The Political Economy of 2013

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Watching America’s leaders scramble in the closing days of 2012 to avoid a “fiscal cliff” that would plunge the economy into recession was yet another illustration of an inconvenient truth: messy politics remains a major driver of economic developments.

In some cases during 2012, politics was a force for good: consider Prime Minister Mario Monti’s ability to pull Italy back from the brink of financial turmoil. But, in other cases, like Greece, political dysfunction aggravated economic problems.

Close and defining linkages between politics and economics are likely to persist in 2013. Having said this, we should also expect much greater segmentation in terms of impact – and that the consequences will affect both individual countries and the global system as a whole.

In some countries – for example, Italy, Japan, and the United States – politics will remain the primary driver of economic-policy approaches. But elsewhere – China, Egypt, Germany, and Greece come to mind – the reverse will be true, with economics becoming a key determinant of political outcomes.

This duality in causation speaks to a world that will become more heterogeneous in 2013 – and in at least two ways: it will lack unifying political themes, and it will be subject to multi-speed growth and financial dynamics that imply a range of possible scenarios for multilateral policy interactions…

How politics and economics interact nationally and globally is one of the important questions for 2013 and beyond. There are three scenarios: good economics and effective politics provide the basis for a growing and more cooperative global economy; bad economics interact with dysfunctional politics to ruin the day; or the world muddles through, increasingly unstable, as a tug of war between economics and politics plays out, with no clear result or direction.

Part of the answer depends on what happens in three countries in particular – China, Germany, and the US. Their economic and political stability is essential to the well-being of a world economy that has yet to recover fully from the 2008 global financial crisis.

Current indications, albeit incomplete, suggest that the three will continue to anchor the global economy in 2013. That is the good news. The bad news is that their anchor may remain both tentative and insufficient to restore the level of growth and financial stability to which billions of people aspire.

Mohamed El-Erian pretty much speaks in moderate terms even when discussing immoderate and opportunist politicians. He’s a nice guy. Even for a NY Jets fan.

He’s worth listening to if for nothing else his experience within and without the boundaries of international economics. Between the IMF and PIMCO, politicians stand in line asking him to run for elective office. But, then, he’d have to spend even more time with politicians. Most of whom – I’m afraid – aren’t any better than the hyenas we have in Congress.

Oldest Swiss bank closing down after tax evasion fine

Switzerland’s oldest bank is to close permanently after pleading guilty in a New York court to helping Americans evade their taxes. Wegelin, which was established in 1741, has also agreed to pay $57.8 million in fines to US authorities. It said that once this was completed, it “will cease to operate as a bank”.

The bank had admitted to allowing more than 100 American citizens to hide $1.2 billion from the Internal Revenue Service for almost 10 years.

Wegelin, based in the small Swiss town of St Gallen, started in business 35 years before the US declaration of independence. It becomes the first foreign bank to plead guilty to tax evasion charges in the US…

US Attorney Preet Bharara said: “The bank wilfully and aggressively jumped in to fill a void that was left when other Swiss banks abandoned the practice due to pressure from US law enforcement.”

He added that it was a “watershed moment in our efforts to hold to account both the individuals and the banks – wherever they may be in the world – who are engaging in unlawful conduct that deprives the US Treasury of billions of dollars of tax revenue”…

Mr Burderer’s further admission that assisting tax evasion was common practice in Switzerland has caused huge concern among the Swiss banking community, according to the BBC’s Switzerland correspondent, Imogen Foulkes.

“Some Swiss financial analysts are already speculating that Wegelin’s $58m fine, which many had expected to be higher, was kept low by the US authorities in return for Wegelin clearly implicating the rest of the Swiss banking community in tax evasion,” she said.

No one’s publishing anything more than speculation about which banks – and which bank officers – are next in line to be prosecuted. The obvious reason for the comparatively light fine and delay of indictments of Wegelin’s officers leads easily to the conclusion that cooperation and leads are being offered. It’s called turning state’s evidence to save your buns!

Republicans still make homophobia #1 – taxpayers forced to bankroll bigotry!

…One of the first acts of the Republican leadership is to continue their $1.7 million defense of the 1996 Defense of Marriage Act, despite the defeat of one of its champions, former Rep. Dan Lungren, R-Sacramento.

DOMA is under Supreme Court review, and as we know, the Obama administration abandoned its DOMA defense nearly a year ago, after which it was taken up by House Republicans.

…Republicans buried the DOMA provision in their rules package, making no mention of it publicly. That left the field wide open to Democrats to hammer away.

Pelosi spokesman Drew Hammill said the GOP “fiscal responsibility mantra does not extend to their efforts to stand firmly on the wrong side of the future. Republicans will take the extraordinary measure of including an authorization of their efforts to defend DOMA in the Rules of the House of Representatives and by doing so, continue to spend taxpayer funds, already adding up to $1.7 million, in their attempts to defend this shameful law in federal courts and the Supreme Court.”

Rep. Mike Honda, D-San Jose, lambasted Republicans for not allowing an up-or-down majority vote on a stand-alone DOMA defense, instead of hiding it in the rules package.

“On this defining issue of our time, House Republicans are continuing to fight for discrimination and using the Rules package to make it seem as if all Members of the House feel that way”…

These creeps always say they campaigned on Jobs, Jobs, Jobs – turn their back on jobs to continue a pattern of bigotry and class loyalty, introducing bills to squash Obamacare, spending taxpayer dollars on DOMA, ignoring their reduction in ranks to continue the Kool Aid Party mantra.

Log Cabin Republicans have to be world leaders in masochism, continuing to support politicians who characterize them as a Satanic abomination. I guess that for a tiny corner of the Gay community, class still counts for more than liberty.

Higgs boson was just a start – other mysteries await


Mark Thiessen/National Geographic Society

When it comes to shutting down the most powerful atom smasher ever built, it’s not simply a question of pressing the off switch.

In the French-Swiss countryside on the far side of Geneva, staff at the Cern particle physics laboratory are taking steps to wind down the Large Hadron Collider. After the latest run of experiments ends next month, the huge superconducting magnets that line the LHC’s 27km-long tunnel must be warmed up, slowly and gently, from -271 Celsius to room temperature. Only then can engineers descend into the tunnel to begin their work.

The machine that last year helped scientists snare the elusive Higgs boson – or a convincing subatomic impostor – faces a two-year shutdown while engineers perform repairs that are needed for the collider to ramp up to its maximum energy in 2015 and beyond. The work will beef up electrical connections in the machine that were identified as weak spots after an incident four years ago that knocked the collider out for more than a year…

The particle accelerator, which reveals new physics at work by crashing together the innards of atoms at close to the speed of light, fills a circular, subterranean tunnel a staggering eight kilometres in diameter. Physicists will not sit around idle while the collider is down. There is far more to know about the new Higgs-like particle, and clues to its identity are probably hidden in the piles of raw data the scientists have already gathered, but have had too little time to analyse.

But the LHC was always more than a Higgs hunting machine. There are other mysteries of the universe that it may shed light on. What is the dark matter that clumps invisibly around galaxies? Why are we made of matter, and not antimatter? And why is gravity such a weak force in nature? “We’re only a tiny way into the LHC programme,” says Pippa Wells, a physicist who works on the LHC’s 7,000-tonne Atlas detector. “There’s a long way to go yet…”

The search for dark matter on Earth has failed to reveal what it is made of, but the LHC may be able to make the substance. If the particles that constitute it are light enough, they could be thrown out from the collisions inside the LHC. While they would zip through the collider’s detectors unseen, they would carry energy and momentum with them. Scientists could then infer their creation by totting up the energy and momentum of all the particles produced in a collision, and looking for signs of the missing energy and momentum.

One theory, called supersymmetry, proposes that the universe is made from twice as many varieties of particles as we now understand. The lightest of these particles is a candidate for dark matter…

Another big mystery the Large Hadron Collider may help crack is why we are made of matter instead of antimatter. The big bang should have flung equal amounts of matter and antimatter into the early universe, but today almost all we see is made of matter. What happened at the dawn of time to give matter the upper hand?

The question is central to the work of scientists on the LHCb detector. Collisions inside LHCb produce vast numbers of particles called beauty quarks, and their antimatter counterparts, both of which were common in the aftermath of the big bang. Through studying their behaviour, scientists hope to understand why nature seems to prefer matter over antimatter…

Extra dimensions may separate us from realms of space we are completely oblivious to. “There could be a whole universe full of galaxies and stars and civilisations and newspapers that we didn’t know about,” says Parker. “That would be a big deal.”

Read the whole article. Set your imagination free into science that moves faster than the speed of light.