Global recession grows closer as G20 summit fails in disarray, Europe stumbles on through debt fog!

G20 ends in disarray as Europe stumbles on through debt fog

Greg Keller

The G20 summit ended in disarray without additional outside money to ease Europe’s debt crisis and new jitters about Italy clouding a plan to prevent Greece from defaulting.

In Athens, Greece’s prime minister survived a confidence vote in parliament early on Saturday morning, calming a revolt in his Socialist party with a pledge to seek an interim government that would secure a vital new European debt deal.

In the end, only vague offers to increase the firepower of the International Monetary Fund – at some later date – were all the eurozone leaders were able to take home Friday after two days of tumultuous talks.

Greece's PM George Papandreou (R) and Finance minister Evangelos Venizelos smile after winning a vote of confidence.Greece’s PM George Papandreou (R) and Finance minister Evangelos Venizelos smile after winning a vote of confidence. Photo: Reuters

With their own finances already stretched from bailing out Greece, Ireland and Portugal – and the United States and other allies wrestling with their own problems – eurozone countries had been looking to the IMF to help line up more financing to prevent the debt crisis from spreading to larger economies like Italy and Spain.

Italy’s fate in particular is crucial to the eurozone, because its economy – the third-largest in the currency union – would be too expensive to bail out. The implications for the world economy are stark: The debt crisis that has rocked the 17-nation eurozone threatens to push the world economy into a second recession.

European leaders could point to one potential catastrophe averted: They stared down Greece’s prime minister and berated him into scrapping a referendum that threatened their European bailout plan. Greece’s politics are in upheaval as a result, but the shaky bailout plan appears back on track – for now.

“We want Europe to work,” French President Nicolas Sarkozy said on French TV when the summit was over. “I think today we can have confidence … but that’s not to say our troubles are behind us.”

In the end, the Greek question completely derailed Sarkozy’s aim of using the summit to show that Europe had sorted out its debt problem once and for all – and possibly convince some of them to pitch in to the rescue effort.

In the space of days, the already shrunken list of goals set out by France to close out its year as head of the G20 was scrapped, replaced by a nearly constant stream of shocking new developments and reversals in Europe’s long-running attempt to get control of Greece’s debt crisis.

That reality was perhaps best illustrated at the height of the summit on Thursday evening, when hundreds of journalists dropped what they were doing in the basement of Cannes’ Palais des Festivals and gathered around television screens to watch a live transmission from the Greek parliament in Athens, where Prime Minister George Papandreou was speaking.

The week of unending drama in Athens horrified its European partners, spooked global markets and overshadowed the summit in Cannes. The threat of a Greek default or exit from the common euro currency has worsened the continent’s debt crisis.

When the week started, Europe had finally reached an intricate, ambitious and fragile deal to try to rescue Greece and stop the crisis from spreading any further. The G-20 summit was supposed to solidify and clarify the deal and get the world economy back on the right track.

Then on Monday night, Papandreou shocked his European partners and domestic allies by announcing he would put the plan to a referendum. Markets panicked, as did many of the leaders coming to Cannes.

Sarkozy and German Chancellor Angela Merkel held a series of frenzied meetings, then summoned Papandreou on Wednesday. If you lose this referendum, you could lose the euro, they told him. And they froze a new (euro) 8 billion ($A10.66 billion) loan that Greece will soon need to pay government salaries.

On Thursday, Papandreou backed down and abandoned the referendum. The U-turn left his 2-year-old government teetering.

Now Europe’s leaders may find it is impossible to take back the shocking admission by Sarkozy and Merkel that an exit by Greece from the eurozone was no longer unthinkable.

And even as US President Barack Obama, Chinese President Hu Jintao and other leaders struggled to make sense of the Greek drama’s fast-shifting plot, another flashpoint emerged in Italy.

Market confidence in Italy’s ability to reduce its public debt and spur growth in its anemic economy has withered over recent weeks as the government weakened. MPs have defected to the opposition and some of Prime Minister Silvio Berlusconi’s ministers have openly suggested the government’s days may be numbered.

Market fears mounted on Friday in the wake of the confusion about Greece. Italy’s benchmark 10-year bond yield jumped 0.32 of a percentage point to 6.43 per cent, indicating a surge in investor worries about the country’s ability to repay its debts.

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Global recession grows closer as G20 summit fails

Cameron tells eurozone member states to solve their own problems. Link to this videoA world recession has drawn closer after a fractious G20 summit failed to agree fresh financial help for distressed countries and debt-ridden Italy was forced to agree to the International Monetary Fund monitoring its austerity programme.

Financial markets fell sharply after the two days of talks in Cannes broke up in disarray, amid concerns that Italy will now replace Greece at the centre of Europe‘s deepening debt crisis.

UK hopes that the Germans would relent and allow the European Central Bank to become the lender of last resort for the euro were also dashed.

On a day of unremitting gloom and yet more market turbulence, the Greek prime minister, George Papandreou, won a late-night confidence vote in his parliament after making a speech in which he promised to start powersharing talks to form a caretaker coalition government. Although he won the vote by 153-145, he is now expected to step down and a national unity government is expected to take over in the coming days.

Papandreou said he would visit the country’s president on Saturday to launch power-sharing talks “with the [opposition] parties … for the formation of a government of broad co-operation.”

In a sign that the spread of the debt crisis to Italy could break up the single currency, the chancellor, George Osborne, admitted the Treasury was undertaking crisis planning for a eurozone collapse.

The G20 deadlock led David Cameron to issue one of his starkest warnings about the impact on the UK economy, saying: “Every day the eurozone crisis continues and every day it is not resolved is a day that it has a chilling effect on the rest of the world economy, including the British economy.

“I am not going to pretend all the problems in the eurozone have been fixed. They have not. The task for the eurozone is the same as going into this summit. The world can’t wait for the eurozone to go through endless questions and changes about this.

“We, like the rest of the world, need the eurozone to sort out its problems. We need more to happen in terms of detail on the European firewall.”

Cameron hinted at worse to come, describing this as only “a stage of the global crisis”.

There had been hopes that the G20 would agree to increase IMF resources by as much as $250bn to more than $1tn, but disagreements about the wisdom of it, structure, size and contributors to the fund left world leaders forced to pass the issue on to a meeting of G20 finance ministers next February.

The French president, Nicolas Sarkozy, had been eager to flourish a figure both to reassure the markets and to top his chairmanship of the G20.

Cameron revealed the friction, saying: “The very worst thing would be to try to cook up a number without being very specific about who is contributing what. If you cannot do that, it is better to say the world stands ready to increase resources to the IMF as necessary.”

In the financial markets an early rise in share prices was reversed after it became clear that divisions in the G20 would prevent a deal in Cannes to boost the firepower of the European financial stability facility (EFSF) or the IMF. The yield on 10-year Italian bonds rose from 6.2% to 6.4%, the highest since the euro was founded, raising fears that the country would face problems financing its huge debts.

Obama, under pressure from Congress, was deeply reluctant to contribute to an expansion of IMF funds without clearer signs that the eurozone was sorting out its problems. Admitting that he had been given a crash course in European politics, Obama urged Greek and Italian parliaments to take decisive action to control their deficits and combat what he described as some of the psychological origins of the crisis.

He also urged the euro area to start putting some resources into the EFSF, which Europe hopes to turn into a bailout fund with at least €1tn to deploy.

But the German chancellor, Angela Merkel, said: “There are hardly any countries here which said they were ready to go along with the EFSF.”

Berlusconi was summoned to a late-night hotel meeting with Merkel, Sarkozy, the IMF director general, Christine Lagarde, and Obama, where he was told that the IMF was to start monitoring to ensure tough austerity measures are implemented. The measures include changes to the labour market, pension reform and the sell-off of state-owned assets.

Italy has debts of €1.9tn, or 120% of GDP, and if it followed Greece down the path towards a financial bailout, or default, the impact on the European banking system would be vast. Italy faces new tests in further auctions of its debt this month – it has to raise €30.5bn in November and a further €22.5bn in December.

Sarkozy denied that the demands on Berlusconi represented an IMF coup, saying: “We never wanted to change governments, either in Greece or in Italy. That is not our role, that is not our idea of democracy, but it’s clear that there are rules in Europe and if you exonerate yourself from these rules you exclude yourself from Europe.”

Berlusconi, facing defections from his own party, insisted he had invited the IMF to offer advice. Berlusconi said on Friday he had rejected an offer of funds from the IMF – “I don’t think Italy needs that” – and said his country was more solid than France or the UK.

British officials privately admit that potential economic collapse in Italy is now the single biggest concern gripping world leaders. One said: “We cannot have the Italians meeting in crisis every three days. We need some action.”

The UK government will now focus on urging its European partners to make progress, and will continue to support extra cash for the IMF. Cameron said he would not need UK parliamentary approval for this as the Commons has already agreed to an increase that would cover the proposed UK additional contribution.

The EFSF has €440bn ($608bn) available to lend, of which roughly half is expected to be consumed by bailouts of Ireland, Portugal and Greece. Italy has nearly €2tn in debt outstanding.

The European Central Bank has purchased Italian debt since August, but will not carry on doing so indefinitely. The need to bolster the EFSF has led the EU to pursue countries outside the euro zone with surplus cash, such as China.

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China’s Great Leap to Space Industry

China’s space industry to see accelerated expansion over next 10 years

BEIJING, Nov. 4 (Xinhua) — China’s space industry will develop quickly over the next 10 years as the country pushes ahead with its space programs after its first space docking on Thursday.

Lab modules, a space station and 10 to 20 spaceships will be launched into space over the next 10 years, the Shanghai Securities News said Friday, but did not reveal its source.

The country will spend around 300 billion yuan (47.47 billion U.S. dollars) in manufacturing those craft, according to the newspaper.

There are 20 or so space voyages being planned in China, the newspaper reported, citing Wu Ping, spokeswoman of China’s manned space program. The spaceflights will shore up demand for spacecraft manufacturing and launch services.

Space infrastructure has been included as one of China’s strategic new industries which the government plans to foster over the next five years.

China started its three-stage manned space program in 1992.

In the first stage the country sent the astronaut, Yang Liwei, into space as part of the Shenzhou-5 mission in 2003. It was the first time for China to send a person into space.

Also as part of the initial stage, two astronauts conducted extravehicular activities during the Shenzhou-7 mission in 2008.

Now during the second stage China is focusing on space docking.

It achieved its first space docking in wee hours of Thursday when Tiangong-1 and Shenzhou-8 connected in space.

The next significant events will be the launching of Shenzhou-9 and -10, and one of the missions will be manned.

China will complete the second stage after it establishes its own space lab around 2016, Wu said.

In the third stage, China plans to develop and launch multiple space modules, with a goal of assembling a 60-tonne manned space station in 2020.

“The successful docking means China will enter a phase of massive production of spacecraft. The space economy is about to take off,” according to Dongxing Securities.

Chinese Space Program

Roaming outer space in an airship, 1962

Roaming outer space in an airship, 1962

The succesful launching of the Shenzhou V, the Divine Vessel, on 15 October 2003, with taikonaut Yang Liwei on board, marked a giant leap forward in the Chinese space program that saw its origins in the 1960s. With this result, China joined the club of space-travelling nations that previously had been limited to the United States and the Soviet Union/Russian Federation. A previous Chinese launching , in 1970, had already brought a satellite into orbit that endlessly broadcast Dongfang hong (东方红, The East is Red), not the national anthem, but probably one of the best known Chinese tunes, eulogizing Mao Zedong. The success of this mission was solely ascribed to the genius of Mao Zedong Thought, which had guided the scientists and workers. In reality, Qian Xuesen (1911-2009), a rocket engineer formerly attached to the Jet Propulsion Lab in Pasadena, California, U.S., who had been expelled in the 1950s for suspected Communist sympathies, designed China’s first missiles, earning him the accolade of being the father of the space program.

Little guests in the Moon Palace, early 1970s

Little guests in the Moon Palace, early 1970s

In the early 1970s, the Chinese space program was brought to a halt as a result of the political turmoil of the Cultural Revolution. After Deng Xiaoping returned to power in the later 1970s, the program was revived in the 1980s. Clearly, the military industrial complex also benefitted greatly from this development, thus enabling the People’s Liberation Army to demonstrate how well it responded to the political demands to modernize. Space also appealed to the popular imagination, as can be seen from the relatively abundant use of space-related imagery in posters published in the 1980s and 1990s.

Our past, present and future, 1987

Our past, present and future, 1987

We are in the process of creation, 1994

We are in the process of creation, 1994

Under Jiang Zemin, however, the program, now named the 921 project, really took off in the 1990s. Successes in space exploration are very much seen as results of the CCP’s support for advanced scientific projects that is part and parcel of his theory, the “Three Represents“. The Party has appropriated the space mission rather as another justification for its continued rule, and attempts to use it even further to fan patriotism. In this patriotic discourse, space activities are another indication that demonstrate that China has shaken off the humiliation it has suffered in the past at the hands of the Western imperialist powers and is becoming a nation once more to be reckoned with.

Continue the struggle to realize the basic strategy and the historic duty of the Party, 2002

Continue the struggle to realize the basic strategy and the historic duty of the Party, 2002

Moreover, space exploration and scientific research in general are part of the Party strategy to combat specific religious behavior that it sees and terms as superstition. Even in materials aimed at Falun Gong adherents, space imagery has been used in an attempt to bring them back into the fold.

Uphold science, eradicate superstition, 1999

Uphold science, eradicate superstition, 1999

Aside from the numerous benefits for the CCP’s legitimacy, military developments and further space exploration, it stands to reason that the Shenzhou-mission will be exploited endlessly for propaganda purposes. Colonel Yang, for example, immediately was turned into an instant hero. According to media reports, 10.2 million sets of commemorative stamps have been issued. Unfortunately, no commemorative posters seem to have been published! In their absence, I reproduce some earlier artists’ impressions of Chinese space travel below.

A garden in outer space, 1985

A garden in outer space, 1985

Heaven increases the years, man gets older, 1989

Heaven increases the years, man gets older, 1989

Aside from the political use of the space mission, its success really has struck a chord with the people. They feel proud and consider China’s joining of the space family as another indication that the country is regaining some of the splendor and importance it had during its imperial past. As a result, a number of Chinese companies have included the Chinese conquest of space in their printed and television advertising. Jianlibao, a sports drink, already featured a Chinese taikonaut walking on the moon in one of its television commercials broadcast in early 2003.

Bringing his playmates to the stars, 1980

Bringing his playmates to the stars, 1980

On 12 October 2005, China launched its second manned spacecraft, the Shenzhou VI, for a multi-manned, multi-day mission. Colonels Fei Junlong (mission commander) and Nie Haisheng (mission operator) embarked on a flight scheduled to take three to five days, during which they will undertake a number of scientific experiments. The launch is part of a more encompassing space program that includes space walks, the docking of a capsule with a space module and the launch of a permanent space lab. Moreover, in 2006, China started with the selection of women astronauts.

Warmly welcome the visit to Hong Kong of the nation’s first taikonaut Yang Liwei and representatives from the manned space flight program, 2003


Leonard David, Shenzhou Secrets: China Prepares for First Human Spaceflight

Matthew Forney, “Great Leap Skyward”, Time Asia, vol. 162, n. 12 (29 September 2003

China Opens ‘Space’ Post Office on Docked Spacecraft

by Robert Z. Pearlman, Editor
Video still showing China's Shenzhou 8 spacecraft docked with the Tiangong 1 lab module on Nov. 3, 2011.
Video still showing China’s Shenzhou 8 spacecraft docked with the Tiangong 1 lab module on Nov. 3, 2011. CREDIT: China Central Television

China opened a new post office Thursday (Nov. 3) with a street address that is 213 miles (343 km) above the Earth.

Coinciding with the country achieving its first ever docking in space between the unmanned Shenzhou 8 spacecraft and Tiangong-1 space lab module, the “China Post Space Office” opened for business both on the ground in Beijing Aerospace City and, at least virtually, on board the newly established orbital complex.

Located on the ground near China’s mission control, the Beijing Aerospace Command and Control Center (BACC), the new space post office even has its own zip code that extends into orbit: 901001.

Like any postal facility, the office will process letters and, in this case, e-mails, making it possible for the public to write Chinese astronauts, or “taikonauts,” on the ground and in space. The space post office will offer domestic and international delivery as well as philatelic products, with more services expected to be introduced as China’s aerospace industry eventually expands.

Yang Liwei, who in 2003 became China’s first taikonaut in space, will serve as the post office’s honorary chief.

A partnership between the China Post Group Corporation and the China Manned Space Engineering (CMSE) Office, the post office will also sell philatelic collectibles depicting China’s major events in space. Among the first souvenirs offered are cancelled envelopes, or “covers,” celebrating the Shenzhou 8 and Tiangong 1 docking complete with a commemorative postmark. [Photos From China’s 1st Space Docking Mission]

China’s postal service has issued other commemoratives for its country’s previous space accomplishment but not through a dedicated “space” post office.

Shenzhou 8, which launched on Oct. 31 EDT, caught up with and docked at the Tiangong 1 space lab module on Nov. 2 EDT. The two unpiloted spacecraft will remain linked for 12 days before the Shenzhou detaches, backs away, and then approaches again. After the second demonstration of docking techniques, Shenzhou 8 will return to Earth.

In addition to demonstrating docking, Shenzhou 8 is also flying space life science experiments for both China and Germany.

The first docking established China as the third nation to achieve such a space feat with spacecraft designed to carry astronauts, after the United States and Russia. The orbital hookup marked a step forward toward China’s plans to deploy a manned space station by 2020.

Russia has operated a makeshift post office on its space stations since the 1970s and continues to operate such a service on the International Space Station.

The Russian space office consists primarily of a postmark device that is only used in space. Cosmonauts use the ink stamp to mark letters and postcards as having flown in orbit, but also use it to mark other space souvenirs including crew notebooks, equipment and patches.

Follow collectSPACE on Facebook and Twitter @collectSPACE and editor Robert Pearlman @robertpearlman. Copyright 2011 All rights reserved.

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