World Economic News
CMS Demands Its Pound of Flesh From Argentina
The lawsuit brought by U.S. gas company, CMS, against Argentina opened Aug. 9 in the Paris headquarters of the World Bank-founded International Centre for the Settlement of Investment Disputes (ICSID), Clarin reported from Paris Aug. 11. CMS charges that the delinking of the Argentine peso from the dollar in 2002 constituted an "expropriation" of their investment, and demands $265 million in compensation. What happens in ICSID "trials" is supposed to be confidential, but lead Argentine lawyer, Justice Minister Horacio Rosatti, informed the tribunal that the Argentine Constitution requires the publication of its public officials' actions, and they could not guarantee confidentiality.
Rosetti argued in his opening argument, that the change in the value of the peso resulted from the fact that Argentina "was on the brink of dissolution as a State," by the end of 2001.
CMS lead lawyer Nigel Blackaby countered that there was only an economic crisis in Argentina, and no political or social crisis, because "only" 20 people diedthe same number as die on the highways, and therefore Argentina owed his client "its" money. (The Argentine delegation "bristled" at that "unfortunate phrase," Clarin reported!)
"No one believes that Argentina is in a condition [to pay] the US$16 billion" being demanded by the 32 private companies, which, like CMS, argue that the government must pay them for their losses, Rosatti told Argentina's Radio Rivadavia, from Paris. Sixteen billion dollars would be equal to nearly a full year budget of all three Argentine branches of government, combined, and is almost equal to its total reserves. Should the court rule against Argentina, the ruling would have to be accepted as Constitutional under Argentine law, before the government would act on it.
British Housing Bubble Continues To Grow
The price of houses in Britain rose 1.8% in June, according to the Office of the Deputy Prime Minister in London, and the average British home now costs 173,756 pounds! The report says that prices are rising by 13.9% annually, but the Halifax (Britain's biggest mortgage lender) reported that house prices were actually rising by 22.1% a year.
When it raised interest rates another .25 points last week, the fifth such rise since last November, the Bank of England had claimed that the housing market was "starting to ease," but there was much skepticism about this among economists in Britain, according to the Daily Telegraph Aug. 10. According to the Land Registry, prices in Wales and the North had risen by 26%-27% in the year June 2003-June 2004, although prices in these areas are lower than in the southeast, where an average house costs 213,828 pounds.
The Telegraph quoted Roger Bootle, economic adviser to Deloitte, saying last week: "In my view, the monetary policy committee [of the Bank of England] should have gone the whole hog. Consumers need to be brought up short. Moreover, the housing boom needs to be stopped before it leads to catastrophe."
Italian Public Debt Is at All-Time High
Figures published by the Banca d'Italia Aug. 12 show that in spite of the Maastricht-dictated budget-control policies implemented since 1992, the Italian public debt has increased, instead of diminishing. State debt in May 2004 was at 1,466,377 million Euros, 106% of GDP and 3.8% more than in May of last year. In 2004, Italy will pay 69.2 billion euros interests on that debt, the Italian central bank said.
Italian state debt inflated as a result of IMF therapies in 1974 and 1976, and definitely as a consequence of capital and currency liberalizations in 1980. As a study published by EIR in 2003 shows, Italian state debt in 1978 was already high, but still at about 50% of GNP. With the post-Moro (after 1980) "restoration" governments, a currency and capital liberalization, combined with the Thatcher-Volcker high-interest-rate policy, the Italian public debt skyrocketed, and, in 1991, surpassed the GNP.
Two-thirds of Italian public debt used to be owned by Italian citizens (one-third families, one-third banks); post-1992 governments have promoted an internationalization of the debt, which is today 50% owned by foreigners.
One-Third of Italian Firms Are Owned by Foreigners
A study published by Mediobanca R&S based on a survey of 1,945 Italian firms, shows that 570 are owned by foreigners, representing 29% of the turnover. The quota of foreign ownership, however, is higher in key sectors, such as chemicals (60%), food processing (39.1%), and mechanics-electronics (35.7%). The study shows a general decline of manufacturing production, in the red for 4.5 billion euros. Profits were made by firms operating in the service sector (9.1 billion) and energy (5.4%).
Expansion of Bankers 'Toxic Waste Dump'
On the heels of Banco Santander's announcement that it will buy Britain's Abbey National, come reports that both Lloyds TSB and the Royal Bank of Scotland are considering counterbids for Abbey. In Japan, UFJ Holdings said it is considering a bid from Sumitomo Mitsui in addition to the bid already made by Mitsubishi Tokyo. Either combination of these Japanese banks would form the largest bank in the world, with either $1.6 trillion or $1.75 trillion in assets. There are currently seven banks in the trillion-dollar clubCitigroup, Mizuho, Bank of America, JP Morgan Chase, UBS, HSBC and Deutsche Bankthanks to the hyperinflation of financial assets. Citigroup, the current leader at $1.3 trillion, just announced an expansion of its toxic waste dump with the $225 million purchase of the derivatives business of Knight Trading. These are all zombies, jockeying for better deck chairs on the Titanic.
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