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Gene Ellis

Nato defence spending falls despite promises to reverse cuts - BBC News - 0 views

www.bbc.co.uk/world-31619553

defence spending

shared by Gene Ellis on 03 Apr 15 - No Cached
  • Nato defence spending falls despite promises to reverse cuts
  • Europe's failure to pay its way in Nato is seriously worrying the US, which already provides 75% of all Nato defence expenditure (the US spends 3.8% of its GDP on defence).
  • Without any of its own maritime patrol aircraft, the UK recently had to request the help of Nato allies to search for suspected Russian submarines off the west coast of Scotland. In Germany there have been reports of serious malfunctions in military equipment.
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  • These figures are in line with earlier research carried out by the Royal United Services Institute which projected that UK defence spending could fall to about 1.7% of GDP by the end of the decade.
  • Nato has already set a target that member states should each spend a minimum of 2% of their national income or GDP on defence.
  • Contrast that with Russia's defence spending, which is rising from 3.4% of its GDP this year to 4.2% next year ($81bn or £52.2bn). Russia is also stepping up its military activity. A separate report by Ian Brzezinski for the Atlantic Council says there is also an "exercise gap" between Russia and Nato. Since 2013 Russia has conducted at least six military exercises involving 65,000-160,000 troops.
Gene Ellis

No ordinary recession: There is much to fear beyond fear itself | vox - 0 views

www.voxeu.org/...e-much-fear-beyond-fear-itself

shared by Gene Ellis on 18 Jul 12 - No Cached
  • Richard Koo (2003) coined the term “balance sheet recession” to characterise the endless travail of Japan following the collapse of its real estate and stock market bubbles in 1990. The Japanese government did not act to repair the balance sheets of the private sector following the crash. Instead, it chose a policy of keeping bank rate near zero so as to reduce deposit rates and let the banks earn their way back into solvency. At the same time it supported the real sector by repeated large doses of Keynesian deficit spending. It took a decade and a half for these policies to bring the Japanese economy back to reasonable health.
  • At the time, a majority of forecasts predicted that the economy would slip back into depression once defence expenditures were terminated and the armed forces demobilised. The forecasts were wrong. This famous postwar “forecasting debacle” demonstrated how simple income-expenditure reasoning, ignoring the state of balance sheets, can lead one completely astray.
  • The lesson to be drawn from these two cases is that deficit spending will be absorbed into the financial sinkholes in private sector balance sheets and will not become effective until those holes have been filled.
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  • The present administration, like the last, would like to recapitalise the banks at least partly by attracting private capital. That can hardly be accomplished as long as the value of large chunks of the banks’ assets remains anybody’s guess.
  • When the entire private sector is bent on shortening its balance sheet and paying down debt, the public sector’s balance sheet must move in the opposite, offsetting direction. When the entire private sector is striving to save, the government must dis-save. The political obstacles to doing these things on a sufficient scale are formidable.
  • The Swedish policy following the 1992 crisis has been often referred to in recent months. Sweden acted quickly and decisively to close insolvent banks, and to quarantine their bad assets into a special fund.2 Eventually, all the assets, good and bad, ended up in the private banking sector again. The stockholders in the failed banks lost all their equity while the loss to taxpayers of the bad assets was minimal in the end. The operation was necessary to the recovery but what actually got the economy out of a very sharp and deep recession was the 25-30% devaluation of the krona which produced a long period of strong export-led growth.
  • So the private sector as a whole is bent on reducing debt.
  • Businesses will use depreciation charges and sell off inventories to do so. Households are trying once more to save. Less investment and more saving spell declining incomes.
  • now that they know how dangerous their leverage of yesteryear was.
  • Fiscal stimulus will not have much effect as long as the financial system is deleveraging.
  • er self-imposed constitutional balanced budget requirements and are consequently acting as powerful amplifiers of recession with respect to both income and employment.
  • Almost all American states now suffer und
Gene Ellis

Greece threatens tilt to Russia and China unless Europe yields - Telegraph - 0 views

www.telegraph.co.uk/...hina-unless-Europe-yields.html

shared by Gene Ellis on 18 Feb 15 - No Cached
  • Greece threatens tilt to Russia and China unless Europe yields
  • Greece's radical new government has threatened to seek money from Russia and China to avert a financial crisis rather than yield to austerity demands from Europe,
  • the defence minister
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  • Nikos Chountis, Greece's deputy foreign minister, said on Tuesday that Russia and China had already offered financial support to the country.
  • Cyprus has already caused a political storm by offering to expand Russian access to its ports and airfields – including “military facilities” - though it has stopped short of offering full military bases.
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