Tuesday, January 3, 2012

Terra Incognita The Global Economy 2012

Terra Incognita: Rethinking the global economy in 2012
01/03/2012 21:56

The economic forecast for this year isn’t all bad, but there are definitely changes in the air.

For some reason financial “experts” are predicting a good year in 2012. Wall Street strategist Brian Belski and Standard and Poor’s analyst Howard Silverblatt predict that stocks will rise about 10 percent. Everywhere are headlines like “pros see stocks rising in 2012” and “analysts see stocks climbing in 2012.”

That is all well and good except, as Bernard Condon at the Associated Press notes, the “experts” also predicted gains in 2011. It is worthwhile looking back over the past year to get an idea of what may be in store for next year’s global economy.

The Dow Jones Industrial Average, a gauge of the US financial market, is ending the year almost precisely where it started, at around 12,000 points. European and Asian markets generally had a worse year than New York’s stock exchange. US financial markets have recovered since the disaster they suffered in 2008, which was a long-term result of a sub-prime mortgage crises.

It turns out 2011 was a relatively good year for US home sales, which were up 7% in November. That means more people are buying homes, but the price of real estate has not changed, and has actually continued to decline, albeit slightly. The spike in home sales has been fueled by record-low interest rates: Wells Fargo, a major bank, estimates that a 30-year fixed-rate loan, which is a typical type of home loan, will come with a rate as low as 3.875%.

IF THE US economy seems to have weathered the storm in 2011 and recovered from many of its problems, it is no secret that the world’s real economic problems are in Europe. All of 2011 was overshadowed by discussions about Greece defaulting on her debts or leaving the Euro, plunging markets into chaos again and again.

The EU response has been tepid, as Germany and France, the largest economies, wrestle with possible solutions. Some fears have been allayed with news that Italy’s borrowing costs declined to 3.2% when it raised $11.8 billion in late December. Borrowing costs are a measure of volatility, so the fact that Italy is paying less interest is a sign that investors feel there is less risk of an Italian default.

In November, an auction of Italian bonds had forced the country to pay upwards of 6% to raise money. It was because of this that Italy was said to be the “next Greece” with fears that financial contagion would spread from Italy to Spain and Portugal and from there to the gates of Paris and Berlin.

However, Europe’s economy still suffers from other issues. The first is that the European Union has become more ham-handed in its regulatory behavior. In one instance it denied the right of mineral water makers to claim their products guarded against dehydration. In slapping record fines on Intel and Microsoft several years ago, it proved itself to be wary of foreign innovation and fearful of penetration of its markets.

In another case the EU continues to provide subsidies to Airbus, against a decision by the World Trade Organization. In that dispute the US has asked the WTO to impose trade sanctions of up to $7b. annually on the Europeans. Over-regulation and protectionist trade policies will hamper the continent’s long-term prospects, rather than protecting European consumers.

More worrying was Germany’s decision to to scrap its nuclear power stations. Nuclear power is the clean innovation of the future, a 20th-century technology that is perfect for the 21st century’s interest in clean energy. But the tsunami in Japan led to widespread irrational fears, and nuclear power is being rolled back. In the end this will be a long-term disaster for Europe and other places, as economies continue to rely on fossil fuels.

In thinking about fossil fuels it is important to recall that oil prices increased due to the Arab Spring, falling back to the $90 a barrel price range in the fall before climbing again to $99 a barrel in December following Iranian threats to close the Straits of Hormuz if sanctions are imposed. It should be recalled that the Iranians attempted something similar in 1984, with limited success, during the Iran-Iraq war.

Because of turmoil in the Arab world the oil fields in Iraq and Libya remain threatened and the Iranian problem casts a shadow over the future price of oil. At the same time the West’s dreams of electric car technology are not being realized. Only 6,142 Chevy Volts were sold in 2011 and only 8,720 Nissan Leefs. By contrast 11,375 Ford Focuses were sold in just November 2011.

This year is going to see several continuing trends. The “occupy” movement and various populist anti-capitalist protests will remain. At the same time the “second world” will continue to outpace the first, with the rise of the Chinese Yuan to record levels and reports that the Brazilian economy has overtaken that of the UK. Interest rates will remain high in Europe and the US dollar will remain pressured by the fact that US has no good plan to repay its deficit or balance its budget.

The good news from 2011 is that despite economic jitters related to the Euro the world economy continued to improve. The bad news, however, is that the long-term structural problems associated with European monetary integration and US debt issues have not been resolved.

The writer has a PhD from the Hebrew University and is a fellow at the Jerusalem Institute for Market Studies

Terra Incognita UnOriginal Shooting

Terra Incognita: Un-original shooting
12/27/2011 23:27

Photographer Fredric Brenner promised to portray Israel beyond the stereotypes in his latest project, but the artists have predictably created an orgy of clichés.

An attempt to create a traveling photographic exhibition of Israel has yielded predicable results; an orgy of clichés. Perhaps this is not surprising given the traditional mix of idealism, Jewish donors, fear of politicization, Israeli intellectuals as guides and requests that the project move beyond black and white stereotypes.

The project, called “Israel: Portrait of a Work in Progress,” was the brainchild of Frederic Brenner. A French photographer, he is best known for his book Diaspora: Homelands in Exile which was billed as “the most extensive visual record of Jewish life ever recorded.” He decided that he wanted to bring world renowned photographers to Israel in order to present a more diverse image of the country.

“[I was] very sad to see how Israel was being portrayed...We were in a binary paradigm – for and against, victim and perpetrator. There was such a lack of complexity in describing this place,” he said.

According to The New York Times participants were supposed to “spend six months exploring the country’s deep and many fault lines to create a body of work that might reframe the conversation about Israel.” To fund the project Brenner raised $3.5 million from Jewish donors in the US and Europe. Donors included the Laurie M. Tisch Illumination Fund, which aims (according to the website) to support projects that deal with “Jewish life,” foster tolerance and an “open an exchange of ideas that goes beyond politics and stereotypes to a place of rich complexity and understanding that is essential to shaping the future of Israel.”

The photographers were afraid of being “instrumentalized” so it was important that no money came from an Israeli government source. Nevertheless the project received support from Bezalel Academy of Arts and Mishkenot Sha’ananim.

SO THE artists came and, according to reports, Mr. Brenner decided that it would be important to hook them up with local Israeli “experts” who would operate as handlers and help them understand Israeli culture. Brenner choose people like philosophy researcher Moshe Halbertal, Beduin expert Clinton Bailey and Gilat Aloni of Bezalel. The project is scheduled to be finished in 2012, after which a travelling exhibition will display the work. Individual photographers taking part in the project will also publish their work separately.

But early reports indicate the outcome of all this work is 100 percent predictable. Suffice it to say, it will primarily be about Palestinians, Beduin, separation barriers, Palestinian Beduin, east Jerusalem Palestinians, the desert and Jenin. So much for the project about “Israel” that was not about “victims and perpetrators” and was supposed to be “complex.”

Fazal Sheikh, a 46-year-old photographer from New York City who has exhibited at the Tate Gallery, has produced work that deals with “displaced and marginalized communities around the world.” Apparently Sheikh felt his name might make his work in Israel problematic and he didn’t want to be viewed as an “apologist... I wanted to know who was backing the project and be sure we would be getting complete freedom.”

In the end he choose to photograph Beduin in the Negev, in order to illustrate the idea of “erasure.” Similarly, his project will focus on Palestinian refugees in the West Bank, probably to show how Israel has “erased” their villages.

Josef Koudelka, a Czech photographer, will explore the separation barrier. He began his work in the Jerusalem area. He describes the fence as a “crime against the landscape, in the most holy landscape for humanity.” Born in Czechoslovakia and having witnessed the Soviet invasion of 1968, he has said that his experiences under Soviet suppression “inform his view of the conflict in the region.”

Even though the project was supposed to be about “Israel,” Rosalind Solomon decided to focus her work on Jenin. Supposedly she ended up being “a few minutes away” when famed Israeli-Arab director Juliano Mer Khamis was gunned down in April, 2011 in front of the Jenin theater his mother had founded.

Gilles Peress, a French photographer, is photographing in Silwan, an Arab neighborhood in east Jerusalem that has been a flashpoint for violence between Jews who moved there and the local Arabs.

Nick Waplington, an English photographer who was born in Aden in the former British colony of Yemen, is reported to be shooting photos of settlers in the West Bank. He has done some work in Gush Etzion, but his webpage shows a giant photo of an Arab village and another of “the West Bank Separation Wall with Water Heaters.”

The group also includes Martin Kollar of Slovakia, Stephen Shore, a famous American photographer who seems to be focusing on archeological themes, Thomas Struth from Germany, who claimed he partly wanted to come to terms with his father’s Nazi past, and Jeff Wall, who is taking photos of the Ramon crater. Jungjin Lee, a Korean photographer, has been photographing diverse vistas, from the Golan Heights to the Negev and West Bank Beduin.

There is nothing intrinsically wrong with a project like this, just as there is nothing wrong with the themes the photographers choose to focus on. Where the project fails is in its claim to go beyond stereotypes. Is this because the artists cannot think in an original way? Is it because the Israeli experts chosen to Sherpa the artists around choose to only talk about Beduin and separation barriers? Is it because any project handsomely paid for by well-meaning Jewish donors and hosted at the Bezalel Academy inevitably gravitates towards Silwan, the “barrier” and Beduin? Is it because the organizer of the project said, “I did not bring people here to see the land of milk and honey. I brought them here to see the land that devours its inhabitants?”

We will never know, but we do know that this project has already failed.

The writer has a PhD from Hebrew University and is a fellow at the Jerusalem Institute for Market Studies.