Chavez strengthens socialist distribution networks and declares war against speculation

Caracas, May 16. ABN.- The President of Venezuela Hugo Chavez declared the war against speculation and organized crime that want to destabilize the Venezuelan Government and its Bolivarian process. Likewise, he informed about the new institutions created that will join the food production and distribution system.

Putting in practice the socialist policies that will help the country to move towards the consolidation of food sovereignty, the President Chavez informed the people the last measures adopted by his Administration against speculation and the next works under construction for people’s welfare, during his weekly TV and radio program “Alo, Presidente.”

Fighting against speculation and building the socialism

In the framework of the fight against speculation and working for a price reduction of food products, the President of Venezuela inaugurated the supermarket Supermercal General Jose Laurencio Silva, which belongs to the food networks expansion plan in the country.

This food distribution center is the second largest of the governmental food network Mercal in the country.

Furthermore, the Venezuelan Head of State commented on the efforts done by the Bolivarian Government to recover the production capacity in the country, fight against speculation, and move forward towards the industrial development of the country.

In this regard, on Sunday, eighty communal mini-Mercal stores were inaugurated nationwide.

Chavez pointed out that in each state communal representatives received their food distribution competence certificate. These people will be in charge of distributing and selling basic-needs basket products in their regions.

In this regard, the Venezuelan President made them a call to multiply the small production units that can be found near the mini-Mercal stores and invited mayors and ministers to work on it.

Moreover, he emphasized that family “backyard” agriculture must be promoted. In this sense, he commented that his Government will resume a project with Brazil, where 70 percent of the agricultural production comes that way.

Afterwards, Chavez highlighted that the governmental food network Mercal sells products up to 60 percent under their regulated price, which contributes with people money saving and a better distribution of the resources among population.

During Chavez’s weekly, the first Social Supply Unit at the Commune Construccion Panal 2021 was also inaugurated. This communal supply center will sell products from the Venezuelan Food Corporation, CVA, and vegetables produced by farmers that have been supported by governmental policies.

President Chavez explained that in addition to the creation of new food distribution centers, the State will keep fighting against inflation and the indiscriminate rise of prices; therefore, he made a call to companies in the country to obey Venezuelan Laws.

He added that recent expropriations are aimed at fighting against the speculation, and making people to have access to basic food products. For instance, the expropriation of the company Molinos Nacionales (Monaca), will give the Government the capacity to process 45 percent of the corn consumed in the country, as well as to lower food costs.

Towards industrial sovereignty with China’s cooperation

The Head of State made reference to the meeting held with a top-level commission from China on Saturday night, aimed at looking over the work agenda for Asian investment in Venezuela to improve basic industries in the country.

The Venezuelan President commented that the Chinese delegation made a tour by the raw materials companies in Venezuela and they were amazed of seeing huge mountains of iron and such a large reserve.

Water for everybody

Moreover, Chavez informed that he approved the allocation of more than 1.3 billion bolivares ($500 million) to guarantee drinkable water for Venezuelans.

“This revolution has to guarantee drinkable water for the entire Venezuelan people, but not a guarantee for today only (…) We are assuring to have water for the next 20 years,” Chavez said.

In this regard, he underscored that previous capitalist governments privatized the drinkable water “and rich people filled up their pools and washed their cars with it.”

Land recovery continues

In the framework of the fight against workers exploitation, the President made a telephone contact during the program with the President of the national land institute Juan Carlos Loyo, who talked about the progress achieved after 14 days a land was recovered by the Government.

According to Loyo, daily milk production in that place has been doubled after two weeks thanks to the rescue plan implemented by his institute, from 100 to 200 liters. In addition, expert technicians are executing a recovery project to safe the coffee production that was hardly affected by plague.

Chavez underscored that with the nationalization of this large-estate the State will give a better use of these lands.

Law Against Illicit Exchange Transaction comes into force

The President of Venezuela took advantage of the opportunity to sign the reform to the Law Against Illicit Exchange Transactions, passed by the National Assembly, and he urged population to denounce people that offer dollars at a different price of the one established by the Government.

The Law was reformed to face speculation with the exchange of dollars, bring to justice “dollar’s speculators,” and leave under Venezuelan Central Bank control any transaction done through exchange bonds, which were previously negotiated by the entire financial system.

Chavez reiterated his call to denounce people offering dollars at a different price through the phone numbers that he has published in his Tweeter account: @chavezcandanga. He informed that, to date, diverse raids have been done thanks to denouncements made by the people through the social network.

Inauguration of works for people’s benefit

At the end of his Sunday’s program, Chavez informed that he will inaugurate and supervise diverse works aimed at improving Venezuelan’s quality of life.

On Monday he will deal with the just reformed Law Against Illicit Exchange Transactions. On Tuesday, he will meet with the board of the United Socialist Party of Venezuela (PSUV) to appoint the National Campaign Command for the next parliamentarian election to be held on September 26.

On Wednesday, Chavez will preside over a ceremony to grant credits from the Bicentenary Fund to a group of small and micro companies to continue strengthening national production.

On Thursday, he will supervise some public works under construction, such as the railway system and he will inaugurate more health units at the Maternity Hospital Concepcion Palacios in Caracas, in the framework of the governmental maternity program Mision Niño Jesus.

On Friday, Chavez will inaugurate the new cellphone factory Orinoquia, which will produce mobiles with Chinese technology.

Uprisings against the New World Order: Thailand, Kyrgyzstan, and Revolution

Are revolutions happening in Thailand and Kyrgyzstan? Are they instead “uprisings”? Does it matter? The distinction is important insofar as it helps to educate others inspired by these recent events, with hopes to radically change their own political and economic systems.

For our purposes, the word “revolution” will be defined as: a prolonged period of mass activity by the normally silent oppressed, with strong intentions to drastically change society to meet the needs of the majority. If successful, representatives of the oppressed majority take control of the government and replace the former ruling class. This activity throws society’s equilibrium off balance, since capitalism requires total obedience from workers and peasants, so that corporations may make profits undisturbed. Once this power dynamic is disrupted, an extended struggle for state power ensues, between those who previously wielded it — the rich — and the majority of people attempting to assert themselves politically-economically.

Revolutions are not one-act dramas, but a series of acts — some more dramatic than others — that have as their basis the underlying power structure of society: the rich owners of corporations — and the state that props them up — versus the working class and the unemployed (plus poor peasants in underdeveloped countries). The struggle for political power is at the basis of every revolution, between these two principal contending social forces. Once the working class begins revolutionary struggle, it must eventually take state power or allow it to return to the corporations and wealthy. A situation of permanent flux is impossible, since eventually one side will exert its dominance and consolidate its power.

Revolutionary periods are exceptional moments in history. They are eruptions of social tensions that once were buried deep in the consciousness of men and women after having accumulated for many years due to deteriorating economic and social conditions for the vast majority of working people. Thus, old beliefs and customs are suddenly discarded, as is silent obedience.

Are these unique characteristics present in Thailand and Kyrgyzstan? The corporate-friendly New York Times wrote a remarkable article recently about Thailand, revealing insights that help prove that an unfolding revolution does exist. The following excerpts list the changes in consciousness in the average Thai worker and peasant, changes that are apparent in all revolutions:

“…more than ever Thailand’s underprivileged are less inclined to quietly accept their station in life as past generations did and are voicing anger about wide disparities in wealth…The deference, gentility and graciousness that have helped anchor the social hierarchy in Thailand for centuries are fraying, analysts say, as poorer Thais become more assertive, discarding long-held taboos that discouraged confrontation.”

And:

“This is a newfound consciousness of a previously neglected part of Thai society…The once deeply ingrained cultural mores that discouraged displays of anger, that prized politeness and justified the entitlements of the royalty and the elite have been eroded by technology and mobility…The traditional restraints on aggressive and argumentative behavior — the Buddhist clergy and a once deeply held fear of bad karma, among other factors — have been weakened…” (March 31, 2010).

This growth in consciousness plus the recent mass activity equals a revolution in both Thailand and Kyrgyzstan. Thousands of protestors fought off the Thai army when the military attempted to evict them from the streets of the occupied “shopping district” — 21 people were killed before the army retreated.

Now, the leading Thai general is recommending that the main demand of the protestors — the dissolution of parliament — be met. The Thai general is not suddenly a pacifist, but worried that his soldiers are not reliable enough to crush demonstrators, and may instead turn their guns on officers or generals. The elite Economist magazine worriedly writes:

“Red-shirt leaders [of the protest movement] have boasted of leaks from allies inside military headquarters. There is even a name for disgruntled, red-leaning soldiers: “watermelons,” i.e., green outside, red inside. Four years of political upheaval have left Thailand divided and disoriented. A split in the army should not come as a surprise. It is still, however, frightening.” (April 15, 2010).

Revolutions often showcase this unique phenomenon: the military is used to crush protestors until soldiers begin to side with the people. Since the military is the ruling class’ watchdog of last resort, its demise marks the crumbling of the existing political-economic system, opening doors for revolutionary struggle.

The people of Kyrgyzstan also overcame a bloody military intervention, with at least 85 killed and hundreds wounded. This bloodshed didn’t have the intended effect and those responsible for the killings are being hunted down by the new government, aided by radicalized troops who served the former government.

But the new government of Kyrgyzstan is not the end of the revolutionary struggle. In fact, many of those who lead it belonged to the former discredited government. However, the working class has its own demands, which they will continue to fight for, so the struggle is far from over. For example, two major demands of the revolution are:

1) Closing the U.S. airbase that feeds hundreds of thousands of troops into the Afghanistan war.

2) Re-nationalizing industries that were privatized after the fall of theUSSR, marking Kyrgyzstan’s transition to capitalism.

These demands, and others, will constitute the basis of the ongoing revolution in Kyrgyzstan, until a legitimate workers’ government is installed or until the movement is crushed by violence.

Likewise in Thailand, if the revolutionary movement succeeds — and is not drowned in blood as in 1976 or 1992 — and new elections are forced, the struggle of Thai working people will continue. The political leader most associated with the “Red Shirts” is an exiled Thai billionaire, Thaksin Shinawatra, who cannot be mistaken as a revolutionary.

Although the revolutionary movement in Thailand is raising mostly political demands at this point — the return of Thaksin and the dissolution of parliament and the Thai monarchy — economic demands are just beneath the surface: Thaksin did initiate some economic policies that assisted the urban and rural poor and in this respect stands in opposition to the Thai monarchy, which is rightly viewed as the centerpiece of the Thai ruling/corporate class.

To achieve the economic demands of the revolutionary movements of Kyrgyzstan and Thailand, both countries’ economies must be radically transformed: away from an economy dominated by the corporate rule of a tiny minority and towards an economy that is run as a public utility, democratically controlled by the majority of the people (as opposed to the totalitarian rule of the former USSR).

If the revolutionary movements in Thailand and Kyrgyzstan are not temporarily halted by state repression, they will strive for higher goals. The recent successes of both movements have shown the people the enormous power they possess, a feeling that does not go away by itself. These realizations have a logic of their own, prompting the masses to work for even bigger victories, at the further political-economic expense of the ruling classes.

The World Has No Money, And The Emperor Has No Clothes

Most of us are aware of the very old fairly tale by Hans Christian Andersen in which two weavers promise an emperor the finest suit of clothes imaginable, but from a fabric invisible to anyone who is unfit for his position or “just hopelessly stupid”. Well, in the fairy tale it turns out that nobody wants to admit that they are “unfit” or “stupid”, so when the emperor parades before his subjects in his imaginary new suit of clothes, it takes a child to cry out: “But he isn’t wearing anything at all!”

Well, many of us have been declaring that the world economy “has no clothes” for some time now, but when the anchor of NBC News declares it on national television it gets a bit more attention. During his recent appearance on The Late Show with David Letterman, NBC’s Brian Williams was asked about the world financial situation. His answer included this shocking statement: “The world has no money, and the Emperor has no clothes.”

During the interview, it was readily apparent that Williams was honestly shaken up by what had happened last Thursday in the stock market. But who can blame him? After all, most of us who watch the markets were totally stunned when the stock market dropped almost 1000 points exactly in less than an hour.

Normally a network news anchor is much more guarded and is much more careful about what is revealed to the public. But on Letterman’s show, Williams gave us a glimpse of what he really thinks about the world economic situation….

“If I wasn’t a tad too close to this, I’d probably not leave the house. But that’s how bad it is.”

So why did the U.S. stock market plunge so rapidly last Thursday?

Well, many have blamed the episode on a “bad trade” or a “computer glitch”. Others claim that the Greek debt crisis caused a brief panic. There are yet others who see something more insidious going on – such as Goldman Sachs seeking to remove their name from the financial headlines, or the Federal Reserve sending a message that S. 604 (the bill to audit the Federal Reserve) should not be passed.

The truth is that we will probably never know what actually caused the market to fall through the floor that afternoon.

But it did pave the way for more bailouts.

Over the weekend, European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases designed to stop the sovereign debt crisis that threatened to shatter confidence in the euro.

The Federal Reserve got into the act as well. Over the weekend the Fed promised to flood the international financial system with U.S. dollars. This was seen in the markets as a sign of “resolve” meant to keep doubt about the European economy from turning into a global crisis of confidence.

So on Monday, investors responded to these bailouts with exuberance. The Dow Jones industrial average gained 405 points that day, which was the average’s biggest one day point gain since March 23rd, 2009.

But are more bailouts, more debt and a flood of paper money really something to celebrate?

No.

The truth is that debt and paper money that continually declines in value are some of the chief causes of the financial mess that the world is now in.

In fact, Congressman Ron Paul is warning that the European bailout that was just announced will just lead to even larger financial problems in the future….

And Ron Paul is right – all of these bailouts and all of this debt will eventually cause all of the major paper currencies (including the U.S. dollar) to collapse.

The funny thing about these bailouts is that they never seem to help the average people on the street. Just take a look at the U.S. economy. We are told that Wall Street has recovered and that things are getting back to normal, and yet more Americans than ever find themselves dependent on the U.S. government for their survival.

The U.S. Department of Agriculture recently announced that 39.68 million people, or 1 out of every 8 Americans, were enrolled in the food stamp program during February, an increase of 260,000 from the previous month.

Nearly 40 million Americans on food stamps?

How in the world did that happen?

Once upon a time, the old timers would tell us that one day things would get so bad that we would all have to stand in bread lines.

Well, today food stamps are the new bread lines.

If you have to rely on the government for the very bread that you eat, what kind of a position does that put you in?

The truth is that the once great American middle class is allowing the system to slowly keep grinding them into oblivion.

Like never before in our lifetimes, wealth is being concentrated in the hands of the “lucky one percent”, while the rest of us are rapidly being marginalized.

Do you ever stop to wonder why it seems like almost everyone is either broke or up to their eyeballs in debt?

That even goes for the major governments of the world. The U.S. government (the “wealthiest” nation on the globe) has piled up the biggest mountain of debt in world history.

You see, Brian Williams was actually chillingly accurate when he declared that “the world has no money”.

So if the world doesn’t have any money, then who does have it?

The international bankers.

But, shhhhh, don’t tell anybody.

Just keep quietly clapping as the emperor walks down the street with no clothes on.

Michael Snyder

The Economic Collapse

Chavez: Orinoco Socialist Project must become in the engine to develop the country

Caracas, May 13. ABN.- “The Orinoco Socialist Project goes well beyond oil. This integral project is located in the geographical center of the country, over the Orinoco River. This entire integral socialist plan must become the most significant engine for a comprehensive development of the entire territory and Venezuelan population.”

The statements were made by Chavez after attending the ceremony were the two companies that will operate in the Carabobo Block of the Orinoco Oil Belt were created.

The event took place in the Simon Bolivar Hall of the Venezuelan state-run oil company PDVSA headquarter, where agreements were endorsed with oil companies from India, Japan, Malaysia, Spain and the United States for the creation of the joint ventures Petrocarabobo and Petroindependencia for an starting investment of 40 billion dollars.

“Currently, with the signing of these agreements, we are fully exercising our independence without being subjugated by any foreign power,” Chavez emphasized.

Through a decree published on May 7, 2010, the Government of Venezuela authorized the alliance between the Venezuelan Petroleum Corporation (CVP), Chevron Carabobo Holdings (U.S.A.), Japan Carabobo (Japan) and Suelopetrol Internacional (Venezuela).

The joint venture created among them will be denominated Petroindependencia. The shares will be divided as follows: CVP, 60%; Chevron, 34%; Japan Carabobo 5%; and Suelopetrol 1%.

Likewise, the same date, the joint venture Petrocarabobo was created between CVP, Repsol Exploracion (España), PC Venezuela, Petrocarabobo Ganga, and Indoil Netherlands (India). The shares are split as follows: CVP, 60%; Repsol, 11%; PC Venezuela, 11%; Petrocarabobo Ganga, 11%; and Indoil, 7%.

The investment of each company will be 12 billion dollars and it is expected they will reach an early production of about 50,000 barrels per day each by 2012. For such purpose, the construction of new facilities such as an oil improver, a production operative center and an oil pipeline have already begun.

The goal is that by 2016, both companies will produce around 400,000 barrels of oil per day after the construction of the oil improver plants.

Furthermore, Venezuela will receive a bond of $ 1.5bn from each company. In addition, both companies agreed on granting a credit to PDVSA for $ 1bn.

The President of Venezuela Hugo Chavez said the country is entering into a new oil century that will contrast with country’s oil history; therefore, he made a call to Venezuelans to compare both periods and be aware of it.

“We can say now that the Venezuelan oil project is starting over solid grounds with a philosophical conception, and a political and social ideological orientation in harmony. We are not going to repeat that terrible history of the 20th century,” Chavez underscored.

Production growth to come from the Orinoco Oil Belt

Rafael Ramirez, energy and oil minister and president of PDVSA, was also present at the ceremony. He was in charge of informing about the progress achieved in the projects and production estimations.

Ramirez stated that by the end of 2015, oil production in Venezuela will reach 4.15 million barrels per day; that is, one million more than the current production. Likewise, he said that by 2016, Government expects production will be over 5 million barrels per day and over 6 million barrels in 2021.

The oil minister explained that the progress achieved on oil projects has been possible thanks to the implementation of a completely sovereign policy, allowing a fiscal adjustment on exploitation and production in the framework of the Organic Law on Hydrocarbons and the governmental Oil Sowing Plan.

The Orinoco Oil Belt has been split into 31 blocks, in which more than 27 companies from 21 countries are working jointly with Venezuela to contribute with country’s development.

Ramirez recalled that when the process to choose the partners for the Carabobo Block began, some tried to interfere into the Venezuelan oil policy through international competition.

“The success we have achieved in Carabobo Blocks ratifies our oil policy and the viability that we have established for the development of these projects,” he underscored.

On May 7 the Ministry of People’s Power for Energy and Petroleum published in the Official Gazette the creation of these two joint ventures that will be comprised by PDVSA and the transnational companies from Japan, India, Malaysia, the United States and Spain, aimed at exploiting hydrocarbons at the Orinoco Oil Belt.

President Chávez becomes most followed Venezuelan on Twitter

Caracas, May 10. ABN.- Just two weeks after joining Twitter, President Hugo Chávez has become Venezuela’s most followed user of the online social network, with over 265,000 followers as of Monday, May 10. He is also amongst the only heads of state that is using the network to directly engage with followers, both in Venezuela and around the world.

President Chávez joined Twitter on April 28, and within 12 hours had gained more than 45,000 followers. Since then, his Twitter account – @chavezcandanga – has gained followers at a rate sometimes exceeding 1,000 per hour. It is estimated that within the first month of use, President Chávez will gain one million followers.

While his first tweets were merely informational, on May 3 he began responding directly to other Twitter users, a practice replicated by virtually none of the other heads of state that use the service. (His first response was to a Mexican girl, to whom he wished a happy birthday for her sister.) He has also taken to responding to tweets during presidential addresses and speeches.

On May 7, President Chávez announced that he was assigning a number of aides to help respond to the multitude of requests coming in through Twitter, and also announced the creation of a special fund to directly assist those who contact him on Twitter and that require immediate attention in key areas such as housing and health.

Venezuela has become a hotbed for Twitter, with over 300,000 registered users to date. Additionally, over five million Venezuelans use Facebook. The use of online social networks mirrors a dramatic growth in access to the Internet in Venezuela. Since 2000, the number of Venezuelans with access to the Internet has grown from 800,000 to over 7.5 million. In 2000, only three percent of the Venezuelan people were online; in 2009, that number stood at 27 percent.

The Venezuelan government has moved aggressively to make access to the Internet free and universal. In recent years, 668 Infocenters – community-based Internet access points – have been founded, and $10 million has been set aside to build 200 more in 2010. The Infocenters are a central component of the government’s plans to broaden Internet access and offer low-income sectors access to online tools and services.

The Embassy of the Bolivarian Republic of Venezuela in Washington, D.C. also uses Twitter, and can be found at @VzlaEmbassyUS.

Embassy of the Bolivarian Republic of Venezuela to the U.S. Press and Communications Office / May 10 2010

The Lines of Chavez # 72: The Socialist Federation!

Caracas, May 16. ABN.- I want to start by highlighting the signing of the contract to create the joint venture companies to work in the Orinoco Oil Belt, held on May 12th. The new Venezuelan oil project does start now with a new philosophical conception, with a new and harmonic political, ideological and social direction, face to face with our real national independence.

With the participation of oil companies from India, Japan, Spain and the U.S., which involves a $40 billion joint investment in our country, the recent creation of Petrocarabobo and Petroindependencia will produce 800,000 barrels per day in 2016.

Building socialism, being an oil nation, represents a dilemma we have to solve. Notwithstanding, this solution involves our autonomy and independence on this area, if we want to have an invulnerable sovereignty. This is what irritates the unpatriotic opposition that opposes our oil sovereignty since it (the opposition) was used to giving it away to foreign interests that stepped over our patriot dignity.

Now, the Venezuelan people set out the conditions for those who want to work jointly with us in the Orinoco Oil Belt, which is and will always be under Venezuela’s control.

II

I want to make an acknowledgment to every single worker who worked in the gas rig Aban Pearl on the extraction in the Dragon Well, at the north of the Paria Peninsula.

They showed not only their professionalism and technical experience, but also their patriotic commitment. I have enough evidence about it. They did their best to avoid the sinking of the rig; but the difficult conditions imposed over their brave answer and efforts.

At 23:00 hrs Wednesday night, all the alarms and the processes of evaluation and security were activated. There is no risk of gas leak. The rig was disconnected; the security valves and extra mechanisms were activated.

This serious accident has been useful to show the level of responsibility, prevention and security of our oil and gas projects. Contrary to some big companies whose structure and roots are hundred percent capitalist and operate all over the world regardless of the disastrous consequences it may have.

In this sense, Project Macondo of the British Petroleum already made history with one of the worst ecological disasters. Since three weeks ago and every day 800,000 liters of oil crude (around 5,000 barrels) go into the Gulf of Mexico after an error in the management of the oil rig Deepwater Horizon, which was drilling a 1,525 meters well.

In Venezuela, we are determined to overcome these situations guided by the voracity, and we are making it. The human and ecological aspect will always be our main priority.

III

We have declared war to every sort of crime. I want to reiterate that there are no untouchables, as I said during the inauguration ceremony of the Police Training Center of Catia, on Thursday 13th, which makes part of the Experimental University for Security Studies (UNES).

We are guided by the inalienable conviction of fighting against impunity. There cannot be any evil condition that transforms some men and women into first-class citizens, and some other into second-class citizens. The first raids and arrests in the illegal, parallel dollar and gold market started under this premise on May 14th.

We swore it to speculators and swindlers, we are going to thrash them in order to finish once and for all the damage they try to make to bankrupt our economy and finances. We amended the Law Against Illicit Exchange Transactions with utmost dispatch; especially the articles 2 and 9, so as to avoid that the homeland’s enemies continue sheltering under certain legal loopholes. The evil conception that “every law has its loophole” must be far away from us.

I urge the current and future deputies to be aware of the need of promoting a new legislative and juridical culture, a culture for the truth and justice.

IV

We formally opened the Federal Council of Government on May 14 in the Ezequiel Zamora Hall, formerly Governor’s Hall, as a great step towards the social State and communal State.

We are riding the horse in times of a new Zamoran and Socialist Bolivarian Federalism, representing a clear and perceptible overcoming of the liberal and bourgeois federalism imposed by the Fourth Republic. One of the worst consequences of this bourgeois federalism was the birth of a deviated concept of decentralization.

It was a decentralization based on unequal and unharmonious political and territorial division designed in direct proportion to the oligarchy; not based on the unity our Liberators fought for. The unity we vindicate and make come true through our Bolivarian revolution.

In this sense, I was capable of nothing else but to invite pro-opposition governors and mayors to be aware that that beyond our ideological and political differences, there is in the middle a national project established in the Constitution of the Bolivarian Republic of Venezuela.

‘I always put the community before the individual,’ wrote our liberator Simón Bolívar in 1828 to the Marshal Antonio José de Sucre. The Federal Council of Government was born with this spirit, and this Federal Council must keep on coming to life under the same spirit. As an instrument of communities, so they definitely take control and assume the powers of the state, as Kléber Ramírez thought, by making a reality the Robinson Toparchy, the Toparchy included in the “Motors of Development Districts.”

Thus, without being euphemistic, it is time for us to practice obedience and let it radicalize among us. In this regard, the Federal Council of Government is born under the obedience power and it must point us the direction and set the example.

All the power for the people!
Socialist Homeland or Death!
We shall triumph!

Hugo Chavez Frías

The “Eurozone Coup d’Etat”, Trend Towards Global Systemic Economic Crisis

Economics / Euro-Zone

Just as anticipated by LEAP/E2020 in issues N°40 (December 2009) and N°42 (February 2010), spring 2010 really marks a tipping point of the global systemic crisis, characterized by a sudden expansion due to the intolerable size of public deficits (see issue N° 39, November 2009) and the inexistence of the recovery, so often announced (see issue N°37, September 2009). Besides, the dramatic social and political consequences of this development clearly reflect the beginning of the process of global geopolitical dislocation as anticipated in issue N°32 (February 2009).

Finally, the Eurozone leaders’ recent decisions confirm LEAP/E2020’s anticipations, contrary to the dominant chatter of these last few months, of the fact that not only will the Euro not « explode » because of the Greek problem but, on the contrary, a strengthened Eurozone will emerge from this stage of the crisis (1). One could even consider that, since the Eurozone decision, a kind of « Eurozone coup d’Etat » supported by Sweden and Poland, to create a huge apparatus to protect the interests of the 26 EU member states (2), the geopolitical deal in Europe has changed radically. Because it runs contrary to the prejudices which fashion their vision of the world, several months will be needed by the majority of the media and players to accept that, behind the appearance of a purely European budgetary-financial decision, lies a geopolitical split with worldwide impact.

Current increases in national debt for the USA, United Kingdom, Euroland and Japan (in green: % of debt to GDP / in red: forecast debt increase for 2009 and 2010 / in yellow: comparative figures for Germany) – Source: European Commission, 2010

Eurozone coup d’Etat in Brussels: The EU founding states regain control

In this issue N°45, we analyse in detail the numerous consequences for Europeans and for the world from what could be called the Eurozone « coup d’Etat » within the EU. In the face of the worsening crisis, the sixteen have indeed taken control of the EU reins of power, creating new tools and instruments which leave no other choice for the other members but to follow or find themselves isolated.

Ten out of the eleven other member states have decided to follow, such as the two most important of them, Sweden and Poland, who have chosen to actively participate in the apparatus put into place by the Eurozone (the other eight are currently either in the course of negotiating their Eurozone entry, like Estonia from 2011 (3), or receiving direct help from the Eurozone, like Lithuania, Hungary, Romania, for example…). It is a (r)evolution that our team has clearly anticipated for over three years and we had even stated recently that events would rapidly unfold in the Eurozone once the German regional elections and the British general election had taken place. However, we would never have thought that it would happen in just a few hours, neither with such boldness as to the amount (750 billion Euros, or one trillion USD) and the character (EU control taken by the Eurozone (4) and a leap ahead in terms of economic and financial integration).

The fact remains that without knowing it, and without having asked their opinion, 440 million Europeans have just joined a new country, Euroland, of which some already share the currency, the Euro, and of which all now share the indebtedness and the joint means to solve the serious problems posed in the context of the global systemic crisis. The budgetary and financial decisions taken during the Summit of the weekend of the 8th May in terms of a response to the European public debt crisis can be evaluated differently according to one’s analysis of the crisis and its causes.

LEAP/E2020 will roll out its own analyses on the subject in this issue N°45 but, without doubt, a radical unraveling of European governance has just taken place: a collective continental governance has just brutally emerged, ironically 65 years after the end of the Second World War, moreover celebrated with a big display in Moscow the same day (5) as the holiday celebrating the creation of the European Coal and Steel Community, the common ancestor of the EU and Euroland. This simultaneity isn’t a coincidence (6) and marks an important step forward in global geopolitical dislocation and the reconstitution of new global balances. Under the pressure of events set off by the crisis, the Eurozone has thus undertaken to grasp its independence with regard to the Anglo-Saxon world still expressed via the financial markets. This 750 billion Euros and this new European governance (of the 26) constitutes, at the one and the same time, the putting in place of the fortifications against the next storms caused by draconian Western indebtedness, and which will affect the United Kingdom and then the United States (cf. issue N°44 causing disturbances of which the « Greek crisis » has only given a small preview.

The EMF will, in the long run, deprive the IMF of 50% of its major contributions: those of the Europeans

Concerning this, LEAP/E2020 reminds readers of a fact that the majority of the media has been oblivious of for many weeks. Contrary to the prevailing discussion, the IMF is first and foremost European money. In effect one out of three IMF Dollars is contributed by Europeans, compared to only one in six by the USA (their share has been cut in half in 50 years) and one of the consequences of the European decisions of these last few days is that it will not be the case for very much longer.

Our team is convinced that, within three years at the latest, when it is time to formalize the integration of the intervention fund created on the 8th and 9th May 2010 into the European Monetary Fund, the EU will reduce its contribution to the IMF by a similar proportion. One could guess already that this reduction in the European contribution (UK excluded) will be in the order of 50% at least. That will allow the IMF to become more globally representative by automatically rebalancing the BRIC share and, in the same breath, requiring the USA to abandon its right of veto (7). But that will equally contribute to it becoming heavily marginalized since Asia has already created its own emergency intervention fund. It is an example which illustrates just how many of the European decisions of the beginning of May 2010 are full of wide sweeping geopolitical changes which will scale out in all of the coming years. In fact, it is unlikely that the majority of the decision makers involved in the « Eurozone coup d’Etat » have clearly understood the implications of their decisions. But no-one has ever said that history was largely made by those people who knew what they were doing.

Countries’ and markets’ IMF contributions (1948-2001) – Source: IMF / Danmarks National Bank – 2001

The United Kingdom: isolated in the face of an historic crisis

One of the simultaneous causes and consequences of this development is the complete marginalization of the United Kingdom. Its increasing weakness since the beginning of the crisis, along with that of its US sponsor, has created the possibility of a complete takeover, without concessions, of the march forward of the European project by the continental countries. This loss of influence reinforces, in return, Great Britain’s marginalization because British leaders are trapped in a denial of reality which they have made their people share as well. None of the British political parties, not even at this point the Liberal Democrats, even though showing greater clarity than the other political parties of the country, could consider reconsidering the decades of diatribe accusing Europe for all the ills and dressing-up the Euro for all the losses. Indeed, even if their leaders were aware of the folly of a strategy consisting of isolating Great Britain a little more day-by-day, even when the world crisis has moved up a gear, they will collide with this public Euroscepticism which they have fostered over the course of the past years.

The irony of history was, once again, clearly shown during this historic weekend of the 8th/9th May 2010: in refusing to participate in the Eurozone’s joint defensive and protective measures, the British leaders have, de facto, refused to catch the last lifeline within their grasp (8). The European continent will now content itself with watching them try to find the 200 billion Euros which their country needs to balance this year’s budget (9). And if the leaders in London think that City speculators will have any qualms breaking the Pound sterling and selling Gilts, it is because they haven’t understood the basics of global finance (10), nor checked the nationalities of these same players (11). Between Wall Street, which will do anything to attract the world’s capital (one only needs to ask the Swiss market what it thinks of the war that world markets are currently delivering one another), Washington, which is knocking itself out to hover up all the world’s available savings, and a European continent which has, from now on, placed itself under the protection of a common currency and debt, the dice have been cast. At this stage, we are still in the drama, because the major English players have not yet realised that they are caught in a trap; a few weeks from now, we will move on to the British tragedy because, this summer, the whole country will have discovered the historic trap into which the country, on its own, has fallen.

So, at the moment when Euroland emerges in Brussels, the United Kingdom struggles with a hung parliament, compelling it to move on to the first coalition government since 1945 and which will take the country to a further election between now and the end of the year.

The British and their leaders in trouble, who are going to have to « think the unthinkable »

Whatever the supporters of the coalition now running the country may tell, LEAP/E2020 thinks it highly unlikely that this alliance will last more than a few months. The very different structure of the two parties involved (Conservatives and Liberal Democrats are divided on a number of issues), combined with unpopular decisions, is leading this team straight to internal crises for each party and, then, to a government collapse. The Conservatives will play this card because, unlike the Liberal Democrats, they have sufficient funds to « finance » a new electoral campaign between now and the end of the year (12). But the most dangerous underlying stumbling-block is intellectual: to avoid the tragedy which portends, the United Kingdom is going to have to « think the unthinkable », i.e. reconsider its basic beliefs on its insular outlook, its transatlantic « relationship », its relationship with a continent now on the road to complete integration, while, for centuries, it has thought of the continent as a disunion. However the problem set is simple: if the United Kingdom has always thought that its power depended on a divided European continent, then logically, considering current events, it must now admit that it is heading to a state of impotence… and draw the necessary conclusions, i.e. that it too should make a « quantum leap ». If Nick Clegg seems intellectually equipped to make such a leap, neither David Cameron’s Conservatives, nor the British leaders altogether, seem mature enough yet. In such a case, Great Britain, sadly, must take the « tragic » path (13).

In any case, this weekend of the 8th/9th May 2010 in Europe dips a number of its roots directly into the Second World War and its consequences (14). It is, besides, one of the features of the global systemic crisis as foretold by LEAP/E2020 in February 2006 in issue N°2: it brings to « an end the West as one has known it since 1945 ».

Another of these features is the take-off in the gold price (compared to the US Dollar especially), in the face of the growing distrust in all fiat currencies (see issue N°41, January 2010 (15)). Indeed, whilst all the world speak of the Euro/US Dollar exchange rate, the Dollar remains at its historically lowest levels compared to its major trade partners (see chart below), a sign of the US currency’s structural weakness. In the coming months, as GEAB anticipated, the Euro will climb back to its medium-term equilibrium level of above 1.45/€.

In this issue, before giving our recommendations on currencies, the stock exchange and gold, LEAP/E2020 will analyse in greater detail the US pseudo-recovery which internally is basically a vast focused news operation aimed at re-starting household spending (an impossible task now) and externally at avoiding panicking foreign investors (at best, several quarters can be gained). Thus the United States maintains that it will be able to escape brutal austerity treatment, like the other Western countries, whilst, in fact, the recovery is an « unrecovery » as Michael Panzner, with a touch of humour, called his excellent article of 04/27/2010, published in Seeking Alpha.

Dollar Index against major trade partners and the index of cumulated Dollar highs and lows compared to eight major currencies – Source: BCA Research, Bloomberg, JP Morgan Chase, 04/2010
Notes

(1) The strong relative weakness of the Euro compared to the US Dollar constitutes a huge advantage for Eurozone exports and, on the contrary, once again handicaps American attempts to reduce the country’s trade deficit (as a matter of fact, the US trade deficit increased in March 2010). The next few months will see this deterioration become more pronounced. Source: AP/NDTV, 05/12/2010
(2) The United Kingdom is de facto positioned outside this protection. For our team, it is one more step taken by the United Kingdom in the direction of the historic crisis with which it will have to grapple, on its own, from the summer of 2010. Even the Financial Times repeats this growing risk. If one has to make a comparison with the 2008 banking system crisis, the United Kingdom looks more and more like Lehman Brothers, support of a system which refuses to accept that a key player could be so dangerously weakened and which finished by causing the collapse of the system itself. To take the analogy a step further, ask yourself who will play the part of AIG in the weeks and months to come? Source: CNBC, 05/11/2010
(3) The final decision will be taken in July 2010. Source: France24, 05/12/2010
(4) On the 9th May 2010, the 27 European finance ministers were indeed summonsed to endorse the decisions of the Eurozone summit which, the previous day, had brought together the sixteen heads of state and government of the Eurozone, failing which the Eurozone would act alone and so leave the eleven other countries without any protection from the financial crisis. Only the United Kingdom, as a reflex action and because of its own political crisis, refused the « diktat » but without being able to oppose it as it would have been able to do a year ago, before its influence hadn’t started to collapse.
(5) Source: RFI, 05/09/2010
(6) Not that Moscow would have had anything to do with the decisions taken in Brussels on the 8th and 9th May.
(7) Source: Bretton Woods Project, 03/19/2008
(8) On this subject, LEAP/E2020 wants to debunk the monetary fairy tale which is circulating in the economic media and parroted by the majority of economists: the fact of being able to devalue one’s currency « at will » is not at all a sign of independence nor a useful tool to get out of a crisis, it’s exactly the opposite. On the one hand, these devaluations are imposed by the « markets », that is to say external forces whose last thought are the interests of the people affected by the devaluation; on the other hand, these devaluations inevitably lead to an impoverishment of the country and its growing reliance on its partners with the strongest currencies which, in a system of freely circulating capital, can buy the « family jewels » of the country cheaply. The process currently taking place in the Eurozone which imposes strong austerity measures, is undertaken collectively with the objective of allowing the states affected to re-establish healthy public finances whilst, at the same time, retaining the major balances of the European socio-economic model. Facing the Eurozone, the IMF is only a secondary player which is only there to provide a bit of technical expertise and some tens of billions of Euros in small change, tens of billions which are really a small part of the major contribution the Europeans made to the IMF in 2010: more than 30% of the total, against barely 15% for the United States.
(9) And that’s not because a Frenchman said it in public, namely Jean-Pierre Jouyet, President of the French Financial Markets Authority and former Minister for European affairs, that it must be untrue. Source: Le Figaro, 05/11/2010
(10) As Paul Mason quite rightly emphasized in his BBC article of 05/11/2010 market reaction will affect the United Kingdom and, when it comes to bonds, unlike shares, the size of the players can make all the difference.
(11) It will be very interesting to follow the hostilities with the City, the coalition in power openly wanting to show its authority by announcing that it wishes to break up the giant British banks over the next year. Source: Telegraph, 05/12/2010
(12) Source: DailyMail, 05/04/2010
(13) And we won’t even linger on the growing emergence of the « English question » at the core of a country becoming more and more disunited following successive « devolutions » which give increasing power to Scotland, Wales and Ulster. Tim Luckhurst’s article of 05/09/2010 in The Independent is a necessary read on this subject.
(14) And even beyond, since David Cameron (at 43 years old) is the youngest British Prime Minister for 200 years and George Osborne (38) the youngest Chancellor of the Exchequer for 125 years. Will that suffice? Nothing is less certain because GEAB readers know that we believe that the crisis questions a world order established nearly four hundred years ago, when the City of London became the world’s financial market place. Maybe it will be necessary to go and seek out British leaders with qualities not seen for over four hundred years? Source: Telegraph, 05/12/2010
(15) As a sign of the times, the Emirates Palace, the most luxurious hotel in Abu Dhabi, has just installed the first ATM dispensing 10 gram gold bars instead of notes. Source: CNBC, 05/13/2010

Global Europe Anticipation Bulletin

China Cuts Holdings of U.S. Treasuries

Foreign demand drops by record amount; Japan now holds most Treasuries

WASHINGTON – The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.

The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.

The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.

The big drop in China’s holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.

Japan increased its holdings of U.S. Treasuries, boosting them by $11.5 billion to $768.8 billion in December. That amount was higher than China’s December total of $755.4 billion, putting Japan back in the top spot in terms of foreign ownership of Treasury securities, a position it had lost in the fall of 2008 when China surpassed Japan.

The $53 billion decline in holdings of Treasury securities came primarily from a drop in official government holdings, which fell by $52.3 billion. The holdings of foreign private investors fell by $700 million during the month of December.

For all of 2009, foreign holdings of U.S. Treasuries dipped by $500 million. In 2008, foreigners had increased their holdings of U.S. Treasuries by $456 billion as a global financial crisis triggered a flight to the safety of U.S. government debt.

That flight to safety had driven down the interest rates that the government was having to pay on its debt to record lows with rates on some short-term securities dipping into negative territory for brief periods.

The Obama administration on Feb. 1 released a new budget plan which projects that the deficit for this year will total a record $1.56 trillion, surpassing last year’s record of $1.4 trillion deficit. The trillion-dollar-plus deficit have been caused by a deep recession, which has reduced government tax receipts, and the massive spending that has been undertaken to jump-start the economy and stabilize the financial system.

The administration has pledged to begin addressing the huge government deficits with Obama saying he will soon appoint a commission to recommend ways to trim future deficits.

Overall, the Treasury Department said that foreign net purchases of long-term securities totaled $63.3 billion in December, down from $126.4 billion in November. This category covers Treasury securities and private company bonds.

China’s holdings are a result of the huge trade deficits the United States runs with China. The Chinese take the dollars Americans pay for Chinese products and invest them in Treasury securities and other dollar-denominated assets.

American manufacturers argue that China’s huge dollar reserve reflect a strategy by the Chinese government to keep its currency artificially low against the dollar as a way to boost Chinese exports and dampen demand in China for American products.

BRIC Ready to Recast World Order

The summit of the world’s top emerging economies (Brazil, Russia, India and China) closed in Brasilia today. All the BRIC leaders came together, for the second time in history, to address various ways to overcome the consequences of the crisis, gear up for the G20 meeting and make the case for a new financial world order.

First coined by Goldman Sachs back in 2001, the term “BRIC” only gained full political and financial prestige in the beginning of the U.S. credit crunch in 2007. The recession that plagued developed countries pushed the emerging economies to the forefront as growth leaders and fundamentally changed the balance of forces on the global arena. BRIC countries have repeatedly called for a new world order in which emerging economies would have more say.

This time around was no exception. BRIC countries unanimously agreed that they had the right to more influence in such international organizations as the World Bank and the IMF. They also urged that reforms be initiated by the next G20 summit in November.

The parties also signed a memorandum outlining ways for the global economy to recover from the aftermath of the financial crisis. They placed special emphasis on preserving the stability of the main reserve currencies and counteracting any form of protectionism to ensure free trade.

On the summit’s sidelines, Russian President Dmitry Medvedev met with his Chinese counterpart Hu Jintao to ventilate business cooperation and international issues. President Medvedev offered China any assistance, on any scale, that Russia could provide in connection with the earthquake in the country’s Qinghai province. In turn, the Chinese leader said that he appreciated Medvedev’s consent to cut the summit short, since the earthquake forced him to return home immediately. Notably, both parties set much store by Sino-Russian relations.

Before he set off for China, however, Hu Jintao met with Brazilian leader Luiz Lula da Silva, and the countries managed to strike a number of deals to further develop bilateral partnerships, including those in trade and energy. For one, China is set to build a steel factory in Brazil, and is also interested in developing railway service in the country.

Another important step forward made at the summit was a memorandum of cooperation signed between the Bank for Development and Foreign Economic Affairs State Corporation (Vnesheconombank), Export-Import Bank of India, China Development Bank and the National Bank for Social and Economic Development of Brazil (BNDES). Under the memorandum, the first practical document within the BRIC format effectively aimed at creating an efficient funding infrastructure for multilateral trade, economic and investment cooperation, authorized financial development and exports support institutions will band together to work out funding schemes, including those for high-tech, innovative and energy efficiency projects, the Russian bank’s press office said.

Vnesheconombank’s CEO Vladimir Dmitriyev also announced that the bank was currently in talks with Brazil’s BNDES and aircraft manufacturer Embraer over a joint project to design and build a 50-seat jet for Russia’s regional air forces. The deal could involve a license to produce the jets, particularly at Tatarstan’s Kazan-based aircraft building plant, Dmitriyev clarified. Investment in such a project could reach hundreds of millions of dollars.

Venezuela, Iran strengthen cooperation ties to face capitalist world crisis

Venezuela, Iran strengthen cooperation ties to face capitalist world crisis

Tehran, May 17. ABN.- In the occasion of the Fourteenth Summit of the G-15, this Tuesday the President of Iran Mahmud Ahmadineyad and the Venezuelan foreign minister Nicolas Maduro held a meeting.

During the encounter that took place at the Iranian Government Palace, the Venezuelan minister and the President of Iran agreed on the necessity to keep progressing towards the consolidation of relations between the two countries and, even more, the consolidation of mechanisms that, from a South-South cooperation perspective, flourish as a sovereign and independent response to face the world crisis, as reads in an official communiqué issued by the Ministry of People’s Power for Foreign Affairs.

In this regard, President Ahmadineyad expressed his willingness to keep supporting Venezuela on technology and industry matters and even to increase the cooperation on energy.

Likewise, Maduro, on behalf of President Chavez and the entire Venezuelan people, congratulated Ahmadineyad and Iranian people for the outstanding organization and success of the G-15 Summit, which took place on Monday in Tehran.

After talking about world economic situation, Maduro said that he was convinced that the so-called first world countries, which have been seriously affected by this financial crisis, are about to wake up just as has happened in Latin America in recent years.

“Venezuela lasted 40 years submerged into passivity. It would not be strange if European peoples wake up, because they are going through the current contradictions we are witnessing,” Maduro stated.