With tensions remaining high, the brouhaha over the ‘probe’ of government corruption daring to find actual corruption rolls on and now the military is complaining of bent judges in their own ‘coup’ trial:
- *TURKISH ARMY SAYS EVIDENCE FABRICATED IN COUP TRIAL: HURRIYET
- *TURKEY ARMED FORCES FILES CASE CITING PLOT AGAINST IT: HURRIYET
Add to this the hike in consumption taxes and fears over inflationary surges and the Lira has re-collapsed back to record lows against the USD and Istanbul stocks are re-tumbling.
The Military involvement (via Bloomberg),
Turkey’s Armed Forces asked the prosecutor’s office to open a case against what it said was a plot targeting it in trials of retired and active duty officers for alleged coup planning, Hurriyet newspaper says, citing a defense lawyer in one of the coup plot cases, Haluk Peksen.
Evidence against members was fabricated to target the Turkish Armed Forces: Hurriyet
Security officials, judges and prosecutors ignored defense of members and manipulated evidence: Hurriyet
Hundreds of military officers, including top generals, have been convicted in a series of cases on charges of plotting to overthrow PM Recep Tayyip Erdogan’s govt
On Inflation and Tax Hikes (via Goldman),
The government hiked various consumption taxes and surcharges on tobacco and alcoholic products, cars and mobile phones, effective from January 2.
We calculate that these tax hikes will add roughly 1.0pp to headline CPI, eradicating almost entirely the favourable base effect (roughly 1pp) set by last year’s administered price and tax hikes. This means headline CPI will be stuck at around the 7.5%-8% range through 2014Q1.
Sustained FX pass-through, pent-up electricity and natural gas price adjustments and possible unprocessed food price shocks (owing to unseasonably warm weather conditions) will likelycontinue to exert upside pressure on headline (and core) CPI. We continue to see end-2014 CPI at 8.3%, well above the 6.7% consensus. However, the risks to our forecasts remain on the upside.
We continue to expect the CBRT to hike (the policy relevant) O/N non-PD lending rate by 225bps to 10% in 2014. More aggressive rate hikes will probably be necessary to anchor inflation expectations, given the large imbalances undermining the TRY.
BofAML also believes the bullish trend in USDTRY is set to continue…
By Adam English 2013-12-31
Here we are, at the last day of a year that has defied all the odds.
The Dow and S&P 500 have posted out-sized gains in spite of what can generously be called tepid economic growth.
The regional governors and economists over at the Fed are undoubtedly enjoying the afterglow of their resounding success with the latest tapering announcement a couple weeks ago.
Investors, banks, and policymakers are most likely enjoying their holiday vacations while planning what to do with the fat bonus checks that are en route.
Of course, the disenfranchised poor are worse off than ever. Millions just lost their only source of money for food, and millions more are stuck in a downward spiral of debt traps and part-time work.
But these downtrodden masses don’t have any money to pour into the markets to boost gains. To the market and policymakers, they were only included when it came time to package self-enriching schemes in populist rhetoric.
Tomorrow, it’ll be time to start thinking about the next set of yearly returns, and none of the big players are worried.
Next year promises more of the same in their eyes. The Easy Money Battle of 2013 was won.
Unfortunately, many of them don’t see that it was a Pyrrhic victory. The cost is already too high to succeed in the end.
A Terrible Record
Clearly, the temptation in the market is to take the latest Fed announcement and ensuing rally as a call to double down on wildly bullish sentiment as 2014 starts.
I have little doubt that we’ll see this shaken out of the market sometime in the first half of next year. When you take a look at the Fed’s record on tapering announcements, it doesn’t look good.
By my count it has one win, one tie, and five losses.
The first mention of winding down QE programs came back on May 22nd. Hints of a reduction in stimulus measures in the Federal Open Market Committee (FOMC) minutes caused an immediate 1% drop in the Dow and a volatility spike.
On June 19th, there were no taper hints. Ben learned his lesson. However, the markets still knew it was imminent. The Dow closed down 1.3% while the S&P 500 fell 1.4%.
July’s announcement caused a 0.7% drop for the Dow and another volatility spike.
September was an aberration and a virtual tie because the government shutdown distracted everyone.
October saw no date set for a taper. There was some volatility and a slight dip in the markets for the afternoon.
Then on December 18th, the November FOMC minutes were released, causing a 290-point gain in the Dow and exuberant front-page headlines.
It’s clear the Fed’s record is pretty abysmal, filled with fumbles and confusion. But the trend appears to suggest that the markets have made peace with the idea. At least on the surface.
So what changed over time?
The overall tone of the statements and Bernanke’s remarks suggests that the Fed is still very “dovish” and willing to err on the side of caution. That helped, but it isn’t enough on its own.
In reality, the folks at the Fed spent the last half-year scratching their heads trying to figure out how to make a taper palatable to the markets. The result was a massive concession in how the taper would proceed.
The Fed now intends to hold interest rates at historic lows past the point when the unemployment rate falls to 6%. This is a large adjustment — over 1% lower than in earlier statements.
The flow of easy money into corporations has been extended through most — if not all — of 2014.
Wall Street could take or leave the $10 billion per month trimmed from bond purchases as long as the virtually free money guaranteed by low interest rates keeps flowing with no real end in sight.
Corporate Cash Cow
The rate banks pay on overnight loans, or the federal funds rate, was at 4.5% in late 2007. As the recession bit into the economy, it was slashed to 0.25% and has stayed there ever since.
Long-term rates quickly followed suit and fell from over 5% in 2007 to record lows near 1.5% in the second half of 2012. Since the beginning of 2013, 10-year Treasuries have crept back to 3%, still well below normal levels.
Corporations capitalized on the low interest rates by issuing $18.2 trillion of bonds worldwide since 2008. Currently outstanding corporate debt has risen over 50% to $9.6 trillion over the same period.
Many of these loans were simply created to push corporate debt obligations out as far as possible. Instead of using them to create growth, it just delays loans from maturing until 2017, 2018, or 2019.
Interest paid by U.S. businesses peaked in 2007 at $2.83 trillion, and then it fell sharply to $1.34 trillion in 2011, the last year data is available from the St. Louis Fed.
At the end of the recession in 2009, companies listed on the S&P 500 paid roughly $4 a share in interest per quarter. Now, they are paying around $1.50 a share in interest on average.
These dramatically lowered interest rates account for an estimated 50% of total profit growth, not including indirect savings from lower leasing or rental costs.
Stock buybacks using debt-fueled funding have also been very popular and have provided quick boosts to stock prices and created earnings per share increases that are not based on growth or performance.
In fact, earnings have tripled since 2000, back when the economy was in far better shape.
The Fed has created a massive boom for corporate America through historically cheap debt and that is what the markets wanted to keep most of all. The Fed capitulated and the markets rejoiced.
Meanwhile, the EBITDA margin (earnings before interest, tax, depreciation, and amortization divided by total revenue) operating profitability peaked at 25.6% in late 2007 and recently fell below 20%.
Of course, this can’t possibly last in perpetuity. Debt will become more expensive, and payments will eat into profit margins.
We have not seen the last time the Fed will disappoint markets, create a volatility spike, and ultimately drive losses for investors.
Still On Shaky Ground
Going forward, the Fed and anyone in the market have a handful of things to remember that should temper the irrational exuberance we’re seeing in the market.
First, Fed policy is overly dependent on creating artificially high asset prices to alter economic behavior for investors and companies. The economy has not substantially improved enough to subsist on meaningful corporate growth, consumer spending, or housing sales.
Secondly, the impact of easy money through abnormally low interest rates is hard to quantify, especially in the short-term. Bullish markets that overextend their gains on very uncertain stimulus will inevitably see very disruptive corrections.
Finally, the Fed is not the only central bank that is actively pushing asset prices higher and fighting to maintain economic and financial stability. China, Japan, and Europe are all using extraordinary measures to intervene.
If any of these major economies see demand that is too weak, experience corporate or bank liquidity and credit crunches, or fail to juggle sovereign debt, the domestic economy will take the full brunt of the blow.
The Fed has fully deployed all of its tools to spur growth while expanding its balance sheet by about $4 trillion with little real effect. Economists put the total return for the Fed’s intervention as low as 0.25% of GDP.
As we close the books on 2013 with large gains for the markets and on a high-note for the Fed, we know what to expect for now. The Fed will have to continue pushing you to put your wealth into the market, and the big players will keep holding the rallying market hostage as they rake in massive profits.
However, the cost has been too high. The Fed may push the day of reckoning well into 2014 or beyond, but there is no way around the correction and burden it will place on us all.
I spent a while last night reading David Holmgren’s latest essay Crash on Demand (read the PDFhere). Back in 2007 Holmgren, who is one of the initiators of the concept of Permaculture, wrote a series of possible future scenarios in which he posited a number of different scenarios that could play out with regard to civilisation and the environment. I won’t go into those scenarios here but suffice to say that this latest essay represents an additional one – and a new way of thinking.
The two civilisation destroying situations we face are peak oil and climate change. Holmgren goes into some detail about why his perception of these has changed, concluding that peak oil has not yet turned out to be as bad as expected (for various reasons, notably financial) and climate change is likely to now far exceed our worst expectations, with a 4-6C degree scenario now likely in a BAU scenario.
This change in thinking was the result of an observation of the way energy and economic issues are panning out, plus a deeper consideration of the role of finance courtesy of systems thinker Nicole Foss. The gist of it is this: we are rapidly losing the chance to persuade policy makers to take the risk of global warming seriously, and given that the course we are now on would likely wipe out nearly all of humanity and make life considerably worse for millions of other species over the coming millennia, then the only sensible option for us is to crash the system of global growth-based capitalism.
If that sounds radical that’s because it is. Holmgren points out that the last few decades of environmental protest have failed miserably. The dominant paradigm of ‘economic growth at any cost’ grinds ecocentrist concerns into the dust. A quick survey of the news headlines should convince anyone of the veracity of this. And although we are now living in an age of limits, where the quantity and quality of the fossil energy sources available to us begins to diminish, the system is perpetuated by the financial system which continues to magic credit out of thin air without any basis on a claim in the real world. Witness the shale oil boom in the US, a vastly inefficient and polluting operation that only makes economic sense due to the distorting wizardry of Wall Street financiers.
Furthermore, he rightly observes that the vast majority of people in the industrialised world could not care less about destroying the basis for life on planet Earth. As the global economic bubble deflates – something it has been doing since 2008 – most people in our overdeveloped economies are too busy trying to hold down a job or are too influenced by the growth-perpetuating mantra of politicians and the media to give much thought to the wider world. This is unfortunate, but at least it demonstrates the pointlessness of trying to gain political traction in a system that is rigged against anything other than limitless growth. Any concessions the system makes to preserving the biosphere tend to be largely symbolic, such as increasing bottle recycling rates, or charging a levy on plastic bags, while the real business of exploitation on a planetary scale continues apace.
Furthermore, the plateauing of oil production has not seen the rapid uptake of clean-tech that its proponents suggested would happen as soon as oil prices climbed. Instead it has seen a switch to dirtier and more dangerous to extract fuels, aided and abetted by the fossil fuel sector and its financial backers. So instead of moving into a ‘green tech’ future we are in practice moving into a ‘brown tech’ one. And although the financial instruments used to boost the production of shale oil and gas are by nature Ponzi schemes and cannot last, Holmgren argues that they may indeed last long enough to make a controlled powerdown situation impossible, as well as missing the window to wean ourselves off fossil fuels.
However, given that the economic system is only being held together by an almost-hallucinatory perception of continued growth and stability which is held by the majority, perhaps this is also the key to seeing its Achilles heel. Holmgren says that a sudden whole scale implosion of the global financial system is really the only hope of curtailing our carbon emissions and cutting them to a level that would avoid runaway global warming. He estimates the chances of a global economic collapse happening ‘naturally’ at 50% over the next five years.
Adopting local currencies, bartering, avoiding paying tax and using the copious quantities of materials lying around as leftovers from the current waste-based economy would be ways of hastening the demise of the planet-destroying system, while simultaneously acting as a good model for late adopters, many of whom would want to ‘join up’ as the current system of industrial production begins to falter. This, he concedes, would also hasten the demise of a good many worthy and progressive projects, and would likely make enemies with those on the left of the political spectrum who rely just as much on the growth of the industrial system as those on the right. Nevertheless, he says, this is a bitter price that must be paid.
Would this be enough to starve the beast? Nobody knows, but it might represent a better expenditure of energy rather than waving a banner outside a climate conference. The system, he maintains, cannot be reformed. Instead it must die and be reborn. He is quite aware that advocating such a view would vilify him and others who could be accused of trying to collapse the economic system, but maintains that we have a duty to protect life on earth by any means necessary from a rapacious class of human being and a system that has got out of control. This is best done by building an alternative parallel economy – one that is not predicated on endless growth.
By a strange coincidence, after I had finished reading David Holmgren’s essay an email popped up in my browser. It was just telling me that Collette O’Neill – the Irish blogger who lives at Bealtaine Cottage – had a new post. I clicked on it and was greeted by a series of pictures and text that are a living example of everything David Holmgren was advocating. It summarised how she herself had turned away from ‘the machine’ and how this had allowed her to build her permaculture cottage and lead the kind of life that many dream could only be possible by, say, winning the lottery. See her example here.
Martin Armstrong Warns Europeans Of The Coming Expropriation Of 10% Of Everyone’s Accounts | Zero Hedge
As we have discussed in depth previously (2 years ago here as “muddle through has failed” and most recently here as the IMF discussed a “one-off” wealth tax), a confiscation (akin to Cyprus overnight debacle) is coming and Martin Armstrong believes sooner than most think.
Submitted by Martin Armstrong via Armstrong Economics,
Anyone who thinks it is a fantasy that government will simply just confiscate 10% of everyone’s accounts in Europe better have another look at the fool they see in the mirror staring back at them. This IMF solution is traditionally French and is really coming because the people in charge are effectively Marxists and this idea came from the IMF under the control of French ideology. They willexpropriate these funds to save a banking system that they screwed up and will never reform anything because they are incapable of admitting any mistake.
These European government officials really are playing a dangerous game that is inviting total chaos, civil unrest, and may set themselves up for invasion. Instead of Napoleon invading Russia (1812.479), it may be the other way around when they smell weakness.
Let me make this very clear. I have many French friends and they know the people in charge are just Marxists. Adam Smith wrote Wealth of Nations because he visited France to investigate Physiocracy that argued agriculture was the only real wealth. Karl Marx did not come up with Communism himself. He was more of a socialist. He did not advocate confiscating all property. It was the French movement of a commune at the time that convinced him their way was better. It was Engels who steered Marx into Communism. These ideas have emerged from France and this is why we have some of the most insane ideas still emerging from this country. There is a core philosophy among some that this socialism is correct.
The IMF proposal to expropriate everyone’s accounts in Europe will happen. The consequences could be absolutely the collapse in confidence that will be off the charts. Why should people trust government ever again or any bank for that matter?
My advise to Europe – move as much as you can… – Hollande will come up with that one you can bet. He will weaken Europe and destroy the future of generations yet to come.
When they took the funds in Cyprus, the EU did not distinguish between European, American, or Russian accounts.
It was the winter of 1939, only a few months earlier the Soviet Union and Hitler’s Third Reich had just signed a partially secret accord known as the Molotov-Ribbentrop Pact; essentially a non-aggression treaty which divided Europe down the middle between the fascists and the communists. Hitler would take the West, and Stalin would take the East. Stalin’s war machine had already steamrolled into Latvia. Lithuania, and Estonia. The soviets used unprecedented social and political purges, rigged elections, and genocide, while the rest of the world was distracted by the Nazi blitzkrieg in Poland. In the midst of this mechanized power grab was the relatively tiny nation of Finland, which had been apportioned to the communists.
Apologists for Stalinist history (propagandists) have attempted to argue that the subsequent attack on Finland was merely about “border territories” which the communists claimed were stolen by the Finns when they seceded from Russia during the Bolshevik Revolution. The assertion that the soviets were not seeking total dominance of the Finns is a common one. However, given the vicious criminal behavior of Russia in nearby pacified regions, and their posture towards Finland, it is safe to assume their intentions were similar. The Finns knew what they had to look forward to if they fell victim to the iron hand of Stalin, and the soviet propensity for subjugation was already legendary.
The Russian military was vastly superior to Finland’s in every way a common tactician would deem important. They had far greater numbers, far better logistical capability, far better technology, etc, etc. Over 1 million troops, thousands of planes, thousands of tanks, versus Finland’s 32 antiquated tanks, 114 planes which were virtually useless against more modern weapons, and 340,000 men, most of whom were reservists rallied from surrounding farmlands. Finland had little to no logistical support from the West until the conflict was almost over, though FDR would later pay lip service to the event, “condemning” soviet actions while brokering deals with them behind the scenes. Russian military leadership boasted that the Finns would run at the sound of harsh words, let alone gun fire. The invasion would be a cakewalk.
The battle that followed would later be known as the “Winter War”; an unmitigated embarrassment for the Soviets, and a perfect example of a small but courageous indigenous guerrilla army repelling a technologically advanced foe.
To Fight, Or Pretend To Fight?
Fast forward about seven decades or so, and you will discover multiple countries around the globe, including the U.S., on the verge of the same centralized and collectivized socialist occupation that the Finnish faced in 1939. The only difference is that while their invasion came from without, our invasion arose from within. The specific methods may have changed, but the underlying face of tyranny remains the same.
In America, the only existing organization of people with the slightest chance of disrupting and defeating the march towards totalitarianism is what we often refer to as the “Liberty Movement”; a large collection of activist and survival groups tied together by the inexorable principles of freedom, natural law, and constitutionalism. The size of this movement is difficult to gauge, but its social and political presence is now too large to be ignored. We are prevalent enough to present a threat, and prevalent enough to be attacked, and that is all that matters. That said, though we are beginning to understand the truly vital nature of our role in America’s path, and find solidarity in the inherent values of liberty that support our core, when it comes to solutions to the dilemma of globalization and elitism, we are sharply divided.
While most activist movements suffer from a complete lack of solutions to the problems they claim to recognize, constitutional conservatives tend to have TOO MANY conceptual solutions to the ailments of the world. Many of these solutions rely upon unrealistic assumptions and methods that avoid certain inevitable outcomes. Such strategies center mostly on the concepts of “non-aggression” or pacifism idealized and romanticized by proponents of Gandhi, Martin Luther King Jr, and the anti-war movements of the 1960’s and 1970’s. The post-baby boomer generations in particular have grown up with an incessant bombardment of the “higher nature” of non-violence as a cure-all for every conceivable cultural ailment.
We have been taught since childhood that fighting solves nothing, but is this really true?
I can understand the allure of the philosophy. After all, physical confrontation is mentally and emotionally terrifying to anyone who is not used to experiencing it. The average “reasonable” person goes far out of their way on every occasion to avoid it. Most of the activists that I have met personally who deride the use of force against tyrannical government have never actually been in an outright confrontation of any kind in their lives, or if they have, it ended in a failure that scarred them. They have never trained for the eventuality. Many of them have never owned a firearm. The focus of their existence has been to hide from pain, rather than overcome their fears to achieve something greater.
There is nothing necessarily wrong with becoming an “intellectual warrior”, unless that person lives under the fantasy that this alone will be enough to defeat the kind of evil we face today.
Non-aggression methods rely on very specific circumstances in order to be effective. Most of all, they rely on a system of government that is forced to at least PRETEND as if it cares what the masses think of it. Gandhi’s Indian Independence Movement, for example, only witnessed noticeable success because the British government at that time was required to present a semblance of dignity and rule of law. But what happens if a particular tyranny reaches a point where the facade of benevolence disappears? What happens when the establishment turns to the use of the purge as a tool for consolidation? What happens when the mask comes completely off?
How many logical arguments or digital stashes of ethereal Bitcoins will it take to save one’s life or one’s freedom then?
Arguments For And Against Violent Action
The position against the use of “violence” (or self defense) to obstruct corrupt systems depends on three basic debate points:
1) Violence only feeds the system and makes it stronger.
2) We need a “majority” movement in order to be successful.
3) The system is too technologically powerful – to fight it through force of arms is “futile”, and our chances are slim to none.
First, violence does indeed feed the system, if it is driven by mindless retribution rather than strategic self defense. This is why despotic governments often resort to false flag events; the engineering of terrorist actions blamed on scapegoats creates fear within the unaware portions of the population, which generates public support for further erosion of freedoms. However, there is such a thing as diminishing returns when it comes to the “reach, teach, and inspire” method.
The escalation of totalitarianism will eventually overtake the speed at which the movement can awaken the masses, if it has not done so already. There will come a time, probably sooner rather than later, when outreach will no longer be effective, and self defense will have to take precedence, even if that means subsections of the public will be shocked and disturbed by it. The sad fact is, the faster we wake people up, the faster the establishment will degrade social stability and destroy constitutional liberties. A physical fight is inevitable exactly because they MAKE it inevitable. Worrying about staying in the good graces of the general populace or getting honest representatives elected is, at a certain point, meaningless. I find it rather foolish to presume that Americans over the next decade or two or three have the time needed to somehow inoculate the system from within. In fact, I’m starting to doubt that strategy has any merit whatsoever.
Second, the idea that a movement needs a “majority” of public backing to shift the path of a society is an old wives tale. Ultimately, most people throughout history are nothing more than spectators in life, watching from the sidelines while smaller, ideologically dedicated groups battle for superiority. Global developments are decided by true believers; never by ineffectual gawkers. Some of these groups are honorable, and some of them are not so honorable. Almost all of them have been in the minority, yet they wield the power to change the destiny of the whole of the nation because most people do not participate in their own futures. They merely place their heads between their legs and wait for the storm to pass.
All revolutions begin in the minds and hearts of so-called “outsiders”. To expect any different is to deny the past, and to assume that a majority is needed to achieve change is to deny reality.
Third, I’m not sure why non-aggression champions see the argument of statistical chance as relevant. When all is said and done, the “odds” of success in any fight against oligarchy DO NOT MATTER. Either you fight, or you are enslaved. The question of victory is an afterthought.
Technological advantage, superior numbers, advanced training, all of these things pale in comparison to force of will, as the Finnish proved during the Winter War. Some battles during that conflict consisted of less than a hundred Finns versus tens-of-thousands of soviets. Yet, at the end of the war, the Russians lost 3500 tanks, 500 aircraft, and had sustained over 125,000 dead (official numbers). The Finns lost 25,000 men. For every dead Finn, the soviets lost at least five. This is the cold hard reality behind guerrilla and attrition warfare, and such tactics are not to be taken lightly.
Do we go to the Finnish and tell them that standing against a larger, more well armed foe is “futile”? Do we tell them that their knives and bolt action rifles are no match for tanks and fighter planes? And by extension, do we go to East Asia today and tell the Taliban that their 30 year old AK-47’s are no match for predator drones and cruise missiles? Obviously, victory in war is not as simple as having the biggest gun and only the uneducated believe otherwise.
The Virtues Of Violence
The word “violence” comes with numerous negative connotations. I believe this is due to the fact that in most cases violence is used by the worst of men to get what they want from the weak. Meeting violence with violence, though, is often the only way to stop such abuses from continuing.
At Alt-Market, we tend to discuss measures of non-participation (not non-aggression) because all resistance requires self-sustainability. Americans cannot fight the criminal establishment if they rely on the criminal establishment. Independence is more about providing one’s own necessities than it is about pulling a trigger. But, we have no illusions about what it will take to keep the independence that we build. This is where many conceptual solutions are severely lacking.
If the system refuses to let you walk away, what do you do? If the tyrants would rather make the public suffer than admit that your social or economic methodology is better for all, how do you remove them? When faced with a cabal of psychopaths with deluded aspirations of godhood, what amount of reason will convince them to step down from their thrones?
I’m sorry to say, but these questions are only answered with violence.
The Liberty Movement doesn’t need to agree on the “usefulness” of physical action because it is coming regardless. The only things left to discern are when and how. Make no mistake, one day each and every one of us will be faced with a choice – to fight, or to throw our hands in the air and pray they don’t shoot us anyway. I certainly can’t speak for the rest of the movement, but in my opinion only those who truly believe in liberty will stand with rifle in hand when that time comes. A freedom fighter is measured by how much of himself he is willing to sacrifice, and how much of his humanity he holds onto in the process. Fear, death, discomfort; none of this matters. There is no conundrum. There is no uncertainty. There are only the chains of self-defeat, or the determination of the gun. The sooner we all embrace this simple fact, the sooner we can move on and deal with the dark problem before us.
Japan’s population declined by the most on record in 2013, highlighting the demographic challenges faced by Prime Minister Shinzo Abe in his campaign to revive the world’s third-biggest economy.
The population fell by 244,000, according to Health Ministry estimates released yesterday, a seventh straight year of decline. Births fell about 6,000 from a year earlier to 1,031,000 and deaths increased about 19,000 to 1,275,000.
Rising welfare costs for an ageing nation threaten to worsen a debt burden that is already twice the size of the Japanese economy. At the same time, a shrinking population caps consumer demand, making it harder for Abe to drive an exit from 15 years of deflation.
The government’s decision to raise a sales tax to 8 percent from 5 percent in April is aimed at helping to secure funds for social welfare payments. That move threatens to undermine the momentum building in the economy from unprecedented monetary stimulus.
Two witnesses said they saw troops striking a Buddhist monk [Reuters]
|Cambodian troops armed with batons and rifles have broken up a protest by textile workers demanding a doubling of wages as part of a nationwide strike by unions allied with the main opposition party.Witnesses said around 100 soldiers wearing riot gear and carrying assault rifles on Thursday used force to clear hundreds of workers protesting outside their factory about 20km west of the capital, Phnom Penh.
“Soldiers beat up everyone,” said labour rights activist Chhorn Sokha of the Community Legal Education Center. “They had sticks, electric batons, slingshots and stones.”
At least 10 protesters were detained and it was not known yet how many were hurt, she added.
Photographers, including one from Reuters news agency, were hit by batons while covering the protest. Two witnesses said they also saw troops striking a Buddhist monk.
The clashes mark a violent turn after two weeks of relatively peaceful strikes, marches and demonstrations of unprecedented scale in Cambodia. Security forces, which have a reputation for zero-tolerance, have so far exercised restraint.
The garment workers, whose industry is a major employer worth $5bn a year to the economy, have joined protests led by the opposition Cambodia National Rescue Party (CNRP), which says it was cheated out of more than two million votes in an election last July.
The CNRP has courted some 350,000 garment factory workers with the promise of a minimum monthly wage equivalent to $160, a proposal dismissed by the government as unsustainable.
Their support for the CNRP represents one of the biggest challenges to the 28-year rule of authoritarian Prime Minister Hun Sen.
He has been credited with steering Cambodia away from being a war-scarred failed state to a promising frontier market, but opponents say his power comes not from the people, but from the sway he has over independent institutions and allege he rigged the election, which he denies.
The strike has blocked roads briefly in Phnom Penh and threatened to cripple an industry that is the biggest foreign currency earner for Cambodia, one of Asia’s poorest states. The government offered on December 24 to raise the minimum wage from $80 to $95, but the unions have rejected that.
Gap Adidas, Nike and Puma are among big brands that outsource manufacturing of footwear and apparel to Cambodian factories, in part due to the cheaper labour costs than China.