Around the world - Dec 2012

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Some tidbits of news from around the world:

Protests in India: As these photos from CNN show, last week New Delhi looked like Tahir square, as thousands of middle-class youth protested against traditional police attitudes toward rape. This followed an exceptionally brutal rape of a middle-class girl in India's capital. Police responded with batons and water-cannons, and one cop died. It appears that this will be  watershed incident, which will bring some real change to public (and police) attitudes toward rape.

Britain's Royal Mail has started to explore privatization. Margaret Thatcher sold state-owned industries except for the railways and the post office. Her successor privatized British Rail in 1993 (inspired by Sweden). The U.S.Post Office and Amtrak have no plans to privatize, though the former is selling some of its pricey real-estate.


The 1997 Kyoto Protocol is losing steam. In 2011, Canada withdrew. Now, in the latest round, Russia and a few other ex-soviet republics are threatening withdrawal. Good riddance!

Japan has been in recession since the crash in 1989/90 (Nikkei in black). The dark blue line in the graph shows the Yen. Notice the strength between 1985 and 1990, during the boom. Notice the flattening out since then.

Japan has more public debt than any other developed nation. They've engaged in a flood of monetary and fiscal stimulus. Yet, to the disappointment of both Keynesians and Monetarists, Japan has been going nowhere for 20 years. (Take heed, all those who would short US debt and the dollar.) No country can put off the day of reckoning forever, but a strong country can delay it long enough to wipe out even the patient shorts.

Still, with every few years, the Japanese crisis worsens. It's like any bubble: hope and expectations underlie credit-creation until one day hope changes to fear. [Full disclosure: I'm short JGB and yen]

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