Copenhagen shows this is China's Century

A Fascinating piece on the closed door talks in Copenhagen from the Guardian UK

Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful "deal" so western leaders would walk away carrying the blame. How do I know this? Because I was in the room and saw it happen.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait.

He goes on to explain how China expertly played on the desperation of the US and other developing countries to pass legislation.

Here's what actually went on late last Friday night, as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and the Ethiopian prime minister, Meles Zenawi. The Danish prime minister chaired, and on his right sat Ban Ki-moon, secretary-general of the UN. Probably only about 50 or 60 people, including the heads of state, were in the room. I was attached to one of the delegations, whose head of state was also present for most of the time.

What I saw was profoundly shocking. The Chinese premier, Wen Jinbao, did not deign to attend the meetings personally, instead sending a second-tier official in the country's foreign ministry to sit opposite Obama himself. The diplomatic snub was obvious and brutal, as was the practical implication: several times during the session, the world's most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his "superiors".

Their reasons are obvious:

...China's growth, and growing global political and economic dominance, is based largely on cheap coal. China knows it is becoming an uncontested superpower; indeed its newfound muscular confidence was on striking display in Copenhagen. Its coal-based economy doubles every decade, and its power increases commensurately. Its leadership will not alter this magic formula unless they absolutely have to.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action. I left Copenhagen more despondent than I have felt in a long time. After all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back, and drained away.

Citi Pays Back Tarp for Billions in Tax Savings

This is pathetic

The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.

So basically the Government gave Citi a 38 billion dollar tax exemption for paying back tarp money. So all this lip flapping about making profits off tarp is complete and utter crap. I am furious as to how our government is able to get away with doing this.

From Denninger:

Obama was touting the "profits" made by Treasury on the TARP repayments. What he wasn't saying is that not only did we flush the money (from TARP) that went into Chrysler (disclosed last night), we now find out that at the same time he was "touting" the so-called "profits" The President was handing that money straight back to the bailed-out companies via tax breaks!

So no, Mr. President, Treasury (and The American People by extension) did not "make a profit" on TARP, nor "will we recover every penny" that was paid out.

There have been several banks that have failed after receiving TARP money - we will get zero from them. We will get zero from Chrysler and GM. We lost 100% of the money injected into CIT, and now you have handed out billions of tax credits to Citibank.

Where's the so-called "populism" - that is, the protection of "the little guy" while making those who were responsible for this economic mess pay for their sins Mr. President?

If you're a Democrat and believe that you were electing "Hope and Change", you might want to think about what you actually bought with your vote - not what you were sold.

Anecdote of the Day

“At a party given by a billionaire on Shelter Island, the late Kurt
Vonnegut informs his pal, the author Joseph Heller, that their host, a
hedge fund manager, had made more money in a single day than Heller had
earned from his wildly popular novel, Catch-22, over its whole history. Heller responds, ‘Yes, but I have something he will never have: Enough.’ “

Scary: North Korea Revalues Currency

From the Washington Post:

TOKYO -- Chaos reportedly erupted in North Korea on Tuesday after the government of Kim Jong Il revalued the country's currency, sharply restricting the amount of old bills that could be traded for new and wiping out personal savings.

The revaluation and exchange limits triggered panic and anger, particularly among market traders with substantial hoards of old North Korean won -- much of which has apparently become worthless, according to news agency reports from South Korea and China and from groups with contacts in North Korea.

Apparently the North Korean Government has punished those who have been saving their cash and running businesses that the government hasn't been able to control. Their solution? To devalue the currency, bankrupting these individuals.

The revaluation replaces 1,000-won notes with 10-won notes but strictly limits the amount of old currency that can be exchanged, news reports said.

According to two Web-based groups with sources in the North, that limit was set Monday at 100,000 won, which at current black-market rates amounts to $40. All North Korean currency that individuals possess in excess of that amount becomes worthless under the revaluation.

Amid widespread protests, the limit was raised to 150,000 won in cash and 300,000 won in bank savings

Here's the kicker:

the government did not explain why the revaluation had occurred.

Asset Bubbles of the past 10 years and the fed

A really fascinating chart showing Apparently easy money has just led to more and more Asset Bubbles and its looking like gold is turning into another one of them. Hopefully Bernanke isn't just blowing smoke when he makes comments like this.

“The best approach here if at all possible is to use supervisory and regulatory methods to restrain undue risk-taking and to make sure the system is resilient in case an asset price bubble bursts in the future.”

Given his comments on protecting the dollar as a store of wealth, consider me suspect.