When Giants Fall

Joining the Roster

The New York Times is reporting that a U.N. agency has joined the roster of individuals and organizations, including the IMF, the World Bank, the European Union, and the U.S. Military, that have warned about the risks posed by continuing economic malaise:

PARIS — Job creation in advanced economies in the wake of the global economic crisis is increasingly being delayed, bringing a heightened threat of social unrest, the International Labor Organization said in a report released Friday.

In its annual “World of Work Report,” the I.L.O. said that the withdrawal of stimulus measures and the failure of many Western economies to change laws or rules that limit job creation meant that employment growth would remain stagnant through 2010, and only return to precrisis levels in 2015, at the earliest. In the report last year, the I.L.O. had said that this should occur by 2013.

...

The report warns of “heightened socioeconomic insecurity around the world.” It cited cases of unrest related to the financial and economic crisis in at least 25 countries, out of 82 with available information, in the form of protests against austerity measures and other government actions, demonstrations against employers and violent clashes between the authorities and protesters.

Perceptions of unfairness are growing, the report added, and people have less confidence in governments than they did before the crisis. This scale of the decline, it said, was unprecedented in the historical data on such perceptions, gleaned from surveys that asked respondents to rank their personal satisfaction and go back as far as 1982 for some advanced nations.

Compared with the data from the 1980s and the 1990s, developed economies in Western Europe and economies in Central and Eastern Europe show some of the most severe declines in life satisfaction.

Western Europe has had the sharpest decline in people’s satisfaction with their lives, the report found. The decline in Spain was particularly severe, reflecting the drastic change in the economy from 2006, when Spaniards were enjoying rapid growth, to 2009, when the bubble burst, bringing higher unemployment.

In Spain and elsewhere, individuals are adjusting to this jobless recovery by taking jobs below their expectations — in terms of hours, wages and skills — or in the informal economy, the I.L.O. said.

“If there is one lesson that can be drawn from history,” the report said, “it is that the current environment of social malaise should be a wake-up call for policy makers.”

Yet Another Non-Surprise

No surprise here:

"53% in US Say Free Trade Hurts Nation: NBC/WSJ Poll" (CNBC)

In addition to the fallout for congressional Democrats, the economic and political turbulence of 2010 has also damaged public support for free trade.

A new NBC News/Wall Street Journal poll shows that 69 percent of Americans believe free trade agreements with other countries have cost jobs in the United States, while just 18 percent believe they have created jobs. A 53 percent majority—up from 46 percent three years ago and 30 percent in 1999—believes that trade agreements have hurt the nation overall.

Moreover, that rising skepticism extends across the political spectrum—a sign that continued trade expansion may be no easier for Republican leaders to promote if they regain control of Congress than it has been for Democrats.

While 65 percent of union members say free trade has hurt the U.S., so do 61 percent of Tea Party sympathizers. Democratic pollster Peter Hart and his Republican counterpart Bill McInturff, who conduct the NBC/WSJ poll, say the greatest shift against free trade has come among relatively affluent Americans, or those earning more than $75,000 a year.

That sentiment represents an obstacle for leaders of American business—who favor trade expansion—and for President Obama. His administration has made export expansion a key element of his economic strategy and is pushing, albeit belatedly, to complete a new trade deal with South Korea later this year.

With economic conditions deteriorating, populism gaining steam, and election season upon us, polls like this will almost certainly embolden Congress to press forward with efforts to enact legislation that some might describe as Smoot-Hawley 2.0.

That Didn't Take Long

It was only two weeks ago when the IMF warned that the U.S. and Europe risked "an explosion of social unrest" because of continuing high unemployment and other fallout from the Great Recession, and already we are seeing evidence that anger is beginning to boil over in that latter region, as Agence France-Presse reports in "Austerity Whips Up Anger, Protests Mount in Europe":

Painful cuts by overspending EU countries come head to a head with mounting social anger on Wednesday when labour leaders call angry workers onto streets right across the continent.

Set for its largest Europe-wide protest for a decade is Brussels where labour leaders are planning to bring 100,000 people from 30 countries to say "No to austerity!"

"We will demonstrate to voice our concern over the economic and social context, which will be compounded by austerity measures," John Monks, general secretary of the European Trade Union Confederation.

The protest, the biggest such march since 2001 when 80,000 people spilled into the EU capital, is being held to coincide with a plan to fine governments running up deficits.

Detailed proposals are due to be released that day by the 27-nation bloc's executive arm, the European Commission, with the continent's finance ministers also gathering in Brussels this week.

Millions of jobs fell off the European map in the global downturn and many more look set to be squeezed as governments axe public spending.

"This is a crucial day for Europe," said Monks, "because our governments, virtually all of them, are about to embark on solid cuts in public expenditures.

"They're doing this at a time where the economy is very close to recession, and almost certainly you'll see the economy go back into recession as the effect of these cuts take place."

In Spain, where trade unions have called a general strike on Wednesday, unemployment has more than doubled, with one in five workers jobless in July.

Madrid in consequence is looking at a drastic overhaul of its labour legislation to ease flexi-time and hiring and firing. Pensions are frozen, wages cut for civil servants and VAT taxes on the rise.

But elsewhere labour leaders are equally concerned. At a glance: The human cost of the crisis in Europe

Portugal's leading labour confederation, the CGTP, which is close to the communists, has called protests in Lisbon and Porto and hopes for more than 10,000 participants.

Poland's main unions, Solidarity and OPZZ, expect "several thousand" at a protest outside government headquarters.

Similar marches are scheduled in Greece, Ireland, Italy, Latvia and Serbia, with labour leaders across the board clamouring for growth and protesting the injustice of workers paying for the errors of the financial sector.

Anyone want to hazard a guess as to how long it will take before we see similar troubles over here?

A Genuine Shift in Perspective?

There are good reasons to be skeptical about corporate environmental initiatives. More often than not, they are little more than cynically shallow marketing efforts aimed at tapping new demographic segments and attracting free publicity from the liberal media.

That said, companies are starting to recognize the value of rethinking methods and approaches. Many are realizing that sustainability can yield bottom-line benefits aside from any goodwill it might generate among prospects and customers. They understand that deteriorating economic circumstances, including the issue of growing resource constraints, will likely have a big impact on their businesses.

Under the circumstances, the corporate plan detailed by the Associated Press in "P&G Sets New Environmental Goals" may well reflect a genuine shift in perspective.

The world's largest consumer product maker announced Monday that it has set ambitious long-term targets for cutting the waste it produces and improving its energy efficiency.

Procter & Gamble said it eventually will use only renewable energy to power its factories and only recycled or renewable materials to make and package its products.

The manufacturer of Pampers diapers, Gillette shavers and numerous other top-selling products says it will take decades to achieve these goals. But it has set 10-year targets and will provide updates each year.

Bob McDonald, P&G's chairman, president and CEO, said in an announcement webcast from Geneva that consumers applaud improvements to help the environment, and the new effort should help P&G's business, as well as the Earth.

"I think when you do the right thing ... the business just takes off," said McDonald.

He said 173-year-old P&G recognizes its long-term impacts.

"It does us no good to grow our business today at the expense of tomorrow," he said.

Environmental advocates have been pushing corporate giants to do more, especially because moves by P&G, retailer Wal-Mart Stores Inc. and others can build momentum for sustainability by all kinds of businesses.

"We hope that P&G's leadership on these issues will spur other companies to do likewise," said Carter Roberts, CEO of World Wildlife Fund-U.S., which is working with P&G on the goals announced Monday.

Among P&G's targets for 2020 is having its factories get 30 percent of their power from renewable sources. P&G officials said new plants now being built around the globe will use more solar, wind and water power.

A Taste of Things to Come

Is there anyone who didn't realize that China's diplomatic entreaties were just one facet of a strategy aimed at gaining dominance in its sphere of influence? Or that economic success and growing nationalism would lead China to become increasingly assertive and eventually expose its true ambitions? In truth, no one should be surprised that a longstanding territorial dispute, as detailed in the following Bloomberg report, "China's Asian Charm Offensive in `Shambles' Over Disputes With Neighbors," has suddenly erupted into something far greater, showing us what we can expect to see more of in future -- both in Asia and the rest of the world.

China may be undermining its effort to build strong ties with its neighbors and draw them away from the U.S. orbit as it seeks to impose its will in territorial disputes with Japan and Southeast Asian nations.

Relations between Asia’s two biggest economies deteriorated to the lowest point in five years during the 17-day detention of a Chinese fishing boat captain before Japanese authorities last week decided to release him. China opposed U.S.-South Korea military exercises aimed at deterring North Korea, and dismissed regional efforts to mediate maritime territorial claims.

Those positions reflect a more assertive diplomatic role in Asia over the past decade as China developed into Asia’s biggest economy. China set up a regional forum, flooded Malaysia and Thailand with tourists, boosted economic aid to countries including the Philippines and participated in Association of Southeast Asian Nations security dialogues.

“China has tried to establish an image in the region as a nice guy, but all of this could be in a shambles right now,” said Huang Jing, a visiting professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “The real issue here is whether Beijing cares.”

Not Just in the West

Many people probably assume that the threat posed by Islamists is primarily a concern for nations in the West. But the truth is that countries like China and Nigeria, among others, must also contend with radical elements intent on stirring upheaval and imposing their socioreligious ideologies on others. In fact, a recent post at Window on Eurasia, "Russia Now at Risk of ‘Religious War’ Across the Country, Experts Warn," suggests our Cold War rival could soon find itself enmeshed in far-reaching civil conflicts.

Increasingly sharp disputes in many cities of the Russian Federation over whether Muslims should be allowed to build a mosque, disputes that have already spilled over into violence in Syktyvkar and Moscow this week, threaten to unleash “a religious war” across the country, experts say.

The number of people now directly involved in these disputes is small and “real tensions” at the societal level” are not intense, but Aleksey Levinson, a sociologist at Moscow’s Levada Center, argues that the situation could easily get out of control because of the way the media is playing up these disagreements (www.svpressa.ru/society/article/30919/).

Speaking to “Svobodnaya pressa” journalist Anton Razmakhnin, Levinson suggests that “those who have decided now to play the anti-Islamic card are taking a great risk.” In response to such “aggressive” opposition to mosques, Russia “can get not just a war in the Caucasus but something much worse a full-scale jihad in every city where there is a conflict of this kind.”

In both the Moscow and Syktyvkar cases, Razmakhnin notes by way of introduction, the number of people involved on both sides of the disputes has been small. Moreover, these disputes have been going on for some time without attracting much attention. But coverage of massive Muslim participation in the Uraza-Bayram celebrations triggered something.

When Razmakhnin asks Levinson why he was so pessimistic about the future, the latter replies that was “because “fundamentalist Islam and precisely this trend is becoming more active … after the protests is a very strong organizing and cementing phenomenon,” one that has “all the signs of a young, active and militant religion” and that no one knows how to stop.

Levinson dismisses the idea that the increasing activism of the Russian Orthodox Church could block this. In his view, the sociologist said, “the mobilizing potential of Christianity [in general and not just the Russian Orthodox Church] now is much weaker than that of Islam,” something the followers of all confessions need to understand.

“To launch a new crusade now,” he argues, “would be insanity – under current circumstances of Christian civilization, such a response would be equal to a battle between crowds of peasants and old women with an organized army. No, contemporary Christianity should not play at such a war.”

Instead, Levinson says, the best outcome is likely to be achieved by “the tactic of the soft assimilation of Islam, its integration into a secular and ecumenical civilization. Such a course of events would allow [Russia and the world] to avoid the escalation of force and new religious wars. To stand above religion and to lift the Muslim up to this level is our chance.”

“Unfortunately,” Levinson continues, the world at present is skittering “toward confrontation. And Russia is no exception. I see that a clash is very probable but we will hardly win it. But with the help of ecumenism, we could achieve a good peace, but this variant of development of events still is not very probable.”

Razmakhnin then asked another expert for her views on the clashes over the construction of mosques. Valeriya Porokhova, a specialist on Islam who has translated the Koran into Russia, says that it is important to draw a distinction between the lumpen elements that are taking part in the clashes and the leadership of the Moscow Patriarchate.

The Church’s upper echelons, she says, “are more friendly to Islam for these are two traditional religions which have common interests and face common challenges.” But “at the lower level, especially among lay Orthodox activists, hostility to Islam is strong: why are there so many of them? Why are they so well-organized?” And that “threatens” peace in Russia.

She suggests that one needs to look beyond the emotions of the moment because they reflect not just religious differences but the ways in which the powers that be conduct their relations with people of faith. Instead of holding public hearings and discussions, Porokhova says, officials do everything in secret, something that sparks anger in and of itself.

“In other words,” she suggests, “the problem which really threatens peace in Russia is not in the mosques as such but in the authoritarian way in which cities take decisions, including on the most sensitive issues.” Whatever decision is reached in this way will be “insufficiently legitimate” to those on the losing side who were not able to participate in reaching it.

That reality can be seen, the specialist says, if one compares the tensions over mosques in Russia with those in European countries. There, “if a case involves a decision about prohibiting or permitting the construction of a mosque in a particular region, this decision will be taken by democratically elected authorities, and the level of trust in this decision will be greater.”

Unfortunately, Porokhova concludes, this, “the main question,” is one that in Russia, “none of the key players has raised. Instead of democratization, practically all somewhat powerful forces are pushing Russia to a new civil but now already religious war,” when the application of democracy could prevent that.

A Predictable Outcome

There's a resource-rich region of the world that nobody really has dibs on, but which many interests are laying claim to. Call me a cynic, but the outcome seems somewhat predictable. First, we have the seemingly endless "discussions," like those detailed in the following Al Jazeera report, "Scrambling for the Artic." Eventually, when those come to naught, we have the conflict. I guess we'll soon find out.

Bad Connection?

Technology enthusiasts wax lyrical about the benefits of ever-increasing connectivity and the power of the internet. Unfortunately, as we've seen in a number of high profile criminal cases, these mechanisms are increasingly being put to bad use. In some cases, they are making it easier for evil-doers to target potential victims; in others, as the Associated Press reports in "Interpol Worried about Spike in Extremist Websites," they are enabling nefarious interests to expand their ranks:

The chief of Interpol says the "skyrocketing" number of extremist websites is making it easier for terrorists to recruit middle class youth around the world.

Interpol Secretary General Ronald K. Noble says terrorist recruiters are exploiting the Web to target vulnerable young people who are "not on the radar of law enforcement."

He says fighting this kind of terrorist recruitment is especially difficult because viewing websites is not necessarily criminal.

Noble said the number of extremist websites tracked by police was 12 in 1998 and 4,500 in 2006.

He spoke Tuesday at a closed-door conference of world police chiefs in Paris. Interpol released his comments in a statement.

Questioning Their Elders

The notion of young people challenging their elders is almost a cliché, but it is not something many of us would expect to see in a regime where the law of the land is dictated from the center and dissent is not well tolerated. However, when it comes to how America's chief rival should invest the fruits of its economic success, as The Dallas Morning News reports in "Some in China Ready to Drop Its U.S. Holdings and Pour Money into Nation," their questions are likely striking a chord among citizens of all ages.

BEIJING – China's young bankers and budding economists are part of a wired, frustrated generation looking for their inheritance.

They've enjoyed the savings of their parents to get this far. Now they are looking to collect their due from another source – the money China has loaned to the United States.

The Council on Foreign Relations estimates that China holds at least $1.4 trillion of U.S. debts, plus $231 billion in corporate bonds and equity. That amount works out to a loan of roughly $4,500 to every American.

This debtor-lender relationship between America and China is a "financial balance of terror," as White House adviser Lawrence Summers once put it. If China sold its dollar holdings, U.S. borrowing needs are so great that the sale could cause a spike in interest rates and push America back into recession.

But if the U.S. decided to cover its debts by printing more money and pushing up inflation, China's investments could drop in value by hundreds of billions of dollars.

Each side worries about the other's intent.

"These large [holdings], in my opinion, are not worth it," said Tang Zhe Zhe, a 25-year-old financial journalist with Caijing.com.cn, an Internet magazine.

"Maybe there are some diplomatic situations where it's nice to have them in negotiating with the U.S. government," she said. "But maybe they should invest them in our own country."

...

Young, urban Chinese say the money should be used to boost salaries and address China's problems like expensive housing.

 "What China should do is bring labor, energy and environmental costs back to a more normal level," said Mil Ken, a graduate student at the People's Bank of China. "America has to reduce spending and increase saving."

Xia Wie, a 24-year-old graduate from Guizhou province, worries about the cost of housing and pollution in China. To her, lending money to the U.S. doesn't make sense.

"America is a developed country and does not need China's money," she said. "Let China put its money into itself so China will be strong."

It's also not sensible to Lin Xiang, a 25-year-old graduate of Peking University's Guanghua School of Management.

 "We have financed the American people's overconsumption for many years," Lin said at a Starbucks on Financial Street, near the investment bank where he works.

Big Changes Up North

One key theme of this blog (and my book of the same name) is that mankind will have to contend with a growing number of resource constraints, including diminishing availability of essential commodities like water, food, and energy.

This will encourage governments, businesses, and other interested parties to seek out and secure other avenues for obtaining these resources, including in those parts of the world (and beyond) that had once been seen as impractical or off-limits for a variety of reasons.

In a Wall Street Journal excerpt, "Unfreezing Arctic Assets," from his forthcoming book, The World in 2050, Laurence C. Smith discusses how these and other factors are set to bring big changes to a part of the world that likely hasn't changed all that much over the course of the past several centuries.

A bloc of countries above the 45th parallel is poised to dominate the next century. Welcome to the New North.

Imagine the Arctic in 2050 as a frigid version of Nevada—an empty landscape dotted with gleaming boom towns. Gas pipelines fan across the tundra, fueling fast-growing cities to the south like Calgary and Moscow, the coveted destinations for millions of global immigrants. It's a busy web for global commerce, as the world's ships advance each summer as the seasonal sea ice retreats, or even briefly disappears.

Much of the planet's northern quarter of latitude, including the Arctic, is poised to undergo tremendous transformation over the next century. As a booming population increases the demand for the Earth's natural resources, and as lands closer to the equator face the prospect of rising water demand, droughts and other likely changes, the prominence of northern countries will rise along with their projected milder winters.

If Florida coasts become uninsurable and California enters a long-term drought, might people consider moving to Minnesota or Alberta? Will Spaniards eye Sweden? Might Russia one day, its population falling and needful of immigrants, decide a smarter alternative to resurrecting old Soviet plans for a 1,600-mile Siberia-Aral canal is to simply invite former Kazakh and Uzbek cotton farmers to abandon their dusty fields and resettle Siberia, to work in the gas fields?

European explorers first started pressing north five centuries ago, searching for an alternate passage to the Orient. By the 19th and early 20th centuries, urban donors around the world were funding expeditions to the Northwest Passage and North Pole. Fears of Japanese invasion and communist ideology opened up the region as military spending poured in during World War II. During the Cold War, American and Russian forces played cat-and-mouse war games there with spy planes and nuclear-armed subs.

Today, scientists studying oil and gas potential—and how shrinking summer sea ice might make it easier to access offshore deposits—are convincing governments and investors that the region has rising strategic value. Private companies have snapped up Canada's northernmost railroad and port of Churchill, bought $2.8 billion in Arctic offshore energy leases, and begun developing specialized tanker ships and platforms for offshore drilling in icy environments. This year, Russia and Norway resolved a four-decade-long boundary dispute in the Arctic Ocean, which could pave the way to more offshore development. Canada, Norway and Russia are bolstering their militaries with ice-strengthened patrol ships, frigates, attack submarines and fighter jets.

Click here to read the rest.

Not So Overblown?

Analysts have raised concerns about the implications for Middle East stability of last weekend's national referendums on changes to the Turkish constitution. In particular, they worried that the vote would pave the way for a shift towards Islamism and a strengthening of ties between Turkey and regimes hostile to Western interests.

A report published in the days following the vote added to those fears:

"Iran Donates $25 Million to Turkey's Ruling Party" (The Telegraph)

Iran has agreed to donate $25 million (£16 million) to Turkey's ruling Justice and Development Party (AKP) in a move that will increase fears that Prime Minister Tayyip Erdogan is preparing to abandon the country's secular constitution.

Not surprisingly, one nation in particular has viewed recent developments with a great deal of alarm:

"Israel Analysts See Turkey Radicalizing, Becoming 'Iran No. 2'" (WorldTribune.com)

TEL AVIV — Israel's defense community has assessed that Turkey was moving toward becoming a radical and nuclear Islamic state.

Officials and leading analysts asserted that the government of Prime Minister Recep Erdogan was rapidly dismantling the secular Turkish state. They said Erdogan could turn Turkey into another Iran, a radical Muslim state with nuclear weapons.

"There could be a deep strategic change," Amos Gilad, a senior Defense Ministry official, said.

Officials cited Turkey's referendum that would revise the secular constitution. They said the 26 amendments approved by 58 percent of voters on Sept. 12 would significantly increase the authority of Erdogan's ruling Justice and Development Party while marginalizing Turkey's military.

Leading officials expressed concern over Erdogan's growing power in Turkey and his success in intimidating the once-powerful Turkish military. They said Erdogan could use his referendum victory to expand Turkey's alliance with neighboring Iran and Syria while fomenting another crisis with Israel.

Commentators have also highlighted the risks for the U.S:

"Turkey’s Referendum: A Looming Challenge to U.S. Interests?" (Heritage Foundation)

On September 12, 2010, Turkey took an important political step away from its secular nature—and, indirectly, away from its alliance with the United States and NATO. Minister Recep Tayyip Erdogan forced a nationwide referendum to accept or reject 26 constitutional amendments for an up-or-down vote. The referendum passed 58 percent to 42 percent, a victory that Erdogan claims symbolizes the forward progress of Turkish democracy. However, the referendum increased the Justice and Development Party’s (AKP) control of the judiciary, weakened separation of powers and checks and balances, and further defanged the army—the two traditional pillars of secularism ever since Mustafa Kemal Ataturk founded modern Turkey in 1923.

But are these concerns overblown? Based on the following reports, published just this past week, some might say that those who are raising the alarm have a point:

"Turkey Seeks Closer Trade Ties with Iran" (Bloomberg Businessweek)

Turkey's prime minister says his country is seeking closer commercial ties with Iran and aims to triple trade volumes in the next five years.

Recep Tayyip Erdogan says he can't see any reason why Turkey can't establish an "unimpeded trade mechanism with Iran similar to the one with Europe."

Erdogan, adressing a Turkish-Iranian business forum in Istanbul Thursday, says his country is planning to buy more natural gas from Iran to supply industrial zones and homes.

Trade between the two countries is currently worth about $10 billion. Turkey says trade with Iran has jumped 86 percent in the first seven months this year.

Iran's vice president Mohammad Reza Rahimi says they have been "laying the foundations of a very strong building with Turkey."

"Turkey and Iran Agree to Open New Border Gates" (The Financial)

Turkey and Iran signed a series of agreements on September 17 including the establishment of new border gates as well as cooperation in higher education, culture and youth, Today's Zaman informs.

The agreements were signed in a meeting between Turkish Prime Minister Recep Tayyip Erdoğan and Iranian First Vice President Mohammed Reza Rahimi in İstanbul.

"Turkish PM Renews Support for Iran's N. Rights" (Fars News Agency)

Turkish Prime Minister Recep Teyyip Erdogan reiterated his country's support for Iran's right to use peaceful nuclear energy.

"Every country has the right to use nuclear energy and Iran must be allowed to enjoy peaceful nuclear energy as well," Erdogan said in a joint press conference with Iran's visiting First Vice-President Mohammad Reza Rahimi on Thursday.

Meantime, the Turkish official stressed that the world devouring powers can not set conditions for Iran.

"Turks Believe Focus Should Be on Middle East and Away from Europe" (The Guardian)

New survey finds support for European Union dwindling in Turkey, while nuclear-armed Iran would be welcome

Turkey sees its interests increasingly better served by greater involvement in the Middle East, and is relatively untroubled by the prospect of a nuclear-armed Iran, according to an opinion poll today which highlighted the widening gulf between Ankara and the west.

Growing frustration in Turkey at the lack of progress towards joining the European Union, as well as strong popular hostility in Germany and France to having the Turks in the union, were also underlined by the survey.

'America Is Moving "from the Jetsons to the Flintstones"'

Numerous studies have shown that humans don't do a particularly good when it comes to assessing their own capabilities. In fact, psychologists refer to this phenomenon as "illusory superiority," a cognitive bias that causes people to overestimate their positive qualities and abilities and to underestimate their negative qualities, relative to others," according to Wikipedia. That is one reason why those who are entrusted with ensuring that mission critical systems function as planned are vetted beforehand by someone other than themselves. It might also help explain why a Canadian publication, MacLean's, in an article entitled "Third World America," can paint a portrait of today's America that many Americans are unable (or unwilling) to see:

In February, the board of commissioners of Ohio’s Ashtabula County faced a scene familiar to local governments across America: a budget shortfall. They began to cut spending and reduced the sheriff’s budget by 20 per cent. A law enforcement agency staff that only a few years ago numbered 112, and had subsequently been pared down to 70, was cut again to 49 people and just one squad car for a county of 1,900 sq. km along the shore of Lake Erie. The sheriff’s department adapted. “We have no patrol units. There is no one on the streets. We respond to only crimes in progress. We don’t respond to property crimes,” deputy sheriff Ron Fenton told Maclean’s. The county once had a “very proactive” detective division in narcotics. Now, there is no detective division. “We are down to one evidence officer and he just runs the evidence room in case someone wants to claim property,” said Fenton. “People are getting property stolen, their houses broken into, and there is no one investigating. We are basically just writing up a report for the insurance company.”

If a county without police seems like a weird throwback to an earlier, frontier-like moment in American history, it is not the only one. “Back to the Stone Age” is the name of a seminar organized in March by civil engineers at Indiana’s Purdue University for local county supervisors interested in saving money by breaking up paved roads and turning them back to gravel. While only some paved roads in the state have been broken up, “There are a substantial number of conversations going on,” John Habermann, who manages a program at Purdue that helps local governments take care of infrastructure, told Maclean’s. “We presented a lot of talking points so that the county supervisors can talk logically back to elected officials when the question is posed,” he said. The state of Michigan had similar conversations. It has converted at least 50 miles of paved road to gravel in the last few years.

Welcome to the ground level of America’s economic crisis. The U.S. unemployment rate is 9.5 per cent. One in 10 homeowners are behind on their mortgage payments. Home sales are at record lows. While the economy has been growing for several quarters, the growth is anemic—only 1.6 per cent in the second quarter of this year—and producing few new jobs.

Even with interest rates at unprecedented lows, there is anxiety about the possibility of a double-dip recession. Sales of existing homes are at their lowest level in 15 years, and new home sales plummeted this summer to the lowest levels on record. Property and sales tax revenues have shrunk. And nowhere is this more apparent than at the local government level, where officials are being forced to roll back the everyday hallmarks of modern civilization.

Cincinnati, Ohio, is cutting back on trash collection and snow removal and filling fewer potholes.

The city of Dallas is not picking up litter in public parks. Flint, Mich., laid off 23 of 88 firefighters and closed two fire stations. In some places it’s almost literally the dark ages: the city of Shelton in Washington state decided to follow the example of numerous other localities and last week turned off 114 of its 860 street lights. Others have axed bus service and cut back on library hours. Class sizes are being increased and teachers are being laid off. School districts around the country are cutting the school day or the school week or the school year—effectively furloughing students. The National Association of Counties estimates that local governments will eliminate roughly half a million employees in the next fiscal year, with public safety, public works, public health, social services, and parks and recreation hardest hit by the cutbacks. A July survey by the association of counties, the National League of Cities, and the U.S. Conference of Mayors of 270 local governments found that 63 per cent of localities are cutting back on public safety and 60 per cent are cutting public works.

In August, the U.S. Congress passed a US$26-billion stimulus extension bill, aimed in part at saving teacher jobs. But it’s a finger in the dike. Jacqueline Byers, director of research for the counties association, said many local governments have yet to confront the full impact of the real estate crisis on government revenues because they do tax assessments only every third year. A fundamental transformation is under way. “When we come out of this recession we’re going to see government functioning very differently,” says Byers. “We are seeing more public-private partnership than we ever had for things like recreation and parks. We are seeing some of them privatize libraries. They lease the library to a private corporation that employs the workers who don’t carry retirement or health benefits.” Or they could wind up like Hood River County, Ore., which in August closed its three libraries altogether.

Some governments are looking for creative ways to replace plummeting property and sales tax revenues. Facing a US$1-billion budget shortfall, Montgomery County in Maryland appealed for corporate sponsors to step up and adopt porta-potties in its public parks. In the end, the privies were saved by a combination of park employees taking early retirement, a few private sponsorships, and a negotiated discount from the supplier, Don’s Johns. Meanwhile, Montgomery County’s school system, banking on its reputation for high standards and test scores, took the unusual step of selling its curriculum to a private textbook publisher, Pearson, for US$2.3 million and royalties of up to three per cent on sales. As part of the deal, county classrooms can be used as “showrooms”—which critics said effectively turns students and teachers into salesmen for a corporation. But the superintendent, Jerry Weast, told the Washington Post, “I tend to look at this from the perspective that we are broke.”

These cuts in infrastructure and education are more than just a temporary belt-tightening in response to a recession. They threaten long-term damage to American’s economic foundation—a foundation that has long been eroding. When the eight-lane Interstate 35 bridge collapsed in Minneapolis in 2009, killing 13 people and injuring 145, the American Society of Civil Engineers warned that the infrastructure deficit of aging postwar highways and bridges amounted to US$1.6 trillion. More than a quarter of America’s bridges were rated structurally deficient or functionally obsolete. Steam pipes have exploded in New York City and the levees failed in New Orleans.

Despite its position as the world’s unrivalled superpower, international comparisons show the U.S. slipping on a number of fronts. On education, the United States has been falling behind, in everything from science and engineering to basic literacy. The U.S. once had the world’s highest proportion of young adults with post-secondary degrees; now it ranks 12th, according to the College Board, an association of education institutions. (Canada is now number one.) In 2001, the U.S. ranked fourth in the world in per capita broadband Internet use; it now ranks 15th out of 30 nations, according to the Organisation for Economic Co-operation and Development. “We have been involved for three decades now in paring back public commitments and public spending, and that started with the Reagan revolution. We are living with the outcomes and consequences,” says Michael Bernstein, an economic historian at Tulane University in New Orleans.

Meanwhile, prolonged rates of high unemployment are taking a toll on families today, and will for years to come. Studies have shown that the longer a person is unemployed, the more difficult it is to find a job—partly because skills deteriorate, and partly because employers become suspicious of why someone hasn’t worked for a year. “The United States is expanding its underclass of a whole group of individuals who will become less employable, less integrated, more subject to criminal and other deviant behaviour—and probably become part of the larger problem of structural poverty in America as well,” says Sherle Shenninger, director of the economic growth program at the New America Foundation, a Washington think tank.

Arianna Huffington sees an even starker big picture emerging from the reams of bad economic news. “As we watch the middle class crumbling, for me this is a major indication that we are turning into a Third World country,” said Huffington, founder of the Huffington Post, in an interview. “The distinguishing characteristic of the Third World country is you have the people at the top and the rest—you don’t have a thriving middle class,” says Huffington, whose new book is entitled Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.

America is moving “from the Jetsons to the Flintstones,” she argues. “The American dream was already based on the idea you could work hard and do well and your children will do better. Now we are confronted with downward mobility across the board. You have the phenomenon of unprecedented numbers of college grads who can’t get jobs.” The current public sector cutbacks in education and infrastructure will only make things worse, Huffington says. “You are both hurting people in the present, and basically undercutting your economic growth and prosperity in the future.”

Click here to read the rest.

At the Crossroads

Turkey has often been seen as a crossroads -- or a battleground of sorts -- between a secular Europe and a Middle East teeming with religious crosscurrents. On the heels of the nation's most recent election results, detailed by Sky News in "Fears Vote Moves Turkey Nearer Islamic State," at least some analysts believe that perspective may soon be tested--literally.

Turkey's ruling AK party has won a referendum to start work on a brand new constitution but opponents fear it could usher in a hidden Islamic agenda.

The Strains Are Growing

Resource constraints are a key theme of When Giants Fall. In a world where fast-growing nations with large populations are keen to enjoy the products, services, and experiences that citizens in more developed countries have long taken for granted, it's not suprising that this is creating any number of strains. In fact, the following reports highlight the fallout stemming from competition for two key essentials:

"On the Nile, Egypt Cuts Water Use As Ethiopia Dams for Power" (Los Angeles Times)

There is a battle over the historic river. Under existing accords, Egypt has veto power over development projects, but upstream nations say they should not be bound by unfair colonial-era pacts.

...

Follow the great river north as it winds thousands of miles through highlands and deserts and funnels into the canals of Egypt's Nile Delta. Since the days of the pharaohs, the land's fate has been twinned with the Nile, and when other visions and schemes failed, the people of the delta believed that the river, which carried Moses through the reeds and Cleopatra on her lavish exploits, belonged to them.

It is in the delta, on some of the most fertile land in the world, that rice farmers have been ordered to plant fewer acres to conserve water as Ethiopia and other nations threaten to siphon away millions of gallons before the river reaches Egypt.

"We're victims of something much larger than ourselves," said Khaled Abubakr, a rice farmer whose income may drop by nearly half this year because of the new limits. "The government sends delegations to tell us how precious every drop of Nile water is to Egypt."

There is a battle over the river that for millenniums has flowed through the rise and fall of civilizations.

The dispute stems from a 1929 treaty brokered by the British and a 1959 agreement between Egypt and Sudan that guaranteed Egypt the majority of the river's water.

The treaties were political, yet they underscored Egypt's reliance on the Nile: The river's source countries, such as Ethiopia, have rainy seasons and other water supplies, but without the river Egypt's farmlands shrivel into desert and die.

Under the agreements, Egypt has veto power over Nile-related development projects and is entitled to 55.5 billion cubic meters of river water a year, or about two-thirds of the Nile's flow. But upstream nations say they should not be bound by unfair colonial-era pacts. In May, five of the 10 Nile basin countries — Ethiopia, Uganda, Tanzania, Rwanda and Kenya — signed a deal that next year would give them larger shares of water for farming, electricity and development.

Angry Egyptian officials said that their nation's security was at stake. They have since toned down their threatening rhetoric and are seeking compromise on how to balance protecting Egypt's share against new development. The aim of the upstream countries, however, is to draft a new legal framework to satisfy their national interests and weaken Egypt's "historic rights" to the river.

"Egypt deals with the Nile water issue as a life-and-death matter," said Moufid Shehab, Egypt's minister of state for legal and parliamentary affairs. "The River Nile provides Egypt with 95% of the country's water needs."

The 4,160-mile-long Nile is formed by the White Nile, which originates near Lake Victoria in Uganda, and the Blue Nile, which begins at Lake Tana in Ethiopia. They converge in Sudan and flow north through the length of Egypt before spilling into the Mediterranean Sea.

The river winds through poverty and turmoil and is vital for economic growth to sustain rising populations. It is a lesson in how water can dictate a nation's future, and threaten or preserve regional stability.

"The way forward," Ethiopian Prime Minister Meles Zenawi told Al Jazeera satellite TV channel, "is not for Egypt to try and stop the unstoppable."

"The Backlash Begins Against the World Landgrab" (The Telegraph)

The neo-colonial rush for global farmland has gone exponential since the food scare of 2007-2008.

Last week's long-delayed report by the World Bank suggests that purchases in developing countries rose to 45m hectares in 2009, a ten-fold jump from levels of the last decade. Two thirds have been in Africa, where institutions offer weak defence.

As is by now well-known, sovereign wealth funds from the Mid-East, as well as state-entities from China, the Pacific Rim, and even India are trying to lock up chunks of the world's future food supply. Western agribusiness is trying to beat them to it. Western funds - many listed on London's AIM exchange - are in turn trying to beat them. The NGO GRAIN, and farmlandgrab.com, have both documented the stampede in detail.

Hedge funds that struck rich 'shorting' US sub-prime have rotated into the next great play of our era: 'long’ soil. "Productive agricultural land with water on site, will be very valuable in the future. And I've put a good amount of money into that," said Michael Burry, star of 'The Big Short'.

Needless to say, this has set off a fierce backlash. Brazil has passed a decree limiting acreage held by foreign-owned companies, the latest evidence that our half-century era of globalisation may be drawing to a close.

Authorities are probing whether firms are using local fronts to disguise investment in Mato Grosso and Amazonia. "Brazilian land must stay in the hands of Brazilians," said the farm development minister, Guilherme Cassel. It is starting to feel like the early 1970s when the military regime more or less froze out foreign buyers.

Where will this leave the plans of SinoLatin Capital, Goldman Sachs, Harvest Capital, or Berkshire Hathaway? Warren Buffett, wisely, is exploring his $400m venture in soya and sugar with a Brazilian partner.

Argentina is drawing up its own law, pressed by the country's bishops. More than 7pc of national territory is owned by foreigners. The Benetton brothers have 900,000 hectares of Patagonia, some on disputed Mapuche tribal land. George Soros has holdings, so does CNN's Ted Turner, and currency trader Joe Lewis, who made himself a public enemy by blocking public access to the majestic Hidden Lake.

"There are many foreigners who don’t buy to produce, but rather to position themselves in places with water, mineral resources and hydrocarbons," said Pablo Orsolini, a sponsor of the legislation.

In Madasgascar, a deal with Korea's Daiwoo Logistics to plant corn on territory half the size of Belgium led to the downfall of the government in 2008. The lease was revoked. "Madagascar's land is neither for sale nor for rent," said the new president. Even Australia's senate has called for an audit of foreign-owned land and water projects.

Reality or Spin?

It's hard to know what is fact and what is fiction when it comes to reports emanating out of Washington, or whether the "news" is simply spin or an attempt to realize a hidden agenda. Take, for example, the following Associated Press story, "Report: US Must Deal with Homegrown Terror Problem." On the one hand, it may be accurate when it details the many challenges we now face as a result of various intelligence failures. On the other, this report may also reflect efforts by one agency or another to consolidate or acquire power. Personally, I'm not sure, but if you put a gun to my head, I suppose I'd lean towards the former. What do you think?

WASHINGTON – The U.S. was slow to take seriously the threat posed by homegrown radicals and the government has failed to put systems in place to deal with the growing phenomenon, according to a new report compiled by the former heads of the Sept. 11 Commission.

The report says U.S. authorities failed to realize that Somali-American youths traveling from Minnesota to Mogadishu in 2008 to join extremists was not an isolated issue. Instead, the movement was one among several instances of a broader, more diverse threat that has surfaced across the country.

"Our long-held belief that homegrown terrorism couldn't happen here has thus created a situation where we are today stumbling blindly through the legal, operational and organizational minefield of countering terrorist radicalization and recruitment occurring in the United States," said the report.

As a result, there is still no federal agency specifically charged with identifying radicalization or working to prevent terrorist recruitment of U.S. citizens and residents, said the report, which was released Friday by the Washington-based Bipartisan Policy Center's National Security Preparedness Group.

The group, headed by former 9-11 commission leaders Tom Kean and Lee Hamilton, laid out a detailed description of domestic terror incidents ranging from the Fort Hood, Texas, shooting spree and the attempted Christmas Day airliner attack in late 2009 to last May's botched truck bombing in New York's Times Square.

"The threat has both diversified and become much more complex than it has been at any time since the attack on Sept. 11, 2001," said Bruce Hoffman, one of the authors of the report. "There is no single profile of the terrorists threatening the United States today. What we see is an adversary that in essence is drawn from all sectors of society and all walks of life."