Taking it to the (Position) Limits One More Time

Jennifer Clapp

One of the Commodity Futures Trading Commission’s (CFTC) most colorful commissioners, Bart Chilton, announced last week that he is stepping down soon. Chilton, one of the few commissioners at the CFTC with agricultural experience, has been a rock-n-roll hero of position limits during his term, frequently referring to rock music in explaining his views on commodity derivatives regulation. For example, he referred to position limits—a ceiling on the number of futures contracts a single non-commercial trader is allowed to hold—as “suggested speed limits on a dark desert highway” (a reference to the 1977 Eagles song “Hotel California”).

Chilton’s parting speech noted that the CFTC was “taking it to the limits one more time” (a reference to another Eagles song). This was in direct reference to the CFTC’s announcement that same day of new, rewritten regulations to establish position limits on speculative commodity futures trading. The proposed rules mark an important milestone for the CFTC in its attempts to rein in excessive speculation that can disrupt commodity markets. But in the longer history of the issue, how best to regulate these markets is likely to remain contested.

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China’s Speculation Problem

Sara Hsu

In 2008, I came up with a concept that I refer to as the “speculative spread,” which states that if the relationship between shadow banking (non bank financing) and production (GDP), on the one hand, and financial deepening (M3, or currency, small and large deposits at banks, and money market funds) and production (GDP), on the other, gets too far out of whack in the wrong direction, the financial economy becomes unstable. I had performed the calculations on the United States and the eurozone during the crisis, finding that the U.S. had an unstable financial economy, while the eurozone, for all of its debt disasters, had a relatively stable financial economy, with the exception of the period just leading up to the crisis in 2007.

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TPPA: When Foreign Investors Sue the State

Martin Khor

Originally published at Third World Economics.

The investor-state dispute system, whereby foreign investors can sue the host-country government in an international tribunal, is one of the issues being negotiated in the Trans-Pacific Partnership Agreement.

In the public debate surrounding the Trans-Pacific Partnership Agreement (TPPA), an issue that seems to stand out is the investor-state dispute settlement (ISDS) system. It would enable foreign investors of TPPA countries to directly sue the host government in an international tribunal.

In most US free trade agreements (FTAs) with investor-state dispute provisions, the tribunal most mentioned is the International Centre for Settlement of Investment Disputes (ICSID), an arbitration court hosted by the World Bank in Washington.

ISDS would be a powerful system for enforcing the rules of the TPPA, which is currently being negotiated by the US and 11 other Pacific Rim countries. Any foreign investor from TPPA countries can take up a case claiming that the government has not met its relevant TPPA obligations.

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Federal Reserve in Uncharted Waters

Yilmaz Akyüz

According to Triple Crisis contributor Yilmaz Akyüz, the U.S. Federal Reserve and, by extension, the entire global economy are in uncharted waters, as the Fed begins to back off the expansionary monetary policy it has followed since 2008. Dr. Akyüz’s comments in conversation with Real News Network producer Lynn Fries, were delivered after a UN workshop in Geneva. He argued that the United States’ zero interest rate policies, and China’s high-investment policies, which have buoyed up world demand, are both “unsustainable.” Meanwhile, income inequality and the declining labor share of total income has put the world economy in a serious “underconsumption” bind. “And income distribution,” he notes, “has gotten much worse during the crisis … and therefore we have [an even bigger] consumption gap.” – Eds.

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Global Finance Celebrates at the Gates of Paradise

Erinc Yeldan

In the episode The Apple, of the classic TV series Star Trek, our heroes, led by Captain Kirk and Mr. Spock, land on a paradise planet inhabited by seemingly peaceful and immortal humanoids. At first, the bounties of the planet dazzle the Enterprise crew, but they soon discover that the planet is actually trying to kill them. Eventually, their investigations lead them to the discovery of an all-controlling artificial “god.”

Witness the reaction of the global “markets,” the artificial gods of global capitalism, to the Fed’s reassuring announcements that it will postpone the withdrawal (or “taper”) of the so-called quantitative easing (QE) packages. It mirrors, in many ways, the drama that played out on that unknown planet, where no one has gone before.

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"Sitting on a Sack of Gold": Ecuador's Turn Toward Extractivism

Elissa Dennis, Guest Blogger

Declaring “the world has failed us,” Ecuador’s President Rafael Correa signaled the termination of the Yasuni ITT Initiative in August 2013.

Back in 2007, Correa had presented a challenge to the world community: If governments, companies, international organizations, and individuals pledged a total of $350 million per year for 10 years, equal to half of the forgone revenues from the Ishpingo, Tambococha, and Tiputinti (ITT) wells in the Yasuni National Park, Ecuador would chip in the other half and keep the oil underground indefinitely, as its contribution to halting global climate change. Citing a meager $116 million in pledges, Correa announced the decision instead to move forward with the Plan B that was always in the background: extraction of oil from the Ishpingo, Tambococha and Tiputini fields. The drilling will only impact .1% of the parklands, Correa contends, noting that the estimated value of oil in the targeted area has increased from $7 billion to $18 billion. Despite street demonstrations in Quito and Cuenca and calls for a national referendum, the National Assembly ratified Correa’s action in October 2013.

Correa, a U.S. trained economist, has consistently ridiculed “infantile” environmentalists, and is clearly most comfortable with a pragmatic economic development model of extractivism with equitable distribution of resources. Like his Bolivian counterpart Evo Morales, Correa has run afoul of indigenous communities and the environmental Left through efforts to transform the nation from exploited exporter of raw materials into savvy user of natural resources to fuel economic growth and social programs.

“We can’t be beggars sitting on a sack of gold,” is Correa’s constant refrain. Read the rest of this entry »

“Sitting on a Sack of Gold”: Ecuador’s Turn Toward Extractivism

Elissa Dennis, Guest Blogger

Declaring “the world has failed us,” Ecuador’s President Rafael Correa signaled the termination of the Yasuni ITT Initiative in August 2013.

Back in 2007, Correa had presented a challenge to the world community: If governments, companies, international organizations, and individuals pledged a total of $350 million per year for 10 years, equal to half of the forgone revenues from the Ishpingo, Tambococha, and Tiputinti (ITT) wells in the Yasuni National Park, Ecuador would chip in the other half and keep the oil underground indefinitely, as its contribution to halting global climate change. Citing a meager $116 million in pledges, Correa announced the decision instead to move forward with the Plan B that was always in the background: extraction of oil from the Ishpingo, Tambococha and Tiputini fields. The drilling will only impact .1% of the parklands, Correa contends, noting that the estimated value of oil in the targeted area has increased from $7 billion to $18 billion. Despite street demonstrations in Quito and Cuenca and calls for a national referendum, the National Assembly ratified Correa’s action in October 2013.

Correa, a U.S. trained economist, has consistently ridiculed “infantile” environmentalists, and is clearly most comfortable with a pragmatic economic development model of extractivism with equitable distribution of resources. Like his Bolivian counterpart Evo Morales, Correa has run afoul of indigenous communities and the environmental Left through efforts to transform the nation from exploited exporter of raw materials into savvy user of natural resources to fuel economic growth and social programs.

“We can’t be beggars sitting on a sack of gold,” is Correa’s constant refrain. Read the rest of this entry »

New GMO Crops Temporarily Blocked in Mexico

Triple Crisis blogger Timothy A. Wise was interviewed by the Real News Network on the continuing controversy in Mexico over the government’s possible approval of permits to Monsanto and other biotech firms to grow transgenic corn on a commercial scale. As Wise explains, the opposition got a shot in the arm recently when a judge issued an injuction on further permits, calling for precaution given the concern (and pending lawsuits) over the environmental impacts of transgenic corn in a country with such a rich diversity of native varieties. Noting the recent controversy over the World Food Prize going to biotech engineers (see his earlier post), he points out that NAFTA’s environment commission studied a documented case of “genetic contamination” a decade ago and recommended precaution. (See the suppressed report and background research.) With a crucial referendum pending in Washington State on mandatory labeling of GM foods, there are signs the tide is turning against Monsanto.

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The Return of Merchant Capital to the Arab World

Ali Kadri

The Arab World has de-industrialised under the combined effects of war and neoliberalism. What has occurred in the AW is the gradual disengagement of national industrial capital from commercial capital, after which commerce bereft of industrialisation became the dominant mode.

Capital in the Arab World (AW), viewed in its dimension of consuming and allocating resources, has edged close to a mercantilist mode of accumulation whose principal characteristic is the near absence of positive intermediation between private and public wealth—literally it leaves behind the progressive side of capitalism.

The merchant mode of accumulation revolves around quick private gains and does not require productive reinvestment in society; the usurpation of value by financial means is a subsidiary outcome. The practice of merchant capital mimics that of financial capital, in the sense that money is transmuted into money without much involvement in production processes: M-M’. Rentier or rent-grab maybe too general a categorisation; it is also something of a misnomer, meant to support an ad hominem (and faux-nationalist) argument which conceals the fact that value transfers away from the working classes in the AW are conducted by national as well as by U.S.-led international financial capital.

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Billionaires: Decline of the West, Rise of the Rest

Robin Broad and John Cavanagh

With the help of Forbes magazine, we and colleagues at the Institute for Policy Studies have been tracking the world’s billionaires and rising inequality the world over for several decades. Just as a drop of water gives us a clue into the chemical composition of the sea, these billionaires offer fascinating clues into the changing face of global power and inequality.

After our initial gawking at the extravagance of this year’s list of 1,426, we looked closer. This list reveals the major power shift in the world today:the decline of the West and the rise of the rest. Gone are the days when U.S. billionaires accounted for over 40 percent of the list, with Western Europe and Japan making up most of the rest. Today, the Asia-Pacific region hosts 386 billionaires, 20 more than all of Europe and Russia combined.

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