COMMENT: We believe very strongly in what we are doing here. Nonetheless, it gets (expletive deleted) frustrating at times. We sure wish more folks would take to heart what we do here.
We sure wish more of you would post links to this material on other websites/chat groups.
One who clearly gets it is the vigilant “Pterrafractyl”, who alerts us to the two stories below.
We have noted many times in the past that the Euro/EMU is the realization of a German blueprint for conquering first Europe and then the world.
It is apparent from the Bloomberg News article below that, as far as Europe is concerned, “Mission Accomplished.”
With American banks potentially vulnerable to a European banking crisis, we may see the U.S. economy brought down in time to see “verMITTler” Romney installed as U.S. President. (Although such a banking crisis would not be Obama’s fault, the damage to the U.S. economy from failing European banks will inevitably be blamed on the incumbent. This election, already shaping up to be much closer than it should be, will be decided by the economy.)
You can bet that the “Occupy” movement, already manifesting the agent-provacateur, street jackass characteristics that I forecast at its birth last fall, will help to heap the blame on Obama. (“Occupy Wall Street,” like WikiLeaks, like the “Arab Spring,” like Americans Elect, like the Naderoids of 2000, are, basically far-right wing/Underground Reich/intelligence operations dressed up to look like “progressive” movements.)
EXCERPT: The euro currency is a malady that condemns at least a generation of Greeks, Italians, Spaniards, Portuguese and Irish to the economic infirmary.
In these nations, unemployment rates are now at their highest levels in recent decades, and there are few prospects for recovery in sight. The economists and politicians who created the system still proclaim it can survive. Their time would be better spent recognizing they made a bad mistake and preparing for an orderly dismantling of the euro before the damage spreads and further undermines European unity.
The problem isn’t just the region’s lack of competitiveness or its budget deficits or the high stock of existing government debt, which the International Monetary Fund now puts at 90 percent of the euro area’s gross domestic product (see Table 5 in this report). It is all of the above, compounded by five years of complete political denial.
For three years, capital has been fleeing Europe’s periphery for Germany. That country’s liquid banks, competitive labor markets and sound fiscal policies have made it the ideal location in Europe for investment. The periphery’s illiquid banks are sharply contracting credit to the productive sector, even as their governments are cutting back and political protests are mounting. Wages are too slow to adjust to dent these powerful forces: Germany looks ever more attractive for investors, further exacerbating the imbalances that brought us to this point.
“Eurodammerung” by Paul Krugman; The New York Times; 5/13/2012.
EXCERPT: Some of us have been talking it over, and here’s what we think the end game looks like:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
And we’re talking about months, not years, for this to play out. [Just in time for the U.S. elections–D.E.]
Der Speigel agrees: it’s time for Greece to go:
I should also point out that despite the machinations of malcontents......I’ve participated in one of the biggest pro-Democrat forums in the country for a little while now and it does seem that the majority of the OWS activists there at least there, are very much pro-Obama and anti-Ron Paul, at least in the sense of ‘I’ll vote for the lesser of the two evils’, for lack of a better term.
And let’s not forget the looming threat of congress refusing to raise the debt limit and shutting down the government this fall. John Boehner is about to give a speech at a Pete Peterson Foundation event, and he appears to be planning on a debt-limit government shutdown showdown:
As von Clausewitz puts it, war is politics by other means. It’s Economic warfare
While I might not agree with Japan’s Prime Minister that the eurozone crisis represents the ‘biggest’ threat to Japan’s economy (Fukushima Daiichi Reactor 4 has surely secured that coveted title), it’s worth remembering that the eurozone crisis is heating up at a time when Japan’s economy is still melting down.
With a new round of Greek elections slated for next month and talk of an official Greek exit from the eurozone — the much feared ‘Grexit’ — a
runjog on the Greek banks is underway. So this, of course, is a time when the ‘confidence’ of the ‘market’ in the ‘credibility’ of the Greek financial system and the larger eurozone is going to be a large premium if th ECB wants to avoid spooking the markets even more. I’m not sure this is the ECB’s most confidence-inducing move:@Steven–
You are making a serious ideological mistake.
It is NOT about right and left.
It is about right and wrong.
Pol Pot, Stalin and Mao constitute no acceptable alternative to the right.
And as far as this country goes, you continue to make the fundamental mistake of failing to understand that, in the US, the so-called “left” is run by the intelligence community and the far right.
You don’t get an instant national phenomenon like the “Occupy” movement from a handful of lefties meeting in a goddamn apartment in NYC.
Whatever “Mother Jones” says.
As FDR said, “In politics, nothing happens by accident.”
You don’t get a phenomenon like “The Muslim Brotherhood Spring” arising out of some damned shopkeeper in Tunisia torching himself.
You DO get something like that from an intelligence operation begun under Bush and continued under Obama.
As I have documented.
You are too young to remember Bush I, but just before leaving office, he invaded Somalia, setting the stage for “Black Hawk Down,” Al Qaeda, 9/11 etc.
Cheers,
D
Thank you Dave for saying that. On my blog, I make it a duty to swing on “both sides of the plate”, to use a baseball metaphor. Communism or socialism is another form of fascism but instead of being based on the power of corporations, it is on a very strong central state and marxist-leninist ideas. So everytime I have an occasion to punch something that is marxist,leninist, socialist or communist, totalitarian in other words, I don’t miss the shot.
I agree with you that the Left in general and the Occupy movement is run by the intelligence community and the far right. We do have serious “student protests” here in Montreal, besides our own “Occupy Montreal” phenomenon, and the fingerprints of the intelligence community are all over the place. One has to be blind not to see that, but unfortunately, I seem to be among the few ones who do. I have tried to warn my fellow citizens about it and I produced two videos and an article. For those who read and/or understand French, that may interest you.
Best.
http://www.youtube.com/watch?v=GsW5zk8B6kU
http://www.youtube.com/watch?v=tISuC9Ur2Io
http://lys-dor.com/2012/04/29/loperation-de-destabilisation-du-quebec-deuxieme-chapitre-lascension-fulgurante-de-larchange-gabriel-nadeau-dubois/
The logic of fascism and our imperialist money system excludes anything like a permanent limit to popular debt. The ongoing destruction of any possibility of democracy demands that military spending continually increase as a percentage of the whole while the population is increasingly impoverished. If a debt limit were imposed it would only last as long as any remnant of social spending still existed. To keep it in place after that would limit military expenditures and actually begin to reduce the public obligation through inflation. This system will reach no point of stability, even if the majority of healthy laborers are held to minimum subsistence. It will either collapse completely or morph into a new form. Whatever control system of involuntary servitude replaces it, these discussions of public debt as anything but occult slavery will seem trivial.
As a case in point for the systemic and bottomless avarice of the ruling class:
http://www.latimes.com/news/opinion/commentary/la-oe-ehrenreich-stealing-from-the-poor-20120517,0,7201749.story
The poster case for government persecution of the down and out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room and board charges for her 16-year-old son’s incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her ongoing incarceration.
The age of Arbeit Macht Frei is just beginning.
A moment of clarity from Bank of England policymaker Adam Posen:
Followed by a moment of bewilderment from Bank of England policymaker Adam Posen:
So the Bank of England’s biggest advocate for more stimulus just got hired to lead the Pete “austerity” Peterson Institute. That must have been one interesting job interview.
Caveat: I recognize & understand the source website is dubious. However, perhaps this story will be verified & followed-up on elsewhere in the coming days. The striking headline does not get much development in the story itself, as per usual with the Daily Mail.
http://www.dailymail.co.uk/news/article-1251136/Spanish-intelligence-probe-debt-attacks-blamed-sabotaging-countrys-economy.html
Spanish intelligence probe ‘debt attacks’ blamed for sabotaging country’s economy
By MAIL FOREIGN SERVICE
UPDATED: 10:58 EST, 15 February 2010
Spain’s intelligence services are investigating the role of investors and media in debt market turbulence over the last few weeks.
The National Intelligence Centre (CNI) is looking into ‘speculative attacks’ on Spain following the Greek debt crisis, according to El Pais newspaper.
‘The (CNI’s) Economic Intelligence division... is investigating whether investors’ attacks and the aggressiveness of some Anglo-Saxon media are driven by market forces and challenges facing the Spanish economy, or whether there is something more behind this campaign,’ the newspaper added.
The report comes days after Public Works Minister Jose Blanco protested ‘somewhat murky manoeuvres’ were behind financial market pressure on Spain.
‘None of what is happening in the world, including the editorials of foreign newspapers, is coincidental or innocent,’ Blanco said.
Economists have cast doubt on forecasts that Spain’s economy will grow by some 3 per cent by 2012, on which the government has based predictions it will cut back on its gaping budget deficit.
Some economists have said Spain’s deficit could be more of a threat than Greece to the euro, the common currency of 16 European countries.
Spain’s deficit has soared to 11.4 per cent of its gross domestic product amid its deepest recession in decades, but the government has pledged to cut the gap back to a eurozone limit of 3 per cent by 2013 by cutting 50 billion euros in spending.
Markets doubt that Spain will be able to cut back drastically on spending with unemployment running at 20 per cent and a big slice of the budget in the hands of fiercely independent regional governments.
Underscoring those doubts, the premium demanded by investors for buying Spanish rather than German government bonds has risen in recent weeks and the cost of insuring Spanish bonds against default by the government has also risen.
Meanwhile, Euro zone finance ministers will exert more pressure on Greece to implement planned budget deficit cuts at a meeting on Monday, as they look to avoid having to deliver on a pledge of support for Athens.
They are not expected to ask Greece for additional fiscal measures until after a review of Athens’ situation in March, although they may discuss what extra steps Greece could be asked to take if it does not show progress, sources said.
European leaders told Greece on Thursday it must cut its budget deficit by 4 percentage points this year, from 12.7 per cent of GDP, and bring it below the EU ceiling of 3 per cent by 2012, moves that Athens has said it will make.
That message will be reiterated by finance ministers from the 16 countries using the euro at a meeting on Monday.
‘For 2010, Greece already has commitments in place. Greece must simply be precise about what it is going to do (to get there),’ a senior EU source said last week.
‘(Any) additional measures are for 2011 and 2012.’
EU leaders are hoping that pressure and a concerted effort by Greece will be enough to get on top of the country’s deficit and debt problems and assuage markets.
But they have said they are prepared to take ‘determined and coordinated’ action to safeguard financial stability in the euro area if needed.
That was designed to send a signal to the bond and currency markets — where Greek yields have come under intense pressure and the euro has weakened — that Greece will not be allowed to default on its debt and that the euro is not threatened.
But leaders did not specify what they would do to support Greece if it came to it, a lack of detail that has left markets with a reason to discount both Greece and the euro.
In a statement after the EU leaders’ summit last week, European Central Bank President Jean-Claude Trichet noted Athens’ commitment to do whatever was necessary, ‘including adopting additional measures’ to ensure its budget deficit cut target was implemented.
The premium investors demand to hold 10-year Greek government bonds rather than benchmark German Bunds rose to 302 basis points on Monday, from 275 bps late on Thursday, and the euro was trading down at 1.3610 to the dollar.
Concerned about how the market is exploiting Greece’s weakness, and by extension that of the euro, euro zone finance ministers could also discuss measures to restrict short-selling of Greek debt via credit default swaps, one source said.
While euro zone finance ministers are agreed that the primary responsibility lies with Greece to get its fiscal and economic house in order, Athens’ determination to act is being tested by unions, which don’t want to see spending cuts.
With unemployment rising in Greece and social unrest always just below the surface, deep budget cuts and higher taxes could put the Socialist government on a collision course with the people.
‘Greece must do what it must do. If they do that, there will be no need for specific measures,’ one euro zone source involved in the preparations of Monday’s meeting said.
‘If they don’t do that, there will be a show of determined and coordinated action, which is unspecified as yet,’ he said, hinting at the financial support measures that could be taken.
Such measures will not be discussed on Monday because it was too early, several euro zone sources said. Greece was still able to borrow money on the market and detailing rescue steps now would send a signal that the situation was critical already.
‘The ministers are very reluctant to define anything ex-ante. When there is a problem, they will sit down and hammer it out in 30 minutes,’ a second euro zone source said.
Eurogroup Chairman Jean-Claude Juncker told the German Sueddeutsche Zeitung newspaper in an interview on Saturday there were instruments available for an intervention that could be used when necessary, but he would not name any at this stage.
On Monday and Tuesday, EU finance ministers will endorse the Greek deficit cutting plan which has already been approved by the European Commission, the EU executive arm.
They will also step up the 27-nation bloc’s disciplinary budget procedure against Athens to the last stage before sanctions. If Athens does not take the action recommended by the ministers to cut the deficit, the EU could fine it.
‘There will be more pressure on Greece to deliver rather than more work in preparing the euro zone for a scenario that Greece fails to deliver,’ the first euro zone sourced said.
http://www.nytimes.com/2012/05/18/opinion/krugman-apocalypse-fairly-soon.html
May 17, 2012
Apocalypse Fairly Soon
By PAUL KRUGMAN
Suddenly, it has become easy to see how the euro — that grand, flawed experiment in monetary union without political union — could come apart at the seams. We’re not talking about a distant prospect, either. Things could fall apart with stunning speed, in a matter of months, not years. And the costs — both economic and, arguably even more important, political — could be huge.
This doesn’t have to happen; the euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality; they need to stop temporizing and, for once, get ahead of the curve.
I wish I could say that I was optimistic.
The story so far: When the euro came into existence, there was a great wave of optimism in Europe — and that, it turned out, was the worst thing that could have happened. Money poured into Spain and other nations, which were now seen as safe investments; this flood of capital fueled huge housing bubbles and huge trade deficits. Then, with the financial crisis of 2008, the flood dried up, causing severe slumps in the very nations that had boomed before.
At that point, Europe’s lack of political union became a severe liability. Florida and Spain both had housing bubbles, but when Florida’s bubble burst, retirees could still count on getting their Social Security and Medicare checks from Washington. Spain receives no comparable support. So the burst bubble turned into a fiscal crisis, too.
Europe’s answer has been austerity: savage spending cuts in an attempt to reassure bond markets. Yet as any sensible economist could have told you (and we did, we did), these cuts deepened the depression in Europe’s troubled economies, which both further undermined investor confidence and led to growing political instability.
And now comes the moment of truth.
Greece is, for the moment, the focal point. Voters who are understandably angry at policies that have produced 22 percent unemployment — more than 50 percent among the young — turned on the parties enforcing those policies. And because the entire Greek political establishment was, in effect, bullied into endorsing a doomed economic orthodoxy, the result of voter revulsion has been rising power for extremists. Even if the polls are wrong and the governing coalition somehow ekes out a majority in the next round of voting, this game is basically up: Greece won’t, can’t pursue the policies that Germany and the European Central Bank are demanding.
So now what? Right now, Greece is experiencing what’s being called a “bank jog” — a somewhat slow-motion bank run, as more and more depositors pull out their cash in anticipation of a possible Greek exit from the euro. Europe’s central bank is, in effect, financing this bank run by lending Greece the necessary euros; if and (probably) when the central bank decides it can lend no more, Greece will be forced to abandon the euro and issue its own currency again.
This demonstration that the euro is, in fact, reversible would lead, in turn, to runs on Spanish and Italian banks. Once again the European Central Bank would have to choose whether to provide open-ended financing; if it were to say no, the euro as a whole would blow up.
Yet financing isn’t enough. Italy and, in particular, Spain must be offered hope — an economic environment in which they have some reasonable prospect of emerging from austerity and depression. Realistically, the only way to provide such an environment would be for the central bank to drop its obsession with price stability, to accept and indeed encourage several years of 3 percent or 4 percent inflation in Europe (and more than that in Germany).
Both the central bankers and the Germans hate this idea, but it’s the only plausible way the euro might be saved. For the past two-and-a-half years, European leaders have responded to crisis with half-measures that buy time, yet they have made no use of that time. Now time has run out.
So will Europe finally rise to the occasion? Let’s hope so — and not just because a euro breakup would have negative ripple effects throughout the world. For the biggest costs of European policy failure would probably be political.
Think of it this way: Failure of the euro would amount to a huge defeat for the broader European project, the attempt to bring peace, prosperity and democracy to a continent with a terrible history. It would also have much the same effect that the failure of austerity is having in Greece, discrediting the political mainstream and empowering extremists.
All of us, then, have a big stake in European success — yet it’s up to the Europeans themselves to deliver that success. The whole world is waiting to see whether they’re up to the task.
Here’s a fascinating example of the inherent systemic challenges in monetary union: One of the more interesting quirks we’re now seeing during this time of crisis is that interest rates within the eurozone seem to move in opposite directions, with interest spikes in place like Spain coinciding with record low interest rates in Germany. This bifurcation of the eurozone economies is somewhat ironice given the stated aim of the eurozone to eventually homogenize the continent. And it sort of makes sense that we would see this kind of behavior...after all, if investors want to move their money out of troubled eurozone economy, one of the best safe-havens around would be Germany since its currency is increasingly undervalued as the eurozone crisis chugs along and Germany’s neighbors fall further and further into economic dispair. Plus, there’s no transaction costs of converting to a new currency. So this isn’t particularly surprising, but still interesting to watch since the world is sort of in uncharted territory with respect to large currency unions undergoing death spasms. And because it was a housing bubble in places like Spain and Ireland that really led to the crisis in the first place (Greece really is the only exception) it’s somewhat ironic that and subsequent plunge in German interest rates is leading to a new housing bubble forming...in Germany. And that, of course, has the Bundesbank and ECB all on edge over inflation, leading to calls for the ECB to raise interest rates. But, since that move by the ECB would send the eurozone’s ailing economies back into a tailspin (more so), the ECB is going to be forced to decide between a mild fever in the core or amputation of some limbs:
Ooooo...3–4% infation. That must sound awful to the 50% of the Spanish youth that can’t find a job. Can we call it the Weimarzone yet?
Pun alert!
***
I found this to be rather un-interesting:
The pun alert has been cancelled.
Ha! ‘Ransom’. Priceless.
Well, on second thought it’s not exactly priceless...sometimes moments of amusement come with a 19 billion euro price tag.
And then there’s the loss of national dignity when stunts like this are pulled and that loss is hard to put a price on.
So yeah, on third thought I guess it is sort of priceless...
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