Monday, December 14, 2015

Here Is What Western Mainstream Elites Do Not Get About The Rise Of Trump.

They just don't get it.  He said some of the most outrageous and unconventional things.  It was universally condemned by the political, media and intellectual elites across the board, from left to right and from right to left.  And yet, the sheep are not responding.  In fact even more of them are now following him.  It seems as if the further he gets from what they see in the mirror every morning, the more popular he becomes.  How can Donald Trump pull this off?  Is he a political genius?  Is it magic?  Are the people not listening?  Or perhaps the people are increasingly giving up on our entire elite strata, due to their failures?

Economic failure.

By far, the biggest failure of our western elites, which also has to a large degree to do with its social failure, is the failure to properly manage the long-term health of our economy.  That may seem like a puzzling statement to make if one is to only look at living standards.  To be sure, if we are to go by the HDI index or by GDP/capita rankings, we see that Western societies tend to dominate the top spots.  Having said that, there are many indicators which confirm that average living standards in the Western world are in relative decline.  For instance, in the US, we have the declining median household income situation.

As we can see, real median household incomes are now very far from the 1999 peak, which essentially means that we are very far away from living standards American households achieved in that year.  Other measures such as food stamp recipients and so on confirm the fact that things are not as great as they used to be.  We are in decline and people feel it.  The effect may have been partially offset by lower interest rates which seem to be destined to remain near record lows, regardless of this month's decision to raise rates for the first time in almost a decade.

Things in Europe are not looking better.  Europe's economy has been essentially flat since 2007.  In other words, in real terms it remained the same size.  The end result is an increase in poverty, as well as a bleak situation faced by the continent's youth.  The high unemployment rate, which is double that in the US says it all.

Source:  Eurostat.

Even in countries where the unemployment rate is low, such as in Germany, there is an increase in poverty.  In fact, poverty levels are now highest since reunification two and a half decades ago.

Social failure.

On this front, the biggest failure is in Europe, because of the nature of European society, which I will touch on in another article.  North American society to a large degree sees itself as an offshoot of Europe.  But it is an offshoot made up of a mix of diverse European cultures and traditions.  If one talks to people of European descent in North America about their background, it is usually an answer that goes along the lines of; "My mother came from Italy and my father is a mix of Germans who came three generations ago and Polish."  So, if asked "is it is alright to have a large influx of people coming from Asia, Africa and Middle East?" the response will be largely that it has to be, after all, "my ancestors are immigrants to this place as well."  Sometimes people will express some concern in private conversations in regards to their country losing its European offshoot characteristics.  Some will even wander whether it is wise to relinquish our majority population status, given that we don't know exactly how our children and grandchildren will be treated within such circumstances.  In some private conversations I have had with people who lived at some point in Vancouver for instance, where about half the population is of Asian descent, discrimination by groups of large Asian population clusters against all others was an issue often raised.  People tend to shy away from talking about it in a more public setting, because any such issues being raised, most often leads to accusations of racism by the PC police.  What we are seeing now with the rise of Donald Trump seems to be a revolt against the PC autocracy, which has been extremely vicious, with people who are accused of racism, often being stigmatized, or even losing their jobs.

Of course, if one listens to the mainstream media "analysis", they will offer us explanations along the lines "Trump is tapping into underlying racism, prejudice, which still exists within our society."  The fact that both establishment parties in the US failed and the people who are increasingly impacted by it never ever comes up, of course.

Let us look at the whole concept of illegal immigration.  Much of it is rooted in the long-term strategy to make food as cheap as possible, in order to free up consumer demand for other products. Thus the family farms, which once upon a time produced quality produce for the rest of us to enjoy,  while giving families a chance to scratch a middle class existence out of the dirt were replaced with the large factory farms.  Those who gave up their farms in the process, moved to the city, so there was a need to get replacements.  This is why illegal immigration was tolerated from the start.  After all, can we really imagine those California vegetable farms surviving without the illegal migrants? Ignoring the laws of the state is extreme, yet this is what the solution provided by our elites has been. Yet, they now wonder why there is a shift to the other extreme, because of course, they do not see themselves as extreme, but widely accepted mainstream.  They have been making it work for many decades.

Encouraging consumer demand is also responsible for the increased demand for foreign high-skill imports.  Most of us who finished university or even high school in the past few decades know that most kids work part-time while in school.  That is in order to be able to afford certain things that make the North American teenage and undergrad experience fun, or at least tolerable, such as having a car, some decent clothes and a little bit of beer money, which our parents would be hard-pressed to provide us with.  We have been shown in countless movies for many decades, that this is what we have to do and most of us do it.  Of course, there are many who also do it, because they really have no other choice, due to financial circumstances.  I believe there is a growing rank of young people who belong in that category.  We made great consumers in the process, which is very important to our consumer-driven economy.  Unfortunately, many of us will fail to reach our academic potential, due to the demands on our time, which are excessive, given the need and desire to work while in school.

But, once again, we are told by out elites that there is a solution, and the good news is that it fits within the currently accepted ideological framework.  We can import our mid-level elites.  The focus is currently on getting PhD's and students mainly from Asia, which is now North America's largest source of migrant inflow.  We are told that it is good for the economy, therefore good for us.  These people are smart and they will contribute to innovation as well as to the better functioning of every aspect of our society. But this too is an extreme solution, because it automatically suggests that most of us can forget about  our own children achieving mid-level elite status.  It is increasingly not just the large inflow of well-educated migrants mainly from Asia, which provides the North American labor force with a disproportionate source of professional elites.  Their children are helped by the fact that they have a lower divorce rate and their parents, many of which are already professional elites make great sacrifices for their children when it comes to their education, which is all very admirable (link).  There is also the one aspect that is never talked about, namely the fact that Asian ethnic groups display a much higher degree of group competition on the job market.  In other words, they are very likely to favor their own kind when in a position to do so.  

There are no studies on this of course, nor should we ever expect such studies to appear.  I have seen a few instances myself and I have had a few conversations with people who witnessed a similar thing happen.  For instance someone once told me of a Chinese member of a hiring committee, who picked out all the fellow Chinese resumes as potential candidates, excluding all others.  This should not come as a surprise, because we should remember that people from different cultures come with different values.  We cannot expect a Chinese person educated in China for instance to have been exposed to the same level of education in regards to the unethical aspects of ethnicity-based discrimination.  This tends to be an exclusively Western trend as far as I am aware.  Furthermore, different cultures may have stronger ethnic kinship bonds than others.

So, in effect, our elites are failing to provide with adequate educational resources for those who were born here and parents are not encouraged to invest in their children's education, but to consume.  Children grow up learning from society that focus on education should be shared with focusing on obtaining money in order to become a good consumer.  In other words, we are encouraged to get a job in order to be able to afford to live the American teenage and perhaps undergrad dream of having lots of fun, even if our parents who are increasingly struggling to make ends meet, cannot afford to help us in that goal.  We are asked to trade in our children's futures for marginally lower taxes, which leads to less spending on education. Hollywood-promoted social engineering discourages our children from focusing on educational achievements, in favor of  pouring our energy and resources into engaging in cheap consumerism.  And of course, even those who do otherwise and do achieve a higher level of education, are increasingly faced with affirmative action programs, in other words, legal discrimination or as is lately the case, faced with groups of people who compete on the job market as an ethnic collective,which might have not been a problem a few decades ago, but now with the number of people belonging to a visible ethnic minority within the strata of professional elites becoming ever-more present or even dominant in some fields, one is likely to encounter such discriminatory situations whether we are aware of it or not.

It is no wonder then that America, long known as the land of opportunity, now happens to be one of the countries with the lowest levels of social mobility in the developed world.


With the promise of a decent future for themselves and their children increasingly ringing hollow and a feeling of marginalization in favor of importing elites from abroad, it is no wonder then that the mainstream center elite no longer attracts an increasing number of people.  A few attempts to link support for Donald Trump and his ideas with a low level of education & income were made in the recent past.

In other words, Trump appeals to the low end, to the dumb ones, who don't know any better but to share in his populist bigotry and fear mongering against non-white foreigners.  In fact, support for Trump comes mainly from the increasing ranks of white people who are not making it.  These numbers will only increase and it will not only be those who are not making it, but those close to them who will increasingly find that Trump's message appeals to them.  After all, we all sympathize with our siblings, children, parents, cousins and so on.  It is is because the current elites are failing these people that Trump is increasingly popular.  And even if they will band together and join forces on the left and the right in order to defeat him as the French elites recently did in France's regional elections, in order to deny the right-wing FN regional gains, it will not be the end of it.  Fact is that what the current elites have to offer in terms of ideas and ideology are not cutting it for an increasing number of people.  They feel that the system and the leaders they have been electing are failing them, so they look for someone else.  


Friday, November 13, 2015

Dear Yale PC Faculty & Students. Transylvanians Need Protection From Halloween As Well.

While I never attended the prestigious Yale university I want to congratulate the Yale staff and students for the principled stand they took against the practice of wearing costumes on Halloween, which may offend some people.  This really is the right path, because Halloween should be a happy occasion where everyone should feel comfortable with other people's behavior and choices.

Have to say however that as a person born in Transylvania, I am a little bit disappointed in the fact that no attention was given to costumes which us Transylvanians, some of which may be a little bit over-sensitive, may find to be potentially offensive.  You were wise to suggest that people should not impersonate Native Americans, Muslims or anyone of color, but remember that other people have feelings as well.

Now, before you jump to conclusions and think that this may be a joke, I assure you, it is not! Transylvania is a real place, currently within the country of Romania.  Transylvania has about seven million inhabitants, therefore chances are that Yale university, with over 12,000 students enrolled and many staff members as well, is home to at least a few people of Transylvanian heritage.

Now, us Transylvanians are somewhat more reserved people comparatively speaking.  We would not ordinarily make a big fuss about some people portraying us in a negative light during an event such as Halloween, therefore perhaps none of your Transylvanian students spoke up about it, or it may simply be that none of them are offended.  But should we take a chance on offending anyone?  Or would it be wise to take proper precautions?

Thanks to Bram Stoker who did not manage to get his geography right, us poor Transylvanians are stuck with being associated with this cultural event.  They even made a terrible movie called "Zoltan hound of Dracula", which unfortunately attributes my name, which I am proud of, to an evil murderous dog.  When I first saw the movie and saw just how awful it was, I was hoping that people will not associate my name with it, because most people would have never even seen it, but it was not to be.  I in fact was approached a few times by people inquiring about that awful connection, and related to me that that awful movie is in fact a cult classic.  So I urge you, please add vampires to your list of costumes which may be offensive to others.  Who knows, it may even save a poor Transylvanian's life.  These days, one never knows given all the unbalanced people around us, whether we will one day have an impalement of a Transylvanian into the heart with a wooden stake.  If this is not about making people feel safe, I don't know what is!

Furthermore, given that us Transylvanians come from Central Europe, I also recommend that you consider putting on your list werewolf and Frankenstein monster costumes which are inspired by that region as well.  Again. it is not only a matter of offending Central European cultures by portraying them as belonging to a place that produces all sorts of horrible monsters, but it is a matter of safety.  Transylvanians and other Central Europeans could become the target of a deranged person which may be convinced that a Central European person may turn into a werewolf thus he/she may look to kill that person with a silver bullet.

Looking back at a particular incident that happened about a decade ago in a gay club, I am also inclined to believe that these sort of stereotypes about the region where I come from, may even lead to sexual harassment issues, sparked by misunderstandings.  Me and a Hungarian friend of mine escorted a group of young ladies to that club after their bachelorette party ended early (stripper left and they started tugging on my shirt when I got there to deliver the drunk groom-to-be to his home).  This club was open till later than most, so we went there.  It did not take long for my Hungarian friend's tush to be grabbed by another man and for my friend to want to go home as a result.  All these years I thought that it was merely a case of a gay man taking a liking to my friends rear end, which he obviously must have thought is rather cute and attractive.  Now that I think back, he must have heard us speak in Hungarian, he must have seen my friend's face and probably thought that he is tired, and he must have thought we might be formerly dead people brought back to life in traditional Central European fashion, by some evil scientist.  So, perhaps he figured that my friend who must have looked very tired must need an electric charge and that nice gay person must have simply been looking for a place to plug it in.  So, as you can see, promoting the Frankenstein monster image on Halloween can in fact lead to some potentially unpleasant misunderstandings.

As for the Witch costume, my grandmother used to practice some of those ceremonies which are usually associated with witchcraft.  Honestly, I don't really think those ceremonies worked.  But, it is estimated that about half a million women in Europe were burnt at the stake over those Pagan rituals, therefore is it really wise not to discourage the use of that costume?  After all, it gives legitimacy to one of the most horrific crimes against women in human history.  Not to mention that it misrepresents my late grandmother, which I can assure you that even though she practiced some of those rituals, she did not dress like that, nor did she ever attempt to fly on a broom.

I know that it may seem highly unusual for anyone from my part of the world to ask for such considerations, given that we are more reserved when it comes to such issues, as I already pointed out.  But, given that you have gone to such effort to protect other groups such as Native Americans, Muslims and colored people in general from being offended by Halloween costumes that some thoughtless people may decide to wear for the occasion, I implore you to also consider extending the same courtesy to us Transylvanians, for we are truly the most affected cultural group on Halloween.

Yours Truly,
Zoltan Ban


Tuesday, September 22, 2015

By Approving Migrant Quota Plan, Arrogant EU Elites Chose To Defy EU Public Opinion.

If we think back to Ukraine's Maidan revolution back in 2013, the Western Media and many political elites jumped on the notion that Yanukovic was facing opposition to his turn towards Russia from the majority of the population.  It was unclear whether or not that was true at the time, but the media presented the protests as the will of the people, therefore deposing of a democratically elected president through street protests was presented to us as fair and democratic.

In the case of the highly polarized debate on the immigration crisis, we cannot be certain whether or not the majority of Europe's population was in favor of today's particular decision on mandatory migrant quotas.  Fact is that we will not see much mainstream media reference to the will of the EU population, even though there are clear signs of widespread popular dissent.  We will hear over and over again how the majority vote at EU level defeated the opposition put up by four former communist countries to these quotas.  EU public opinion will unfortunately be ignored not only by the EU political elite, but also by the Western mainstream media.  They will present this as a case of West Europeans being mainly in favor of facilitating the enlargement of the EU's capacity to take in asylum seekers, against the East, where people are mainly opposed.

The fact that Britain, Ireland and Denmark, all three of which are west European countries were more than happy to exercise their right not to participate in the scheme, will largely be ignored when creating this narrative of the East-West divide.  Nor will the media focus much on the fact that the French government most likely acted against the majority will of the French electorate, given that 55% of people polled in that country were against taking in more asylum seekers.  France will take in the second largest number of asylum seekers under this scheme.  French President Francois Hollande publicly declared that his electorate's opposition does not matter.

Source:  BBC

In Belgium, 61% of people think that there are too many migrants being taken in, yet Belgium voted for the mandatory quota.  There are many other West European countries where the vote of the elite ran counter to majority public opinion on this very important issue.  There were also East European member states, such as Poland, where the population is opposed to the quota, yet its government decided to vote for it.

We may not have an entirely clear EU public opinion picture on the specific issue of the mandatory migrant quota, but we do know that a 57% majority of all EU citizens were against taking in migrants from countries outside the EU, according to the European commission's own survey conducted this year.

So in effect the European Parliament & the European Commission both went against the wishes of the EU electorate, because the mandatory quota plan is meant to expand Europe's capacity to take in migrants.

Now, if the EU masses will chose to take to the streets over this issue and demand a reversal of course, or call for their elites who ignored their will to resign, will the EU elite act in a democratic manner and abide by the will of the masses?  Will they allow for early elections over the issue as Yanukovic offered to do before he was forced to flee?  Fact is that at this point, the EU elites are looking like they will get away with their outright disrespectful act of disregard for their electorate. This may be in part because the European people do not feel as strongly about this issue as Ukrainians did about their choice between East & West.  Or perhaps it will be the case because on this issue, there will be no Nuland action to hand out "cookies" in support of the protests, in other words, there will be no special interest supporting the organization of a protest movement.  Political parties which are opposed to accepting this migrant flow into the EU are simply not strong enough to motivate enough people to devote their time and energy to the cause of preventing the EU elites from imposing their will on the masses.

Most importantly, the EU elites will rely heavily on the mainstream Western media to steer the conversation on this topic away from the most important aspect of it, namely the extent to which the elites are out of step compared to their electorate on this issue.  The conversation will be channeled towards many other directions, making it seem like the topic is being covered fairly and objectively to some extent.  The Western mainstream media can successfully do this, because it does have many decades of built-up credibility on its side.  That credibility is slowly eroding in my opinion, but right now, it still wields tremendous power and influence with the masses.  The EU elites also have a very strong and active left-leaning globalist minority of people in Europe who feel very passionate about open borders and the right of anyone to chose where they live on this planet.  This minority has shown in past weeks a much stronger will to publicly support their view.  Those opposed to the concept of taking in all eligible asylum seekers who simply show up in Europe seem to be content with expressing their disapproval at election time, forgetting that elections will be contested based on many other topics, which will peel away the majority that feels shunned by the EU elites on the topic, leaving a minority of voters who will still feel the need to hold their elites accountable for this. 

We often hear of autocratic governments where the leadership is portrayed to be ruling with an iron grip on the levers of power, with disregard for their citizens.  Some leaders that fit in this category in the present and in the recent past have been deposed by popular movements, such as the color revolutions in Eastern Europe.  Ironically, it seems that it is precisely the leadership which we perceive as being more democratic, which seems to be able to show the middle finger to its electorate on many subjects, including this one and still get away with it.  Makes one think who really holds the reigns of power with an iron grip?   

Friday, September 18, 2015

EU Migrant Crisis Pushes It On Brink Of Institutional & Economic Meltdown.

The current migrant inflow into Europe is starting to severely affect its institutions that are core to EU economic activity such as the Schengen agreement on free movement across borders.
Data from the past few months from the border of Hungary suggests that the migrant inflow continues to grow exponentially. It was 10,000/month at beginning of year, while 100,000/month now.
The only proposed solution, on which EU members haggled for months and continue to do so is un-viable and counterproductive. The time already lost makes odds of crisis resolution unlikely.
One of the most important pillars of the current global world order is the European Union. It is the purpose for the very existence of the NATO alliance. It is occasionally the world's largest economy, depending on the Euro/Dollar exchange rate. EU member states also collectively make up the largest exporter/importer of goods in the world. It is an important pillar in the global advancement of science, technological innovation, and very importantly, human rights standards.
Europe has also become the most unstable pillar of the current world order. It has been plagued by slow economic growth for some time now. In fact, since 2008 the EU economy has registered average yearly economic growth near zero percent. This has resulted in a great deal of disillusionment with the EU experiment among wide segments of its citizenry, which is being manifested in a great wave of increasing support for radical political movements on the left and right side of the spectrum. In some cases, formerly mainstream political parties had to resort to borrowing the radical positions of the rising fringe parties in order to remain in power. If we can draw a parallel to the historical past, I'd have to say that we are looking at a similar trend as we saw in the aftermath of the 1929 economic crash, where in Germany for instance, the centrist political forces were abandoned in favor of the National Socialists and the Communists.
In addition to the economic crisis that the old continent is facing, a series of unexplainable and seemingly illogical policy decisions have further dampened Europe's chances of recovering. The 2014 economical and political confrontation with Russia comes to mind as a very obvious example. There were plenty of opportunities to prevent the conflict, including the day after Ukraine's president Yanukovic was deposed. On that day, the new Ukrainian government decided to do away with the country's minority rights, which inflamed the spirits among the Russian minority, and in my view did more than anything to spark the civil war. The EU should have acted swiftly to condemn that act as soon as it learned of it. It could have prevented the civil war and might have even denied Putin the opportunity to annex Crimea. But as things stand right now, the EU probably lost hundreds of thousands of jobs as a result of the economic confrontation with Russia and shaved a few tenths of a percent from its economic growth potential. It was the last thing the EU needed after almost a decade of economic stagnation.
Now we are looking at a new crisis that threatens the stability of the old continent. This time, it is causing not only economic distress, but is also leading to an ideological and regional polarization that threatens the stability of the EU. At the root of this problem is yet another mistake made by some EU member states in regards to the handling of the refugee crisis. Countries like Sweden and Germany increasingly signaled a willingness to offer asylum to anyone who shows up and makes a convincing claim to be from a conflict zone. Last year, there were hundreds of thousands who risked the Mediterranean voyage on flimsy, overcrowded boats run by people smugglers in order to take advantage of the opportunity. This year, we are looking at perhaps a million and a half people doing this. Let us not forget that this number does not represent the actual number of people who will receive asylum. On one hand, there will be some rejections, but on the other hand there will be family unification for those who are accepted. Taking this into consideration, the actual number of asylum seekers being accepted ends up being much higher.
A million and a half people and then relatives who will follow may be overwhelming for the EU right now, but the trends we are seeing at the Hungarian border for instance are worrying to say the least. At the beginning of the year, there were about 10,000 asylum seekers entering Hungary each month. By last month however, that figure increased to 50,000 and this month it seems that there are about 3-4,000 new arrivals each day on average, which means that there will be over 100,000 new asylum seekers crossing into Hungary this month. It remains to be seen whether more stringent measures will help stem the flow into Hungary, but even if it will, fact is that the route will simply move to another country such as Croatia. After Hungary closed the border and hunkered down behind its newly-built fence, Croatia saw a massive one-day influx of over 5,000 asylum seekers enter in just one day.
Given the German and Swedish policy of considering anyone who shows up from a conflict zone or from a country where they can show that they are facing political repression for asylum and permanent residence, there is literally no practical limit to the potential supply of asylum seekers seeking to move to Europe. Conflict zones in the Middle East alone, such as Iraq, Syria, Yemen, Libya and Afghanistan collectively comprise a population of over 100 million people. Add to that the many conflict areas in Africa as well as repressive regimes around the world and we have hundreds of millions of people on this planet who are eligible for asylum in Europe, by only showing up. I by no means mean to suggest that hundreds of millions of people will show up, but a growing number are making the journey.
Add to that a growing trend of people assuming a false identity in order to be able to claim asylum under the pretext of being from a conflict zone and there really is no limit to the potential flow of refugees. There have been reports that there is a flourishing trade in Turkey in fake Syrian passports. The Syrian government is also getting in on this by issuing Syrian passportsat various embassies for about $400, with no need to show proof of identity. It has been reported that 10,000 such passports were issued at their Jordanian embassy alone, with similar situations reported elsewhere, such as in Lebanon. There are even those who show up with no identification papers at all. There are many reports of people being caught at the Hungarian border with Serbia, which claim to be from a conflict country, while in fact they came from countries neighboring the conflict zone, such as Pakistani citizens posing as Afghans. Many are not caught however and there is no way to catch them, unless they give themselves away by mistake.
Let us also remember that aiding in this whole process, we also have the people-smuggling networks, which are becoming a billion dollar industry. There is money to be made in the process of facilitating this mass-movement of people across seas and borders. It has been reported that in Hungary alone over 1,000 suspected people smugglers were detained this year. Bottom line, there is an almost limitless pool of potential asylum seekers and the criminal networks to get them to Europe are also firmly in place and growing. Any further invitation to come will result in the tide of refugees rising even higher. Yet, as I shall explain, an invitation for more to come is exactly the proposed solution, in the form of mandatory migrant quotas.
Needless to say that countries like Germany are now feeling overwhelmed by their commitments to take in all those who come, now that the world has heard their message. The proposed solution has therefore become the EU migrant quota scheme, which does very little to prevent this tide from rising. It is however a wrong-headed approach, which is leading to a lot of bad blood across the EU.
In France, for instance, 55% of people oppose taking in asylum seekers, yet their government has taken a lead role alongside Germany in attempting to push for a compulsory system of asylum seeker accommodation among EU members. Needles to say that this is causing a lot of friction given that we have countries such as the Czech Republic, where 94% of people in a recent poll supported the idea of the EU returning all asylum seekers to where they came from. The overall mood of the EU electorate seems to be decidedly opposed to taking in immigrants from outside the EU as a European Commision survey has found. According to the findings, 57% of Europeans are opposed to taking in migrants from outside the EU, while only 34% are in favor of the idea.
The resulting friction caused by an EU population that is largely opposed to taking in the asylum seekers, not supporting some of the EU elites who want to impose a mandatory, permanent quota, while doing little to address the flow of immigrants is already leading to indecision which is tearing EU institutions apart. The mainly EU-based Schengen zone, which allows people and goods to travel through most of Europe without border controls is crumbling as more and more states are putting up border controls. This cannot happen without serious economic consequences. For instance, the Hungarian border with Austria and Slovakia, both of which are now being reinstated is facilitating about $100 billion in yearly two-way trade between Hungary and the EU. Trade between Romania and Bulgaria on one hand and the rest of the EU on the other is also facilitated mainly through those same borders. All the borders that are currently temporarily re-introduced across Europe facilitate a few trillion Euro's worth of trade between EU nations. 62% of all trade done by EU countries is within the European Union. Most of that trade will still continue at an extra cost, but some of it will cease.
Source: Eurostat.
While the potential loss of the free movement of goods is a current problem with grave consequences for the already fragile EU economy, it pales in comparison to the problems it is causing politically. There is increasing acrimony among member countries over the mandatory quota plan, with threats flying over some former communist countries refusing to accept their share. Austria's Chancellor, as well as Germany's interior minister suggested that former communist countries should be pressured into voting in favor of the permanent quota system by cutting EU funds to these countries. Needless to say that there was a very angry response to such coercive and legally questionable ideas being expressed by the German government and Austria's leader. For now Germany's Chancellor Angela Merkel brushed aside such statements, suggesting that it is not helpful to make threats, but it certainly highlights the level of friction that this is causing.
The UK situation is also being aggravated by the current crisis. It is likely to hold a referendum on EU membership in 2017 and this crisis and its handling is pushing British public opinion towards the "Brexit" camp. This would mean far fewer net resources for the EU, given that Britain is a significant net contributor to the central EU budget. This comes just as the EU is engaging in increased spending on asylum seekers, which means that cuts to popular EU-funded programs, such as infrastructure projects will happen, and will further alienate the EU electorate.
Aside from the British referendum, we also have a number of national elections coming up, where anti-EU governments have a strong chance of coming to power. Most notably, we have the French presidential elections in 2017, where the formerly fringe National Front party has a real chance of capturing the presidency with Marine La Pen polling ahead of her rivals. Even in Sweden, where the overwhelming majority of the population was in favor of offering asylum to all who show up from places like Syria, the formerly fringe, anti-immigration Sweden Democrats are leading in the opinion polls. An increase in violence and crime in Swedish towns like Malmo, where immigrants make up an ever-larger share of the population is causing the electorate to turn away from its traditionally moderate views.
There is also an aspect of this situation which most Western mainstream media outlets as well as European officials have been ignoring. While all attention has been on the refusal of many countries to accept mandatory permanent migrant quotas, there is also the prevailing opinion of the migrants to consider. I have the benefit of being fluent in both Hungarian and Romanian, therefore I can access news from local sources. Hungary's government has been pointing out for months that none of the 200,000 asylum seekers who entered Hungary want to actually stay in Hungary. They want to go to Western Europe, where living standards are higher and social benefits more generous.
The media and EU officials seem to have dismissed these reports coming out of Hungary, preferring to accuse that country of not providing the asylum seekers with adequate shelter and other help, rather than admit to the fact that their entire argument that these are not refugees but mainly economic migrants is flawed to say the least. The fact that asylum seekers in Hungary refused attempts to house them in camps and be registered in accordance with laws governing members of the EU and Schengen area, was simply dismissed as a refusal by refugees to collaborate with authorities that were accused of not treating the asylum seekers well enough (which is partly true). At the same time however, only after two days of Hungary closing its borders, diverting the flow of migrants towards Croatia, we are already seeing violent and chaotic situations emerge in that country as well. I think, it puts into perspective the lack of objectivity that the Western media as well as EU officials used in their attacks on the Hungarian authorities in the past few months.
In Romania however, where thus far there has been no influx of refugees, the true picture of the situation was uncovered by the Romanian media. As the debate over migrant quotas was raging in the EU, it was revealed that roughly 6-7,000 migrants may be sent to Romania as part of the first quota allocation. Some Romanian journalists from Adevarul (Article is in Romanian) got the bright idea to go to Hungary and talk to some of the asylum seekers in places like Budapest and asked them what they thought of the prospect of being sent to Romania. All the respondents refused the concept outright, all of them citing the fact that they heard Romania is a "poor" country, therefore they are not interested. So, clearly, the overwhelming majority of the asylum seekers are motivated by economic considerations when showing up in the EU, therefore the whole quota system is flawed and likely to create more problems.
I cannot think of a more explosive situation than forcing potentially hundreds of thousands of migrants to locate to countries in the former communist block, where they do not want to be, surrounded by locals who overwhelmingly do not want them there either. In Hungary, they went as far as breaching the camps in order to avoid being subjected to the quota. They all declared themselves for Germany or other Western countries. They resisted any attempts by Hungarian authorities to enforce the laws that bind it as a member of the EU, thus not respecting the laws of the EU, where they wish to claim refugee status. I do not see any positive prospects for hundreds of thousands of these migrants, which will be allocated to the former communist block in the next year or so if the quota system is approved, to simply accept their fate peacefully. They would if they were simply refugees trying to find shelter from violence as most of the Western elite tried to portray them. While many of the asylum seekers are indeed from conflict zones, they are clearly dual-purpose migrants and by the time they reach Europe, they are no longer fleeing war. Ignoring this very important fact cost the EU months of haggling over the quota system, which does not resolve the problem, only intensifies it in the longer term.
The quota system will intensify the problem by sending out the message to potential asylum seekers that Europe has found a mechanism to deal with ever-increasing volumes of migrants, which means that they are less likely to be rejected when showing up. In effect, it will not only be Germany and Sweden inviting them, but the entire EU. The already exponentially-growing flow of refugees will intensify further, overwhelming Europe's ability to cope. That is exactly why Britain's Prime Minister announced that his country will take in 20,000 Syrian refugees, but not from among the asylum seekers who showed up in Europe, but from camps in the Middle East. It is a measure that is not only logical but also humane, given that the ones taking refuge in places like Lebanon are the ones in most need, given that they cannot afford to pay the people smugglers to get them to Europe. A few EU leaders recognize the danger of continuing to offer asylum to all who show up with a valid claim, but unfortunately the EU leadership as well as leaders of many EU countries are choosing to take an ideological rather than a logical position.
Given the political deadlock, as well as the fact that the only proposed solution on the table is deeply flawed for the many reasons I pointed out, this crisis will not only continue, but intensify. EU elites have been very slow to realize that the overland migration route through the Balkans, which started to grow in prominence late last year and is now eclipsing the previously popular Mediterranean route. It already has the potential to bring to the borders of the EU hundreds of thousands of asylum seekers each month. The EU is not prepared to deal with it politically or institutionally. European public opinion puts it at odds with the EU elite, while opposition from some EU countries to taking in refugees through a permanent mandatory quota is causing friction among member states. Now we have border controls re-introduced among member states, being announced on a daily basis. The economic impact that it will have depends on the severity of the border controls, but as of this week, we are now looking at a resulting economic impact, which is set to grow exponentially together with the crisis.
If nothing is done to stop the crisis and the resulting acrimony, as well as the resulting disruptions to the institutions that the EU economy depends on, we could start to see the return of recession in the EU next year, or even sooner. If the quota system will be adopted, it might lead to a return to a semblance of normal life in the EU for a few months, but I expect that it will ultimately lead to an even more severe social, political and economic crisis breaking out within a few months, or within a year at the most, depending on how fast the flow of refugees will continue to intensify. At that point, we will likely become spectators to an EU crisis that will make the Greek "tragedy" look very tame in comparison.

Thursday, September 3, 2015

EU Immigration Crisis: A View To Total Failure Of Leadership.

On September 14'th, there will be an emergency EU meeting meant to deal with the current immigration crisis.  There will be many proposals put on the table, but the prevailing argument will be for a new push for an already failed solution, namely EU migrant quotas meant to fairly distribute the burden, while not addressing the exponential nature of the increase in the flow of asylum seekers. Those EU leaders who support this idea will present it as a must, in order to preserve the "spirit of the EU" as well as to save some of its cherished institutions, such as the Schengen agreement on free travel across borders.

The idea was already rejected once, when the flow of asylum seekers was relatively less intense than it is right now.  Back then it called for the re-distribution of 40,000 asylum seekers from Italy and Greece, while in August alone Hungary intercepted 50,000 asylum seekers crossing the Southern border with Serbia.  Many more arrived into Italy, Greece as well as other points of entry into the EU.  It is clear therefore that any EU asylum seeker re-distribution plan will most likely involve a monthly allocation of migrants, which will be in the 50-100,000 range.  EU officials such as Jean-Claude Junker are now proposing an initiative to re-locate 160,000 asylum seekers.  But of course, any attempt to push such an agreement through will avoid spelling out the fact that it will not be a one-time event, but a regular occurrence.  Nor will the supporters of such a scheme touch on the very sensitive subject of the vicious cycle aspect of this proposed solution.

Needless to say that among the tens of millions of people who are currently displaced by conflicts, therefore eligible to be considered for asylum, this will be received as a message of support towards further arrivals.  The floodgates could really open up then, especially now that asylum seekers figured out that they can avoid the dangerous Mediterranean journey and they can travel across land, through the Balkan region.  The ranks of the already numerous legitimate asylum seekers will be further swelled by those hoping to find a better life for themselves by pretending to be from a conflict zone.  People arriving in Hungary are increasingly coming without any documentation.  They mainly claim to be from Syria, but there is no way to verify it.  Furthermore, there is an increasingly flourishing industry growing in Turkey, namely in the production and sale of fake Syrian passports.  Given that anyone who speaks Arabic can potentially pretend to be Syrian, we are looking at a potential pool of hundreds of millions of people who can try to do this.  In effect, the EU could end up taking in more "Syrians" then there were Syrian citizens to begin with.

Taking these factors into consideration, as well as the likely spread of violence across the Middle East and possibly in Africa, which will further exacerbate this crisis, there is the potential of having monthly re-allocation loads in the hundreds of thousands of people.  It will be overwhelming.  It will lead to financial and infrastructural stresses showing up all over Europe.  Such a formidable inflow of migrants will also have the effect of causing a great deal of unease among the European population. We have to keep in mind that the EU is made up of largely homogeneous nation-states, made up of white ethnic groups, with a particular Christian religion being dominant in most countries.  We should also be mindful of the fact that the current birth rate among Europeans is well-bellow natural replacement levels and most people in Europe are aware of this fact.  Within this context, Europeans are already feeling uneasy about the current wave of migrants, because they see it as population replacement of the shrinking native population with a growing foreign population.  An asylum seeker re-allocation program across the EU, which is likely to grow exponentially within a short period of time will give Europeans a sense of being under siege.

Regardless of whether one thinks that Europeans are right or not to feel this way, the reality is that the current situation is making a growing number of them feel this way, which is evidenced by the growing popularity of extreme right-leaning parties across Europe.  The European electorate may see giving their support to these parties as a way to push back.  We also see other, more direct forms of push-back gaining in frequency.  We have seen anti-immigrant demonstrations, as well as acts of arson in places like Germany.

Source:  European Commission.

The European elite is clearly acting against the will of most Europeans on this, as we can see from official surveys.  While a majority of Europeans feels comfortable with immigration within the EU, only one third of people are feeling alright with taking in people from outside Europe.  As things are likely to go very wrong, as long as EU elites refuse to change course, it should not be hard to understand that they are betting their credibility on this, and they are likely to lose it, which will have devastating effects.  European leaders may argue that EU values are at stake here if the requests for legitimate asylum are not honored by the collective EU community.  The continued viability of the EU is in fact what is at stake if this flow of refugees does not stop.  Reality is that Europeans are being asked to accept something that no other country on earth would, simply due to its geographical proximity to the Middle East conflict zones.  For instance, Canada, only takes in about 15,000 refugees per year, which it selects before they show up.  If it were to be asked to take in as many refugees per capita as Germany is likely to take in this year, it would have to take in about 300,000 in order to match Germany's effort.  Despite Canada's reputation as a country that is made up of immigrants and is open to taking in those who are different, due to its already multicultural profile, I doubt Canada's government could ever hope to convince its electorate that this is a good idea.  Yet, this is what Europe's elite is attempting to do.

On September 14'th and leading up to it, many heavyweights of the EU leadership, together with a heavily liberal-leaning mainstream media will try to convince Europeans that the only way to deal with this crisis is to come up with an orderly disbursement of what is likely to continue to be an exponentially-growing wave of refugees.  The fact that just a few months ago, Junker was pushing for a relocation quota of 40,000 asylum seekers, while now he is talking about 160,000 is an indication of just how quickly the problem intensified.  As things stand right now some EU leaders are starting to organize an opposition to the plan.  The Visegrad group made up of Poland, Slovakia, Hungary and Czech Republic are due to meet in order to form a united opposition to the quota plan. Needless to say however that if need be, these countries can be bullied into submission by the West European elites, who claim to be doing this in the name of their people, even though they clearly do not have their own electorate behind them on this issue.

If this move succeeds, it will at first seem like a viable solution as the migrant flow will be managed much better.  The chaotic scenes out of Hungary will disappear as most arrivals will know that they will be dispersed throughout Europe and will be offered asylum.  Those who will be allocated to the less affluent parts of the EU will grumble some, but in the end they will accept their fate.  The Schengen agreement will appear to be intact at first and the border controls that are popping up all over Europe will disappear.  Then, reality will set in.  In August of this year, Hungary saw 50,000 refugees cross its border with Serbia, which was more than it received all of last year.  If by August 2016, 500,000 will show up in a single month, what will the EU do then?  Raise the monthly asylum seeker re-distribution quota to 500,000?

And how will the EU cope with the likelihood of fake refugees?  And how will it cope with the likelihood that together with the flow of refugees, there will be possibly thousands of radical Islamist militants moving into Europe, undetected amid the sea of genuine and fake asylum seekers?  How will EU authorities cope with waves of possibly coordinated attacks carried out by thousands of cells, which will cause the EU population to lose faith in their government's ability to fulfill their main obligation, which is to keep the population safe?  Before dismissing this as nonsense, let us not forget that there is already evidence that groups such as ISIS identified the current flow of refugees into Europe as an opportunity to infiltrate the European continent.  There is no way of knowing to what extent this may be already happening, or whether it is happening at all.  One thing that is for certain is that even if there were currently hundreds or even thousands of sleeper cells with certain orders already set up across Europe, EU authorities are most likely unaware of it.  They have no way of knowing about it, because the reality is that EU authorities have no way of knowing who most of the people who show up may or may not be.

Reality is that at this point EU elites are relying solely on the assumption that Islamic militant groups will simply forego the opportunity that the current situation presents in order for them to organize attacks against one of the main pillars of the current world order, which they claim to want to destroy in order to set up their Caliphate.  I personally think that they would have to be fools not to take advantage of this opportunity, and I do not believe that they are fools.  I think they are aware of just what a devastating effect a sustained campaign of terror would have on European society, which relies on a very sophisticated network of institutions in order to run smoothly and efficiently.  It in fact takes what may seem very minor disruptions to bring down the normal flow of life in the EU. Failure of the EU elites to safeguard that sophisticated but fragile order might be their last failure.  I don't think they will be given another opportunity to fail after this.

There is only one path that is viable here and that is for the EU elites to make a bold decision to suspend asylum offers for those who just show up.  Come to think of it, it would not be such a bold decision in many ways, because after all, it is the solution that it seems the majority of the EU electorate would be the most likely to support.  It is the solution that is most likely to end the tragic deaths that are occurring constantly.  Recently, a campaign meant to push the EU and its members to take in more asylum seekers was launched, using the unfortunate tragedy of a little boy who drowned and washed up on the Turkish shore, as a means to claim the ethical high-ground.


This picture has been plastered all over the media, and has been sent to many people via petitions that are making the rounds, arguing that because of this tragedy European countries have a moral responsibility to offer people asylum, given the dangers they face in getting to Europe.

For myself, this is a picture that is especially hard to look at, given that I have a little boy of similar age.  The first thing that I thought about when I saw this picture was in fact my little boy, who is today by coincidence also wearing blue shorts and a red T-shirt.  I doubt there are many parents out there who will not think of their own children when seeing this image and be reminded how precious they are to us, therefore how precious all kids are, including the little boy whose family fled from the Syrian town of Kobani.

Those who are making use of this image in order to push for their ideological agenda however are in fact trying to manipulate, by suggesting that those who want to deny asylum to millions of people just like the little boy, are being mean and heartless.  Fact is however, that putting a stop to asylum offers in the face of the growing tide of refugees would have most likely saved the little boy's life. Declaring an open border and a liberal asylum policy will in fact have the opposite effect and only encourage even more people to try to make the very dangerous journey.   More children will die, just like the little boy did, and so will thousands of others who will join the thousands who already perished this year.

 Refusing asylum for those who pay smugglers to enter Europe may seem heartless, but it is the solution that will end the growing human trafficking industry that is now flourishing in the region and is reported to be in fact partially connected to the same militants who caused  this humanitarian disaster in the first place.  This is the first step that needs to be taken in order to bring back some order in the region.  The second step is to help countries bordering Syria cope with the refugee crisis. I personally find the concept of spending tens of billions of dollars per year on people who pay thousands of dollars to smugglers to get them to Europe, while tens of millions of people who do not have thousands of dollars to give to smugglers are not being adequately helped, to be an outrage.  I also think it is an outrage that Israel currently occupies part of Syria, it exploits the resources of the land and colonizes it with Israelis, while Syrian refugees need to look for help elsewhere.  The Golan should be evacuated by Israel as soon as possible and be made a NATO protectorate, where all Syrian refugees should be welcome to live on their own rightful land.

The next step of course, is to put an end to to the brutal militants who are responsible for this tragedy.  Here the US bears more responsibility than anyone else, because it made the decision to invade Iraq in 2003, which unleashed the sequence of events that led to the current disaster.  ISIS needs to go and a military solution needs to be found.  But before that, we need to get the US, Saudi Arabia, Russia the EU and perhaps Iran in the same room in order to come to an agreement which will see these actors no longer pulling in different directions, but coming up with a formula to put an end to the fighting between factions in the region, which is being exploited by ISIS.  All external players need to put their own strategic interests aside in order to stop fueling the conflicts that are tearing the place apart.

Now compare the list of the things that need to be done in order to deal with the crisis, with the intentions of the EU elites who will meet on September 14'th.  If this does not look like failure of leadership, I don't know what does!  



Friday, August 28, 2015

Trump's immigration proposal would not cause a 6% loss in GDP as claimed.

Note:  This is the first of two articles I intend to write on immigration.  The second article will focus on the EU refugee crisis, with a focus on the unethical aspects of current EU policy towards the humanitarian crisis in the Middle East.

A lot has been made about the costs involved in Donald Trump's proposal to deport all illegal immigrants and keep them out.  The big headline number of almost a trillion dollars has been cited by many news outlets as well as politicians.  I personally think that it is a very inflated number, but it is not the detail I want to take issue with.  It is the assumed cost to US GDP of as much as 6% which I find to be exaggerated and outright disingenuous.

The argument is based on the simple calculation that illegal immigrants make up over 6% of the total workforce, therefore their absence would cause a resulting loss in economic activity proportional to the loss in the workforce, thus the drop in GDP.

The calculation neglects to adjust for the resulting rise in wages and increase in worker participation, right where it is needed the most, among the working poor.  Incomes among the bottom 40% of households have in fact stagnated in past years, even when not adjusting to inflation.

 Data source:  US Census Bureau.

When adjusting for inflation, real household income for the lowest 20% of earners are down by about 13% compared with the year 2000.  I am certain that a resulting rise in wages due to a shortage of foreign illegal workers would encourage more discouraged workers to re-join the workforce.  The higher wages would also allow many more households to consume more, which would also resolve one of the biggest drags on the economy today, namely a lack of demand, which makes up over 2/3 of the economy.  Some tax contributions would also result from more legal workers in the workforce, therefore, it would also benefit the government budget.  Not to mention the reduced costs of assistance programs as a result of people on the lower-end of the income scale earning more, thus needing less help.

Now, we have to be honest here and admit to the fact that even a resulting rise in the lower-end of wages will not fill all the vacant positions that would be left behind by the removal of over 6% of the current total US workforce.  There are certain jobs that would not be attractive to the average American, even if it would offer more money than it currently offers to an illegal worker.  But there is a solution to that, called a temporary work visa program.  It should be a visa for non-qualified work, and it should be made easy to obtain, needing nothing more than proof on the part of the employers that they made a reasonable effort to fill the position with a legal US resident, but there were no takers, as well as a criminal record check on behalf of the would-be foreign employee.  This would allow employers to fill any voids in labor needs, as well as for the government to take a rightful share in income taxes.  This plan would have the added benefit of providing some labor elasticity in the economy, filling the void with temporary workers when there is high demand, while allowing those visas to expire when labor demand is slack.

I don't believe that even many of the illegal immigrants who currently reside in the US would find the concept of a work visa unappealing.  Sure, it would mean having to perhaps pay some income tax. At the same time, they would enjoy the benefit of being legal, thus subject to current labor protection laws.  Not to mention the fact that they would no longer have to constantly worry about being apprehended and deported at any moment.  It would also give the US authorities the opportunity to weed out criminal elements attempting to reside in the US, because the few bad apples would no longer have the opportunity to hide among the masses of people simply looking to exchange their sweat and toil for some wages that they can use to support themselves and their families.  The reason I think many illegal immigrants would like this aspect is because it would lessen the stigma attached to coming to the US to work, because it would remove suspicions of wrong doing and give people fewer excuses to stereotype and associate them with the drug smugglers and other unwanted elements.

Donald Trump's proposal on immigration, as it seems to be the case with most other subjects he touches on, lacks on details, therefore there is to my knowledge no comprehensive proposal, which would include my idea of the work visa for instance.  But he does claim to be a good manager, and as such, I am sure that if he were to ever get into the position of being responsible for making decisions on immigration policy, he would see the need to expand on his idea and not just do what his campaign suggests and nothing more.  Bottom line; there are ways to deal with the illegal immigration issue.  And it does not have to result in economic and fiscal Armageddon as much of the mainstream media tried to portray it.

Friday, May 29, 2015

Viktor Orban: The Tyrant Who Rules A Free Country

I am certain that most people who consume news media on a regular basis have come across the occasional story which jumped out as factually incorrect, or distorted.   Political speeches are full of these inaccuracies as well.  What makes the story of Hungary and its Prime Minister Viktor Orban different is that in this case there is a definite pattern of willful disinformation, which transcends borders as well as political and ideological inclination.  It is to be found in the Western mainstream media, as well as among political elites.

The intensity and duration of this wide-spread campaign of disinformation is also something that sets this apart.  It started five years ago, almost as soon as Viktor Orban became prime-minister.  At first, there was a media barrage using quotes made by distinguished Hungarian citizens who declared that Hungary was turned into an autocracy, which were combined with valid examples of measures which to some extent did curtail media freedom, or the separation of powers of the state.  Then came political attacks mounted mainly by the EU left, such as the Tavares report, which singled out Hungary as a state which gravely violates media freedom standards and human rights.  It was voted in the EU parliament largely along ideological lines, but with a few members of parliament on the right joining in with the left.

Since then, there were countless meetings in the EU on the state of Hungary’s democracy.  There was even a recent one in the US, where the Republican Party pushed back, pointing out that Hungary is being singled out, even though it is no different from other EU and NATO members such as Romania and Bulgaria.  This pushback was in fact a rare occurrence, which had nothing to do with any sense of fairness, but rather a desire to expose flawed policies pursued by the current US presidency.  After all, the argument is correct, because Romania and Bulgaria along with other EU members such as Greece and Croatia do in fact score bellow Hungary when it comes to media freedom and other relevant measures.

Freedomhouse ranks Hungary as a free country, although one would not know it from the constant barrage of claims that state otherwise.  Ironically, one can find these claims even in a place like Romania, among political elites and in its mainstream media outlets, despite that Romania ranks lower than Hungary on a number of critical measures, including media freedom.  This leaves us with the dilemma of trying to understand the source of the constant campaign against Hungary’s current Prime Minister.  He has been labeled a fascist dictator by high-ranking political elites such as Senator John McCain and compared to Musolini, Putin and other genuine past and current authoritarian figures in the Western mainstream media.  Paul Krugman has made it a point to give a platform to Kim Lane Scheppele, which has been on a personal crusade against Hungary’s current government, even going as far as denouncing the state of US democracy, simply because there was some Republican pushback on this issue at a recent sub-committee hearing.  She started a recent article by saying “Usually, I write about the dismal state of Hungarian democracy.   But today, I will write about the dismal state of American democracy.”  As I said, it transcends borders, political ideology and it endures, despite the obvious disconnect from Hungary’s reality.

There are of course some legitimate factors which we can point to as a trigger of the “Viktator” campaign.  First and foremost, some of the measures taken by the current Orban Government are in fact a step back in terms of overall freedom and democracy, although the trend is yet to cause Hungary to be an outlier, as I pointed out.  Then there is the fact that he tends to be overly outspoken.  For instance, he made a speech in Romania pointing out that more authoritarian states such as Turkey, Russia and China have had more economic success lately, avoiding the stagnation that has gripped the Western world, and especially the EU.  The media and Western elites automatically jumped to attack him, which should be expected given that Orban in fact questioned the viability of our Western foundational principles.  It is very probable that many of our elected elites in fact think about these things on occasion; after all, when things do go wrong as they did economically speaking, especially in the EU, which has seen zero yearly economic growth on average since 2007, inevitably questions and doubts arise.  Problem with Orban has been that he doesn’t only think them but also voices them.

The fact that Orban has also been among the EU leaders, which went along with the confrontational approach towards Russia more hesitantly and again voiced support for pragmatism, urging the EU to keep in mind its economic interests, also provided more ammunition against Orban.  More comparisons surfaced, equating Orban with Putin, in an attempt to argue that Orban supports a softer line because he is as authoritarian as Putin, therefore there is a natural desire to associate with him.  At this point Orban became an obvious target for anti-Russia hawks, given the already well-established but false perception of Viktor Orban being a tyrant.  The fact that many EU political and business elites were never on board with the sanctions, did not prevent Hungary’s position from being singled out, despite the fact that it has been by no means the only voice of doubt in regards to current EU policy in this regard.

Summing up the situation, we can conclude that at the root of the five year old “Viktator” campaign, we have the vicious nature of Hungarian politics, with opposing parties willing to drag the reputation of Hungary down, at the expense of its interests, in the hope of indirectly tarnishing the reputation of the ruling party.  Orban can be said to have been guilty of it to some extent while his party was in opposition.  It seems the former ruling establishment has decided to raise it to a new level and there seems to be definite support on behalf of the Western ideological left for this campaign against Hungary’s current government.

There is of course another possible explanation for this seemingly bizarre situation where we have very strong, sustained rhetoric in regards to Hungary, which does not correspond to actual facts, yet it seems it never gets seriously challenged despite the factual deficiencies.  The fact that this campaign against Orban and his government started in the fall of 2010, when Hungary decided against renewing its IMF deal and going alone instead cannot be ignored.  It goes without saying that attacking Orban directly would have been inconvenient for any ideological camp.  On the right, they would have been seen as supporters of global finance, which since 2008 is equivalent to political suicide, especially on the right, which is already seen as being more pro-business.  On the left, which has been the most active in this bizarrely aggressive campaign, it would be even harder to justify.  Hungary’s current government is in fact the only one in the Western World to actually do more than just pay lip-service to the mass demands to let financial institutions share in the pain of the financial crisis.  Instead of implementing IMF-prescribed austerity measures which as we can see with Greece, not only it led to widespread misery but also failed to re-balance the economy, 

Hungary decided to plug fiscal holes through taxing the banks.  Hungary also decided to let the banks swallow some losses on the FX mortgage and other consumer loans on their books, in order to bring the consumer back to relative health.  Worst, of all from the perspective of global financial interests, Hungary emerged from being one of Europe’s economic basket cases at the beginning of the crisis in 2008, to becoming an example of relative economic stability.  The FX consumer loan pile problem, which was among the worst in Europe was largely solved, with the loans being converted to forints just before the Swiss Franc was allowed to appreciate, sending Global finances into turmoil and renewing worries of consumer defaults in central Europe, where many people still have franc-denominated debt.

Hungary’s debt/GDP ratio has been on a gradual declining trend, which is important given that it entered the 2008 crisis as the most indebted country in the region.  Economic growth has been significantly outpacing the EU average since 2013.  More importantly, this was all done without implementing significant new austerity measures since Orban’s government came to power in 2010, which spared Hungary’s population from even worse suffering than it had to endure in the past few years.

This is something that Mr. Krugman or President Obama most certainly cannot openly criticize, without some serious backlash from their base.  The right cannot openly criticize these measures either, because it would only reinforce the stereotype of the heartless ideology.  Nevertheless, it seems there has been a great deal of desire to denigrate Hungary and its government in the past years, so it seems the left and the right went along with the theory that if it is repeated often enough…..

Given that now we have major political parties elsewhere, such as in Poland advocating for similar measures taken in Hungary by the current government in regards to bank taxation and FX loan conversion, it is understandable why much discontent would be present among certain elites.  Perhaps the worst fear was that “Orbanomics” will actually show some results and others may be tempted to emulate those policies.  Regardless of what the reasons are for this huge discrepancy between facts and rhetoric on the situation in Hungary, which has been going on for five years now, there is one indisputable conclusion that we can draw, namely that the Western mainstream media and our elites are just as capable of disinformation, as the elites of societies we criticize for lack of freedom, such as Russia and China.  We should not take it for granted that we are always better informed than people living under authoritarian regimes.

Monday, April 20, 2015

Electric Vehicles Far From Being Able To Compete With The Internal Combustion Engine. It Will Not Act As Our Savior.

A niche market by definition is one which captures the interest of a number of people, but does not have mass-appeal. The global EV market is one such market. It is currently a market that needs a lot of financial support, with federal incentives in the US, for each electric vehicle sold at $7,500. For reference, Renault is offering some pretty decent ICE cars for sale in the price range of that subsidy, through its Dacia subsidiary. Some countries such as Norway and China are offering even greater subsidies. For instance, in China one can purchase a Denza and get up to $18,000 in subsidies.
Despite all this help that the EV is getting around the world, in 2014 they only accounted for .4% of all global car sales. What is worse, sales around the world are starting to show signs of stalling out.
Those who want to paint a positive picture of this situation will be tempted to point to the growth achieved year on year. Reality is however that we are looking at a definite slowdown in month on month growth. While I do believe that sales will eventually beat last year's record of 320,000 units, I don't think it will be by much. While for the past three years we have seen dramatic exponential growth in EV sales around the world, evidence is building of a significant slowdown in growth, and may even signal stagnation.
Early indications from Inside EV's suggest that in the first quarter of 2015 around 22,500 EV's were sold in the US. That is a drop of about 30% compared with the fourth quarter of 2014, and it barely matches the sales volume of the first quarter of 2014, or we might learn that sales will be even slightly lower once the final numbers will be in.
In the EU, the fourth quarter of 2014 saw a decline in sales compared to the fourth quarter of 2013.
Source: EV obsession.
This might not yet reflect a trend moving forward, but it by no means bodes well, especially if we consider the early signs of stagnation we are seeing from global sales this year. It seems that the EV niche market is reaching its limits, despite all the incentives offered by governments around the world.

Tesla is not the ICE slayer.

I had an interesting chat with an acquaintance a few weeks ago. He mentioned his interest in Tesla (NASDAQ:TSLA) and how he would have liked to buy shares back when it went public in 2010. He did not, which is a shame because as we know, it would have made for a great investment back then. But what I found interesting about his reasoning behind his desire to invest in Tesla was that it was not entirely out of the desire to make money on it. He told me that he would have liked to buy some shares, because he would have liked to be part of it, because he believes in what the company is doing.
He is a tech enthusiast and I believe that it is that aspect of it that attracted him to the Tesla story. Tech enthusiasts love technological progress and revolutionary products. Environmentalists also love to see such progress as Tesla is promising. The thought of a company challenging the supremacy of the gas guzzler producers is very appealing indeed. It gives hope to the believers in human ingenuity as a way of solving our environmental and sustainability issues. It would also be a vindication of the government policies of support for the EV industry for which the environmental movement lobbied for. Tesla's own sales growth forecasts suggest that it is ready to become a major car manufacturer, with 500,000 yearly unit sales by 2020 and perhaps in the million unit yearly sales range by 2025.
But far from becoming a formidable competitor for the internal combustion engine, Tesla is so far not even in position to claim top spot in the global EV market. In fact, it is in fifth spot for this year so far.
Data source: EV-sales
I do believe Tesla will claim the top spot in the EV market eventually. In fact, it may even happen this year if the release of the model X will go smoothly. But, at the moment, it did not yet reach that objective and it is facing competition from companies which are best known for their conventional gasoline-powered technology. But even when it will reach the objective of becoming the top EV seller on this planet, it will still have to contend with the dominant technology, which in my opinion is too easily dismissed as yesterday's innovation by tech enthusiasts as well as environmentalists.

Range/Price ratio.

Range was always seen as an issue when evaluating the viability of EV's as an alternative to the ICE. One of the things that got people exited about Tesla, aside from the fact that it is a pure EV company, while the other car manufacturers are seen as simply going through the motions of satisfying various pressures to embrace EV's, has been Tesla's range. The model S has almost 300 miles maximum range per charge that drivers can rely on to get them around. That is as much as many ICE cars get on a tank of gas. Even the model 3, which is supposed to have mass appeal, due to its projected base price of $35,000, will still have a 200 mile range. Furthermore, Tesla is increasing the presence of its fast-charge stations in order to facilitate long-distance mobility for its cars.
It is beyond any doubt that EV range is an undisputed factor in meeting the challenge of taking on ICE domination on the roads, together with an extensive charging network, which needs to provide for fast charging. Tesla is meeting that prerequisite. It is however falling way short on challenging ICE technology on price. The model 3, which is scheduled to hit the market in 2017 will have a base price of $35,000, which on the surface seems reasonable. The average sale price of a car in the US last year was about $31,000. But, the real sale price of that model 3 will average more like $40,000 at the least once options will be included. Furthermore, it will be a compact car, which on average sells for significantly less, in the $20,000 range on average. Car buyers seem to be inclined to pay over $30,000 for SUV's and Trucks, as well as smaller luxury cars, but it remains to be seen whether they will go in large numbers for a $35,000 base price EV compact.
The model 3 battery will cost at least $10,000, assuming a price per kWh of $200, and a range of 200 miles, which suggests it will have a 50 kWh battery. So the battery alone will cost almost as much as many small conventional cars available in the US, EU and Chinese markets. In fact, one can purchase a decent-made Dacia Logan in Europe for about $10,000 these days. I have been ridiculed in the past for bringing up Tesla and Renault's Dacia subsidiary in the same article, but this is the reality of the price difference between ICE's and EV's. The ICE can allow car manufacturers the option of introducing decent cars on the market for sale in the $10,000 range. EV makers, cannot hope to provide a car with a decent 200 mile range for under $30,000 at the moment, and I think they will struggle to do so in the near to medium future as well.
I don't believe that many people are able to grasp the significance of the barrier that this price difference poses to EV's. I am not suggesting by any means that EV makers need to be able to provide a 200 mile range, $10,000 car in order to compete. But, the cheapest EV's with a decent range now cost about two to three times more than the cheapest decent cars available on the main car markets. If the age of the EV is to be ushered in, then the price gap needs to be reduced significantly and I do not foresee that this will be achieved within the next decade, which means that the EV will remain a relatively small niece product, which will continue to rely on significant government support to stay afloat.
As for Tesla's goal of becoming a mainstream carmaker in the next decade, the odds of making it seem very slim. The model 3 may enjoy significantly more success than the model S, or the upcoming model X, but looking at the global EV market and the ICE competition, there is not much to go on as evidence of competitiveness. While I think Tesla is a great company, with a potentially bright future, I also continue to believe that it is currently priced as if the breakthrough to over a million unit sales per year by 2025 has already happened. In other words, there is plenty of room for disappointment, therefore downside for the stock, with little room for upside in case that Tesla does meet its goals on time. The breakthrough into the mainstream car market may eventually happen, but it may take two or more decades for EV's to stand toe to toe with the ICE, with Tesla perhaps leading the way.