STAFF NEWS & ANALYSIS
DB Briefs: German Court Set to Trip Up EU? / China's Leaders Attempt to Gag Internet, but Problems are Fundamental/ Atlantic Questions Work Habits of US Leaders
By Staff News & Analysis - September 05, 2011

German Court Set to Trip Up EU? … German court to insist on bail-out reforms … The German Constitutional Court is set to demand that the German government does more to ensure “democratic legitimacy” for its support for European wide bail-outs in its long-awaited judgment on the legality of the multi-million bail-out of debtor nations. Chancellor Angela Merkel has faced criticism for not seeking fresh democratic mandates for the millions of euros the German government has provided in support for the eurozone’s struggling nations such as Greece and Ireland. – UK Telegraph

China’s Leaders Attempt to Gag Internet, but Problems Are Fundamental … China state paper urges Internet rethink to gag foes … China’s Communist Party control is at risk unless the government takes firmer steps to stop Internet opinion being shaped by increasingly organized political foes, a team of party writers warned in a commentary published on Friday. The long commentary in the overseas edition of the People’s Daily, the main newspaper of China’s ruling Communist Party, added to signs that Beijing, jolted by the growing audience and influence of Twitter-like microblogging websites, is weighing fresh ways to tame and channel online opinion. Chinese officials and media have recently complained about the spread of damaging and unfounded “rumors” on the Internet. – Reuters

Atlantic Questions Work Habits of US Leaders … In Praise of Senior U.S. Officials Taking the Weekend Off … Secretary of Defense Leon Panetta’s absences call into question management practices and a culture of workaholism … The LA Times ran an anonymously sourced piece on new Secretary of Defense Leon Panetta: Aides say that unless he is required to stay in Washington or travel elsewhere, Panetta will spend most weekends and days off at his 12-acre walnut farm in scenic Carmel Valley, where he and his wife, Sylvia, make their home… But his absences at the Pentagon have raised eyebrows in workaholic Washington. Even some of Panetta’s friends wonder how he can get away so regularly while his department, by far the largest in the U.S. government, faces multiple wars and daily crises. – The Atlantic

German Court Set to Trip Up EU? …

German court to insist on bail-out reforms … The German Constitutional Court is set to demand that the German government does more to ensure “democratic legitimacy” for its support for European wide bail-outs in its long-awaited judgment on the legality of the multi-million bail-out of debtor nations. Chancellor Angela Merkel has faced criticism for not seeking fresh democratic mandates for the millions of euros the German government has provided in support for the eurozone’s struggling nations such as Greece and Ireland … Leading European experts have said that, although the court is unlikely to throw out the bail-out policy, which would cause chaos across the eurozone, it is likely to set conditions on continuing German support for the policy. Matt Persson, of the think tank Open Europe, said: “The Court will almost certainly approve the bail-outs, possibly citing as a reason that monetary stability is a legally protected interest.. However, the Court is also susceptible to public opinion and, in order to guard its reputation, could well demand more influence for the German parliament and lay down additional constitutional red lines in return for approving the bail-outs.” It could also make moves towards fiscal union in the eurozone even more complicated, he said. – UK Telegraph

Dominant Social Theme: The German court’s ruling is merely a glitch on the way to an EU superstate.

Free-Market Analysis: German judges are to decide on Wednesday whether Chancellor Angela Merkel was within her rights to OK EU bailouts. While the euro-media has downplayed the consequences, they could nonetheless be grave. There is nothing like a consensus in Germany over the deals Merkel has made with the rest of the EU.

Five German professors launched the lawsuit and recently Professor Dr. Wilhelm Hankel, one of these professors, claimed that Germany could be using the Deutschmark again by 2012. “I think the chances of a favourable ruling are good,” he said. “Contrary to the last complaint made against the euro in the 1990s, the court has accepted the complaint from the first minute, it has not been rejected,” he told the Telegraph.

Recent reports have indicated that at the very least the Constitutional Court will attempt to limit what Merkel can do going forward. And with the crisis far from resolved in Europe, such limitations may further complicate EU policy choices. Top EU leaders have been pressing for a closer political union, and the Court’s ruling could make this more difficult. The fallout could be severe, politically, economically and from a market perspective. Stay tuned.


China’s Leaders Attempt to Gag Internet, but Problems are Fundamental

China state paper urges Internet rethink to gag foes … China’s Communist Party control is at risk unless the government takes firmer steps to stop Internet opinion being shaped by increasingly organized political foes, a team of party writers warned in a commentary published on Friday. The long commentary in the overseas edition of the People’s Daily, the main newspaper of China’s ruling Communist Party, added to signs that Beijing, jolted by the growing audience and influence of Twitter-like microblogging websites, is weighing fresh ways to tame and channel online opinion. Chinese officials and media have recently complained about the spread of damaging and unfounded “rumors” on the Internet. – Reuters

Dominant Social Theme: China will continue to do a good job of taming the Internet.

Free-Market Analysis: China’s leaders are upset about the Internet again. The consensus of Western media seems to be that the ChiComs have found ways to make sure the Internet poses no threat to the dominance of the Communist party. But this commentary seems to show us that this is not at all the case.

The statement could not be clearer. “Unless administration is vigorous, criminal forces, hostile forces, terrorist organizations and others could manipulate public sentiment by manufacturing bogus opinion on the Internet, damaging social stability and national security.” This sounds like Beijing is leaning to tougher controls, according to Reuters. But given the amount of censorship already present, there may be a limit to what Chinese leaders can do.

China’s problems have to do with intractable price inflation that has made apartments and food increasingly expensive. Additionally, China’s regional bureaucracy has been building entire empty cities – as well as empty skyscrapers and public works projects – to keep up with the demands of the central government for increasing economic growth.

The pressure for growth is leading increasingly to reports of shoddy construction, especially when it comes to public works. According to the Reuters article, a “recent string of public uproars that have spread through microblogs … Those uproars included a bullet train crash in July that drew outrage aimed at government officials over evasive statements, safety failures and the feverish expansion of high-speed rail.”

The problems are not of perception, but reality. Inflation and questionable construction are not issues that will go away if reporting about them on the Internet is damped. In fact, Chinese communities are seeing rising civil unrest, to the point where the Chinese government has taken active steps to reduce reports on protests and disturbances.

New restrictions on the Internet may be part of this effort. Since the problems are both real and intrinsic, reducing the flow of information, even if it were practical, will do nothing to reduce the challenges China faces. One can shoot the messenger, but the news remains.


Atlantic Questions Work Habits of US Leaders

In Praise of Senior U.S. Officials Taking the Weekend Off … Secretary of Defense Leon Panetta’s absences call into question management practices and a culture of workaholism … The LA Times ran an anonymously sourced piece on new Secretary of Defense Leon Panetta: Aides say that unless he is required to stay in Washington or travel elsewhere, Panetta will spend most weekends and days off at his 12-acre walnut farm in scenic Carmel Valley, where he and his wife, Sylvia, make their home… But his absences at the Pentagon have raised eyebrows in workaholic Washington. Even some of Panetta’s friends wonder how he can get away so regularly while his department, by far the largest in the U.S. government, faces multiple wars and daily crises. – The Atlantic

Dominant Social Theme: Top US leaders need to relax, too.

Free-Market Analysis: This is an odd little article, if only because it takes for granted that US leaders are facing such grave and intractable problems that the habits of their workaday week have become subject to scrutiny and serious commentary.

To the article’s credit, it does make the point that much of what goes in Washington DC has little to do with reality. The article’s author has worked in Washington and calls DC “a terrible, and addictive place to work.” He makes the point that at the Pentagon in particular, work performance “is often judged by time served, not mission accomplished – that is, if you are at your desk, busily writing or signing things or attending marathon six-hour coordination meetings that don’t actually do anything or making powerpoint presentations and drafting snowflake memos… then you are, obviously, a strong worker and good leader.”

Put more bluntly, government, including the military and intelligence part of government, really has little or nothing of value to produce, excluding in this case the so-called “war on terror.” Given that there is no “production” – only a redistribution of resources – appearances may matter more than reality.

The article never really grapples with this larger issue, however. It ends up concluding that top US leaders like Panetta ought to take enough time off to clear their heads to grapple with the truly important issues the US faces. But of course, the war on terror itself is a highly questionable one and the questions reverberate through every action the US is taking domestically and abroad.

When one closely examines what is going on, it begins to seem as if the power elite behind the US’s current war footing has developed a kind of fantastical approach to world affairs in which the West’s enemies are based more on perception than reality. The CIA itself may have developed al-Qaeda in the 1980s to face down the Russians; there is plenty of evidence that Osama bin Laden himself operated as a CIA asset.

These are surely issues of more import than Leon Panetta’s work habits. They remain unaddressed in the mainstream media.

Posted in STAFF NEWS & ANALYSIS
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