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Views from around the world - who thinks what about whom?

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Talk about it, talk about it, talk about it, talk about it....Every nation and people carry their own hand lens (magnifying glass) through which they may look either darkly or otherwise. We now deploy ours, scanning the ever changing Amazon of data flowing from innumerable portals across the globe and near earth orbit.

We have browsed some of the lesser visited corners of the scribbling world and assembled a few of the most interesting and lesser visited for our readers to peruse. Although we believe that some of these viewpoints are ill-advised or outright wrong, we hope these views will provide a perspective through which we can more clearly view current and impending challenges.

Happy new year to all. One way or the other, we believe 2013 will be a very “interesting” year. Perhaps we will all soon be living in “interesting” times. Or perhaps, the best of times, the worst of times? Or perhaps time is a river? Or perhaps, does anybody really know what time it is, does anybody really care?

Outlook to 2013




The United States faces three clusters of challenges in 2013. The first is the conflict in the Middle East, most immediately in Syria, but potentially down the road with the question of Iran approaching the red line on nuclear weapons activities. Second, the United States faces rising tensions in East Asia, especially between China and its neighbors over boundary lines in the East China Sea and the South China Sea. The third set of issues is the overall health of the international economy.


Of course, that modest improvement assumes that Washington will come to some sort of compromise on avoiding the so-called fiscal cliff. Should that combination of automatic tax hikes and spending cuts come to pass, unemployment will likely spike as the U.S. falls back into recession.

Given the impasse over a budget deal, economists’ forecasts for 2013 all come with a big asterisk. So take the following figures with a grain of salt. Besides, economists as a group aren’t exactly covered in glory with their macro forecasts in the best of times. Throw high-stakes political brinksmanship into the mix, and all these average estimates could be way off.

At any rate …

Assuming we get some kind of budget deal, 2013 is shaping up to be another year of healing, if not a return to robust health:



China will be a welcome partner in the world order, at least defined by the West, only if it democratizes, dismantles its state-controlled economy, and adheres to the standards of liberal multinational institutions in seeking its place in the world order. These outcomes are so far off the radar as far as the current PRC leadership is concerned, the only near-term endgame on these terms is regime collapse.

That's a risky bet. If the regime doesn't collapse, a simmering, constitutional hostility between the PRC and its many antagonists is on the books for the foreseeable future.

China's response has been to avoid confronting the United States head-on, instead probing for weaknesses in the US chain of proxies and allies, while trying to shore up weaknesses in its own proxies and allies.

The only unalloyed win for the PRC in East Asia in 2012 was the re-election of the Kuomintang's Ma Ying-jeou as president of Taiwan. President Ma has a steady-as-she-goes policy of minimal friction with the PRC, in contrast to the fractious pro-independence and pro-Japanese Democratic Progressive Party. In 2012 he went a step further.


As global economic prospects remain fragile and Europe's debt crisis lingers, external demand for China is unlikely to improve. However, this can also be an opportunity for the country to concentrate on economic growth quality and efficiency and the transformation of growth pattern.

"The global economy has entered a period of profound transition and correction from a period of fast growth in the pre-crisis years," the conference said, warning of rising protectionism and increasing pressure from potential inflation and asset bubbles.

Long Guoqiang from the development research center under the State Council said due to developed economies’ slowdown, global investors will be more optimistic about China’s economic prospects.

“Against this background, the middle and high-end resources worldwide are expected to be redistributed. By the time, the new trend of advanced industries shifting to China will emerge, thus creating a great opportunity for China’s industrial structural transformation,” Long said.



The latest crackdown comes on top of a long list of Iraqi state institutions that Maliki has targeted such as the armed forces, the Central Bank of Iraq, the electoral commission, the judiciary, and the integrity commission, in what Michael Knights calls “a culture of direct control.” Let’s imagine that by pushing the disputed territories/Kurdish oil dispute to the limit, presiding over the corruption riddled $4 billion arms deal with Russia and arresting Issawi (testing his nationalist Sunni supporters in Anbar) a successful no confidence vote is held against Maliki next year. Maliki has promised “unprecedented measures” against anyone who backs such a vote. But if he continues down this path, political opposition is going to grow. Are we going to see Maliki take more “unprecedented measures” in 2013?


Despite the formation of a government in December 2010, we expectpolitical progress to remain slow and stability to remain fragile. Abroken power-sharing agreement, withdrawal of US troops, andpersistent sectarian tensions all present risks.The Iraqi economy will be among the fastest growing in the worldover the coming five years, driven by an aggressive increase in oilproduction and the start of large-scale infrastructure projects.


Economically, there was some positive news in Q312, as Iraqi oil exports reached their highest point in 30 years. These are expected to double again over the next three to four years. So, if the Iraqi state canhold together, a growing public purse should result in marked improvements in security and livingstandards.

However, that remains a big ‘if’. A new offensive by al-Qaeda in the second half of 2012 has causedhundreds of deaths in dozens of towns and cities across the country, with the security services seeminglypowerless to stop them. Regionally, Iraq remains highly vulnerable to instability in Syria and also to thedesigns of Iran, which continues to wield undue influence over Iraqi affairs. Internally, Prime MinisterNouri al-Maliki has worsened sectarian tensions by failing to deliver on a promise to implement a powersharingagreement designed to safeguard the rights of the country’s different ethnic and religious groups.

The US still aims to support Iraq through arms sales and other programmes, but even this intention isbeing challenged by Baghdad’s failure to use all the funds that Washington has allocated for it. Over the last quarter BMI has revised the following forecasts/views:




Polls for the BBC and several UK newspapers over the last two years suggest a majority of British voters think the conflict is "unwinnable" and that its soldiers should leave Afghanistan ahead of schedule.

Some Afghans fear the withdrawal could lead to an escalation in violence or even civil war. However, Afghan President Hamid Karzai has dismissed those concerns.

A resilient Taliban, ethnic tensions and competing warlords all pose a threat to Afghanistan's security before presidential elections due in 2014. Attacks on NATO forces by rogue Afghan soldiers and police have raised tensions.

An Afghan defense ministry spokesman said its forces could fill the gap left by the withdrawal of foreign troops.


In the past year, the Afghan government focused on convincing Taliban into table talks in effort to end the conflict in Afghanistan through a political way. But they responded with continuing to practice violence all over the country. They engineered a very sophisticated attack on Assadullah Khalid, the intelligence chief of Afghanistan but he was lucky enough to survive.

In a much unexpected move, the government of Pakistan released 19 Taliban figures from its prisons after a delegation of High Peace Council (HPC) members led by Salahuddin Rabbani paid a visit to Islamabad. Pakistan has released them to push the peace negotiation process of the Afghan government.


Great Britain

 There is lots of talk of the ’lost decade’, the ‘new normal’ where banks and governments are going to continue to de-lever for some years to come. Back in 1999 investors could see no clouds; the outlook now is unremittingly gloomy. Importantly, in 2012 we struggled to reconcile official GDP data, which has had the economy stuck in recession for much of the past year, with what companies tell us.
Companies are telling us that “it is not getting much better but it is not getting any worse”. Inflation is coming down, albeit slowly and erratically, which should support some real income growth over time. Even though the public sector continues to shed staff, the
private sector is creating sufficient jobs that net employment growth is positive.


Public sector construction work is set to fall by 19% between 2010 and 2014, while the CPA predicts that private sector work will fall by 4% in 2012 but rise by 15% to 2016. These forecasts rely on the government increasing capital expenditure, notably in housing and infrastructure.


The human resources industry body warns the private sector will fail to offset the 120,000 job losses in the public sector in 2012, but it sees no sign of widespread private sector redundancies. The jobless rate is expected to hit 8.8% in 2012, from 8.3% most recently. Government policy should help youth and long-term joblessness, the CIPD said.
"As long as there is a relatively benign outcome to the eurozone crisis we expect the 2012 jobs recession to be milder than that suffered in 2008-9," said John Philpott, chief economic adviser at the CIPD.
"But unemployment in the coming year will be rising from a much higher starting point, so the UK jobs market in 2012 will be weaker than at any time since the recession of the early 1990s."


There should by now be few who doubt that the biggest problem facing the UK economy is a shortage of aggregate demand. Consumer spending is increasing at a sub-par rate because wages are growing less rapidly than prices and households are choosing to reduce their debts. Export growth has tailed off badly because the UK’s main market – Europe – is back in recession. The government is cutting its spending on goods and services. And businesses, although in aggregate they are sitting on large cash piles, are reluctant to spend until they see more demand for their products.




Tensions between Mrs Merkel and Francois Hollande will hobble the eurozone's ability to act as the French Socialist President struggles to cut borrowing and implement domestic unpopular economic reforms with early evidence that France's entrepreneurs are fleeing his high taxes.

President Hollande is likely to be angered by German electioneering that will draw negative comparisons between Germany and France's failure to bite the bullet on economic restructuring.


Unemployment rose for the 19th straight month in November and now stands at 3,132,600, its highest for 15 years.

Hollande has said 2013 is the ‘year of the great battle for jobs’ for his government, and he knows the Socialists will be judged on their record here above all else.



 But in face of slowing economic growth, Merkel also warned that conditions could be more difficult in 2013 than in 2012. "I know that many people are naturally concerned going into the new year," she said. "And the economic environment will not in fact be easier but rather more difficult next year. But we shouldn't let that get us down; rather it should spur us on."


Hundt also said that he was concerned about high wage demands in Germany in 2013 after workers got big increases in 2012 thanks in part to intervention by Chancellor Angela Merkel and members of her cabinet.

Even though unions are calling for big increases again in 2013, Hundt said he was confident wage deals would be moderate.


the EU


"In 2013, the headlines for Europe are likely to be gloomy. Despite the last headlines about the new Greek bailout agreement, there are a number of issues that throw doubt over its implementation and sustainability.

"Crucially, the level of debt is still viewed as unsustainable and a Greek exit at some stage next year is still a high probability. Furthermore, Spain is expected to formally ask for a bail-out next year and we have Italian and German elections to contend with."


European banks could finally be able to turn their fortunes around over the course of next year. Currently, however, they are facing heavy challenges. i) On an operating level: 9M results had shown the miserable state of the industry. The top 20 banks reported a net profit of only EUR 23 bn, on total assets of EUR 16.7 tr (excl. UK institutions), with avg. ROE an unacceptable 3.8%. No wonder EU banks trade at 0.7x book value. Revenues are slightly declining, with the sole bright spot coming from volatile trading income (up 22% yoy). Due to the recession in many countries, loan loss provisions are 14% higher than a year ago. ii) Regulatory & legal headwinds: apart from uncertainty around the final shape of the CRD IV, litigation risk may remain one of the main threats in 2013.;document=PROD0000000000298896&rdShowArchivedDocus=true&rwnode=DBR_INTERNET_EN-PROD$NAVIGATION&rwobj=ReDisplay.Start.class&rwsite=DBR_INTERNET_EN-PROD

 We wonder if our readers feel so very optimistic that current leadership has got it right by this time in the game?


Last modified on Tuesday, 01 January 2013 16:11

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