market conditions will improve further to 4.9% unemployment and inflation will edge upward to two percent in the years 2016 and 2017. The inherent difficulty with accepting the future estimate on inflation is the fact that the projection of inflation is an outlier to the trend being established by the incoming data. Consumer Price Index (CPI) Inflation, including food and energy, has been declining since November. The Fed also cut its estimate of PCE inflation from December, for the year 2015. The PCE measure has been falling since October when it was at 1.48%, and current sits at 1.31%. This is a decline of 11% since the Fed finished its bond buying program. The last time PCE was 2% was in March of 2012. If the Fed expects inflation in 2015 to be low, borderline dangerously low by the ideas of some FOMC Board members, then how can the Fed raise rates this year? Especially if raising rates has the effect of lowering inflation even more, then the United States might enter outright deflation. The Federal Reserve has been trying to prevent deflation ever since the financial crisis.
When the Fed put out its statement, it no longer included the word “patient” in regards to when it will raise interest rates. In previous press conferences, Chair Yellen has said that when the Committee elects to remove “patient”, the Fed may begin to raise rates “in a couple of meetings.” During her most recent conference she said that there is no calendar date and markets should not expect a rate hike in necessarily two meetings. Effective the word “patient” was removed, but its meaning in terms of the Fed’s Policy was not. In the Question and Answer portion of the Conference Sam Fleming from the Financial Times asked a question regarding the risks of leaving “zero lower bound” and how tightening too early can have greater risks than remaining in a low interest rate environment. Chari Yellen responded by saying, “When an economy is operating at the so called zero lower bound, it creates a situation where there are asymmetric risks.” She continues, “If there are adverse shocks to demand that tend to push inflation and economic performance in an adverse direction, it’s not possible to lower rates. Of course that’s a reason why for a number of years we engaged in active asset purchase programs.” Yellen pointed out that while at close to zero percent interest rates the Fed’s policy options to further stimulate the economy are limited.
With the dramatic drop in the price of oil, along with thousands of rig layoffs have pulled the energy industry into a large contraction. Combine this with largely negative economic data, paired with the fact that the US is historically due for a recession, and there could be a large problem for the Fed. The Bloomberg ECO Surprise Index, which measures general economic data trends, is at its lowest level since the depths of the recession in 2009. The US economy could very well be starting to roll over into a recession, in which the Federal Reserve’s policy options are limited. According to Janet Yellen’s remarks about past policy decisions in this type of scenario, one would think that if this negative trend continues the possibility of another asset purchasing program could enter into the discussion, postponing today’s talks about raising interest rates even further.
Foreign investment is a hot topic at the moment. The idea mostly, in the current climate, invokes criticism and anger, such as the recent Guardian opinion piece that lamented the selling off of British and London infrastructure to foreign investors. To compound this, there has been general ill feeling from some quarters due to a view that European, and particularly British, condemnation of the conflict in the Ukraine and Russian aggression has been diluted by the noueau-riche Russians investing and blowing their money across London and other trendy cities.
Nevertheless, foreign investment is capable of garnering some positive headlines with the case of Sri Lanka. Understandably, Sri Lanka does not immediately jump to mind when you are trying to think of where best to spend your money. While it is difficult to compare the post-civil war situation across different countries, it is generally true that institutions weakened by war usually do not have the capacity to handle investments. The economy of Northern Ireland, after a significant period of general peace and stability, is weak. This is partly due to much of the political focus being on identity and violence rather than the economy. So why is Sri Lanka different?
One easy example is that of tourism. A long civil war deterred tourists from flocking to the region and so its rich natural beauty and its breath-taking array of flora and fauna was never truly tapped into. This is now changing. It is also on the door step of India so Sri Lanka can be an attractive pit stop for westerners touring the region. This has a follow on for infrastructure and, as well, Sri Lanka has a view on the long-term as it tries, backed by Chinese money, to become a maritime hub in the region.
Sri Lanka’s proximity to India is another boon because India is enjoying the fruits of heavy foreign investment itself and India has a good trade policy with Sri Lanka. Sri Lanka and India are both under stable governments and, thus, there is time and energy to direct towards improving their respective economies without the disraction of a destabilizing civil war in the region.
In addition to the analysis from Forbes, CNBC called Sri Lanka the ‘darling’ of investors as the economy continues to grow and inflation continues to decrease. The economy grew by 8 percent last year.
To temper this positivity, it is important to note that Transparency International has stated that funds earmarked for reconstruction and investment have been misappropriated and the systemic corruption in Sri Lanka is a stumbling block for future investment. It is a common problem in post conflict zones and one Sri Lanka is not immune from. Transparency International used Bosnia-Herzegovina as an example of inherent corruption making investors more wary and reluctant. This is the fate that awaits Sri Lanka, Transparency International fears.
HSBC are another group who are not entirely convinced by Sri Lanka’s economy, citing an over dependence on foreign fuel and a lack of consumer spending as reasons for remaining doubtful.
Overall, Sri Lanka is a place remarkable for its readiness for investment and for the stability of its government. There are obvious problems which persist but, with elections on the way, Sri Lanka can epitomize how foreign investment can be a good and positive thing at a time when this concept of is receiving a lot of bad press around the world.
