World Economic News
Debate in Europe Intensifies Over Future of Euro Currency
The future of the European common currency, the euro, is now being openly questioned, after the bombshell of the French and Dutch votes, May 29 and June 1, respectively, against the European Constitution. After years in which serious debate over the European Union's economic policy has been virtually prohibited, a public backlash is becoming an explosion, and certain political forces have begun to suggest that the euro could actually fall apart. See this week's InDepth for the story behind the story.
Fabius Calls for Grand Development Plan for Eastern Europe
Laurent Fabius, an early proponent of the "No" vote on the European Constitution, warned, as he was being expelled from the French Socialist Party executive June 5, that the European elites must guard against neglecting the deep concern of Europeans about an exclusively neoliberal (monetarist) expansion and integration of Europe, according to Germany's Junge Welt daily and other news outlets.
Fabius, a former Prime Minister of France, is reported to have called for a "kind of new Marshall Plan, for the relaunching of the economies in Eastern Europe," as a common mission of the European Union. Only in this way, Fabius said, can the citizens of Europe be filled with enthusiasm for the idea of "Europe."
China Announces Plans for Nuclear Plant Construction
The president of China's Nuclear Corporation, Kang Rixin, has announced that China pledges to spend 400 billion yuan ($48.33 billion) to build new nuclear power plants by 2020. China plans to triple its nuclear power, from 16 to 60 gigawatts. The new power plants are to be sited in the populous south and east provinces, such as Fujian and Zheijang, which are short of hydrocarbons.
G-8 Finance Ministers Run from Reality
The Group of Eight Finance Ministers squabbled over fraudulent debt relief to Africa, and bludgeoned China over devaluing its currency during their meeting in London on June 10-11. With hedge funds crashing and the world economy moving into the deepening turbulence of the end-of-June period, the gathering in London was more instructive for what it didn't discusscertainly no one mentioned the physical economy.
The key agenda item was to gain acceptance of the "debt relief for Africa" scheme, largely cooked up by the politically shaky Tony Blair, with less than enthusiastic support from lame-duck George Bush. Eighteen African countries are supposed to benefit from the plan, which involves $16.7 billion in debts to multilateral lenders. But despite insistence from Britain's Chancellor of the Exchequer Gordon Brown that agreement will be reached on how to implement the plan by the meeting's conclusion, Germany's Finance Minister Koch-Weser said there were "moral and budgetary dimensions" that have to be considered. "We will try to avoid being steamrolled by the U.K. and the U.S.," he added. Germany, France, and Japan are concerned that if African countries cease making interest payments, this will leave the World Bank short of cash!
There is big pressure on China to revalue the yuan, and there was some suggestion that the G-8 ministers might issue a statement to that effect.
To see what issues were avoided, see this week's EIR featuring on the collapsing world economy, that leads with Lyndon LaRouche's article, "Remember Walter Rathenau."
U.S. Treasuries 'in Grip of Speculators'
Speculative trading in interest derivatives, has now reached U.S. Treasuries, according to a June 11 article in the leading Swiss daily, Neue Zuercher Zeitung, headlined, "U.S. Long-Term Interests in the Grip of the Speculators." In particular, says the NZZ, in March 2005, hedge funds took short positions on a massive scale, on ten-year Treasury bonds, which are not intended to be speculative instruments. When the price of Treasuries went up, instead of down, and dangerous defaults were looming, hedge funds turned around by 180 degrees, and bought positive net long positions, i.e., betting that the price would rise.