European Debt Crisis Continues to Bleed

The blame game begins as no solution is achieved for Greece, Italy or Spain.

By JAMES CHAPMAN | MAIL ONLINE | MAY 16, 2012

David Cameron will today express grave doubts about the survival of the euro amid fears that a collapse could drag Britain into a decade-long depression.

He will warn of ‘perilous economic times’ and launch a startling attack on the failure of Germany and other major European countries to take the necessary steps if they want to prevent the euro breaking apart.

‘The eurozone is at a crossroads – it either has to make up, or it is looking at a potential break-up,’ the Prime Minister will say, insisting that sticking to the Government’s austerity measures is the only way to ‘keep Britain safe’.

With signs of a full-blown bank run beginning in debt-stricken Greece, experts warned that if the crisis is not quickly contained, as much as 10 per cent of national income could be wiped out in countries across the EU.

Bank of England governor Sir Mervyn King said yesterday the single-currency bloc was ‘tearing itself apart without any obvious solution’, while former Labour Chancellor Alistair Darling said the crisis could condemn Britain to ‘years of stagnation’. In other developments:

■ Households face another painful squeeze this year after the Bank of England raised its inflation forecast and warned of rising mortgage costs;

■ Growth forecasts for this year were slashed from 1.3 per cent to 0.8 per cent, with no return to pre-financial crisis levels of growth before 2014;

■ Financial markets slumped further as Greek leaders braced themselves for  fresh elections after talks to form a coalition government failed;

■ In a glimmer of good news, unemployment dropped 45,000 to 2.63million, while the number in work jumped by 105,000 to 29.2million.

Economists believe the euro breaking up in disarray would herald a ten-year slump similar to that experienced by Japan in the 1990s. Japanese policymakers hesitated before tackling a banking crisis, and then struggled to revive economic growth, leading to a so-called ‘lost decade’.

Banks Can No Longer Hide the Collapse

By LUIS MIRANDA | THE REAL AGENDA | MAY 16, 2012

It’s been at least four years since the current financial collapse began. Back in 2008, when the crisis was already taking shape, the banks supported by international financial institutions such as the IMF, World Bank, Bank of Europe, Bank of England and the US Federal Reserve did not hesitate to calm everyone down saying that the earliest signs of a global financial collapse were nothing to worry about. It was all a minor cough, they said. But as time went by, those who warned about the coming depression were proven correct. The forecasts of local, regional and global crisis were unfortunately true.

Today, four years after the banks recognized the existence of a ‘difficult situation’ due to the accumulation of sovereign debt, we have confirmed, over and over, that the threat of a global financial collapse is greater than ever, and that it is just a matter of time before more countries declare bankruptcy. The crisis did not begin with Greece, as many would have us believe. It did not start with Iceland either. In fact, Iceland did what it had to do in order to clean its own house. The collapse began from the moment the bankers were set free to gamble away investments into fake financial products they invented to lure nations into fast and easy returns on their savings.

The signs of the crisis have been so alarming, that in the past few weeks the same entities that once said there was no crisis, and that the economy would begin to pick up, started to warn that the world was getting to edge of the precipice. Their acceptance of the inevitable did not come easy. It was only after reality made it impossible to hide the current financial collapse that the bankers had to come out and publicly accept that their debt based business model came to an end. However, this acceptance was not a clear ‘it is our fault’ kind of thing. Instead, the bankers sought to blame countries for their irresponsible management of savings and investments which the bankers themselves had helped to carry out by swindling politicians and bureaucrats to divest their people’s monies to put it all in one single bag; the banker’s bag.

The collapse couldn’t have happened without the help of accomplice politicians who opened their country’s doors to powerful financial institutions by deregulating their activity, permitting investment banks to fuse their operations with savings banks. Those banks then offered toxic financial products which countries around the world invested their monies in under the premise that their cash would be returned fast and multiplied many times over.

As we now know, in the case of Greece and Iceland deregulation brought about more debt rather than a healthy recovery. The difference is that Iceland decided to face their debt problem the right way, liquidating what needed to be liquidated instead of bailing out their banks and other institutions that had used their money to buy credit default swaps. Greece on the other hand decided to bend over to the bankers’ demands and began accept supposed financial aid provided by other European nations. As a result, the country is in a financial comma from where it will probably not wake up unless it exits the Euro zone and goes back to the drachma, its former currency. Greece’s exit from the Euro will not only allow it to start fresh, but also will free the country from the chains attached to it by powerful European bankers in command of the fraudulent Euro scheme. Greece’s only possible change of survival as a nation is to reject the payment of a gigantic illegally incurred debt acquired by corrupt politicians on behalf of their people, who were not consulted about it. Most of that debt, as it happened in the case of Iceland, does not belong to the Greek, but to banks themselves.

As we reported before, people have begun to realize that their trusted leaders defrauded them and one by one they’ve been voted out of office. Greece’s former Prime Minister was outed, France’s Sarkozy was also kicked out of office and Angela Merkel had giant loses in the latest state elections in Germany. Meanwhile, in the United States, the man who came with change written all over himself will most likely be changed next november. Any and all efforts made by the bankers to provide a rosy picture of reality has failed because reality has shown the dark side they didn’t want people to see.

World stocks and the euro have fallen in value as nations become less capable of paying their debt. Banks all over the Eurozone continue to be downgraded and borrowing rates for eurozone countries continue to go up as none of the nations are trusted to pay their dues. Attempts by Greece’s President to form a new government which he openly called to be composed by technocrats failed Tuesday and new elections will have to take place. The rejection by Greek politicians to form a government led by their president comes during a time when the country is incapable of paying the interests on its debt and with it the likelihood of Greece abandoning the Eurozone becomes more real than before.

The shaky conditions in the Mediterranean nation has prompted people to take their money out of the banks. In the last week, depositors have withdrawn at least 1 billion out of Greece’s banks and the trend is expected to continue. Meanwhile, the Bank of England has cut down its forecast for economic growth for Britain as it warned that the debt crisis was the biggest threat to the financial recovery. Suddenly the organizations that promoted indebtedness are now portraying themselves as the speakers of truth. In its announcement, the BoE says that growth will be limited to just 1 percent, as supposed to just over 1 percent, a number given by the bank in a previous financial report. The BoE also cut down its growth estimate for 2013. It now sets it at 2 percent, as supposed to 3 percent from its previous estimations in February.

The financial crisis’ effects have been augmented by the interconnectedness of the global economy, composed by economic blocks as supposed to independent nation-states. Nowadays, a sneeze in Italy will carry its waves to all the European Union. A protectionist measure in Argentina will impact the whole Mercosur. Another trend that shows the reach of the current financial crisis is the movement of large amounts of cash from one country to another. Investors seem to trust Germany more than Greece as they’ve bet their assets will be safer there. The interest rate which Germany must pay to borrow money for 10 years fell to the lowest level ever in early trading on Wednesday, which is a reflection of the growing concern about the need for Greece to carry out elections. “New elections are risky because they could confirm the population’s support for anti-austerity parties and lead eventually to a eurozone exit”, said bond strategist Jean-Francois Robin to AFP.

The latest voice of alarm came from the International Monetary Fund’s President, Christine Lagarde, who said that when it comes to Greece she is prepared for anything, and that she believes that a Greek exit from the Eurozone must be done in an orderly fashion. Both Angela Merkel and Greece’s President, Karolos Papoulias, have gone out fear mongering on the public they most make the right decision in the coming election, of face a “threat to our national existence”. According to the UK Telegraph European shares and the euro itself fell again. The stock markets, such as the Eurostoxx 600 fell 0.7 per cent to a year-low; Germany’s Dax dropped 0.8 percent and Spain’s Ibex was down 1.6 per cent. In London the FTSE100 slid 0.5 per cent. These are clear signs that not even the banks believe that a solution to the Greek crisis will emerge, or that a recovery will take place anytime soon.

Elsewhere in Europe, the worrisome situation in Spain, for example, further accelerates the collapse of the Euro system. The rate of borrowing for debtor nations which are seen as riskier borrowers jumped sharply this week. In Spain, the market rate on 10-year bonds increased to 6.49 percent, exactly .4 above the levels that analysts consider safe to sustain in the long run. Despite its decision to once again bailout commercial banks, Spain continues to struggle to keep its head over the water. The banks that the country is trying to ‘rescue’ from their knowingly bad investments are feeling their loses from their loans to the real-estate sector, which collapsed in 2008. Local media reported today that Moody’s, an entity created by the banks themselves, was ready to once again cut down the ratings of some 20 spanish banks just a couple of days after it cut down the ratings of 26 Italian banks.

Italy, Spain and Portugal are said to be the next countries that will join Greece in the financial bankruptcy wagon; a process that will only be delayed if the European bankers decide to continue with their policies to force the hand of countries which they are in complete control of to bailout more local banks that invested in heavily toxic financial products. This process is set to go on for as long as the bankers need in order to further consolidate power in Europe and the United States. The final implosion will occur after the banks have absorbed the largest and most important nations of the troubled European Union zone, which is originally composed by 17 countries.

Angela Merkel is Latest Casualty of Global Uprising

Austerity is not popular anywhere.

REUTERS | MAY 13, 2012

Chancellor Angela Merkel’s conservatives suffered a crushing defeat on Sunday in an election in Germany’s most populous state, a result which could embolden the left opposition to step up its criticism of her European austerity policies.

The election in North Rhine-Westphalia (NRW), a western German state with a bigger population than the Netherlands and an economy the size of Turkey, was held 18 months before a national election in which Merkel is expected to fight for a third term.

She remains popular in Germany for her steady handling of the euro zone debt crisis, but the sheer scale of her party’s defeat leaves her vulnerable at a time when a backlash against her insistence on fiscal discipline is building across Europe.

According to first projections, the centre-left Social Democrats (SPD) won 38.8 percent of the vote and will have enough to form a stable majority with the Greens, who scored 12.2 percent.

The two left-leaning parties had run a fragile minority government for the past two years under popular SPD leader Hannelore Kraft, whose decisive victory on Sunday could propel her to national prominence.

Merkel’s Christian Democrats (CDU) saw their support plunge to just 25.8 percent, down from nearly 35 percent in 2010, and the worst result in the state since World War Two.

“This is not a good evening for Merkel,” said Gero Neugebauer, a political scientist at Berlin’s Free University.

“The SPD is strengthened by this election, which will stir things up in Berlin.”

The blow comes only two days before France’s new president, Socialist Francois Hollande, is due to visit Berlin and press Merkel for a shift away from austerity and more emphasis on growth-oriented measures in Europe.

Other big countries like Italy also want Merkel to take a more balanced approach to the debt crisis and an election in Greece last week showed massive public resistance to tough austerity.

SPD MOMENTUM

Hollande’s victory, coupled with the NRW result, is bound to give the SPD, which still trails Merkel in national opinion polls, new momentum before the federal vote in the autumn of 2013.

The chancellor needs the support of her rivals to pass a new “fiscal compact” that is meant to anchor budget discipline across the EU. The SPD is already pressing her to delay a parliamentary vote on the pact, keen for her to commit to new growth measures beforehand.

Many in her party will blame the result on regional leader Norbert Roettgen, Merkel’s environment minister in Berlin, who bungled his campaign early on by refusing to commit to staying in the state in the event of a loss.

Roettgen ran on a platform of budget consolidation in a state that, with 180 billion euros in debt, is Germany’s most indebted. Kraft, on the other hand, advocated a go-slowly approach to debt reduction, emphasizing the need to invest in cities, education and childcare.

In that sense, the result will be seen by some as a double defeat for Merkel. Voters in NRW not only rejected her party but also the austerity measures that she has forced on struggling southern states like Greece, Spain and Portugal.

The Free Democrats (FDP), a pro-business party that rules in coalition with Merkel’s conservatives at the federal level, scored 8.6 percent to make it back into the state assembly. The party hailed the result as proof of a comeback after a collapse in support over the last three years.

The upstart Pirates, a new party that campaigns for internet freedom, continued their strong run at regional level, making it into their fourth straight state parliament, winning 7.6 percent of the vote.

NRW, a diverse state with struggling cities in the rust-belt Ruhr region and home to one third of Germany’s blue-chip companies, has a history of influencing national politics.

Seven years ago, a humiliating loss for then-Chancellor Gerhard Schroeder’s SPD in the state prompted him to call early elections, which he subsequently lost to Merkel. ($1 = 0.7726 euros)

Will the Global Political Shakedown be for the best?

By LUIS MIRANDA | THE REAL AGENDA | MAY 7, 2012

All around the world there seems to be a wave of people kicking their leaders’ rear ends. The most recent examples of these manifestations of non-conformity with business as usual politics began in Spain, where Mariano Rajoy took over the steering wheel from a failed Jose Luis Zapatero. Then came Greece, who changed its leader George Papandreou for Lucas Papademos.

Over the weekend, elections in France and Germany, carried on the ball as Moamer Khadafi’s friend, Nicolas Zarkozy was unseated as France’s president. He yielded his post to Mr. Francois Hollande. Angela Merkel suffered significant loses in Germany, as her centre-right government coalition lost power in the state of Schleswig-Holstein. By the end of this week, once the counting of the votes is over with, she could also be a victim of what seems to be a generalized european mini-political quake. In Europe, the only nation that seems to have escaped the technocratic attack was Iceland, whose leaders were not totally in the pockets of the bankers who have now taken over Greece.

Meanwhile, in the United States, most of the media has collaborated to pick Mitt Romney as the Republican candidate for president after Newt Gingrich and Rick Santorum realized they did not have enough cash to financed their campaigns or pay their debts. Both Santorum and Gingrich are lobbying Romney to take care of those debts in exchange for their vote and support. Most of the gains made by Romney comes from his beauty contest victories obtained during the caucus and primaries, which enabled him to get the highest number of unpledged delegates among his fellow candidates.

Different from the European contests, the American election system is more like a pageant, and the candidate is only elected during a national party meeting. Conventional wisdom would dictate that Romney would be elected as the man to face a decaying Barack Obama in November, and that is what the main stream media and the Republican Party’s machine has tried to do since both Santorum and Gingrich left the race. But in the middle of all the chicanery created to have Romney be the candidate for president, the wave of American discontent seems to be rising. Although many state caucuses and primaries were reported as won by Santorum, Gingrich and Romney himself, the official results in several of those states had not been announced. In the last two weeks, at least five states have changed the outcome of the previously announced results. It turns out that it wasn’t Romney, Santorum or Gingrich who won those states. It was Texas Representative Ron Paul.

Nevada, Washington State, Iowa, Maine and Louisiana are now official Paul’s states. He has also made significant gains in Minnesota and Missouri. So, while the Romney campaign was enjoying the feeling of inevitability, a hard working group of Paul supporters made sure that their votes had the weight they were supposed to have up until the last moment. The Paul campaign has quietly picked up an important number of delegates after Romney was officially ‘elected’ by the GOP to face Obama in November. With his recent gains, Paul is making strides to force a brokered convention in Florida, as supposed to allow Romney to enjoy a victory lap all by himself.

The issue with all the political revolts both in Europe and in the US is whether those revolts against the establishment corporate-backed candidates has rendered or will render anything positive for the people who booted their leaders out of office. In the case of Europe there has been little progress, especially in Greece. After George Papandreu left, the country accepted so-called financial aid from the European Union and adopted a harsh package of government austerity whose only significant result has been the increase in political suicides. Greece is in a worse condition than ever before. The thought that a rich country would eventually be able to pay for its debt in no longer the ephimerous guarantee that it was before. Greece, one of those supposed rich countries is now less capable of paying off his debt than before the sovereign debt problem became apparent. Neither is France, Spain, Portugal or any other European nation. So in the case of the Greek, the change has not been that great. It has been for the worse indeed.

In the case of Spain, things are much different. The government led by Mariano Rajoy has basically continues the same strategy that Zapatero had, which is a powerful government sponsored economy. Since Rajoy took power, the government has not done anything to generate more revenue other than raising taxes. It has also adopted austerity programs in exchange for financial bailouts as it increases government spending in traditional entitlement programs. Spain’s financial health is worse today that it was before, and perhaps it is even worse than Greece. In addition to the gigantic out of control debt, the socialist government continues to borrow money at a very high cost. The unemployment rate has reached 24% which has spurred major economic problems everywhere. Why will Spain be worse than Greece? Because its economy is four times the size of Greece. Economic activity in Spain adds up to just about 12% of the GDP generated in the Eurozone, which makes it the fourth most important in the old continent and number 10 in the world.  A Spanish default will cause a quake that whose ripples will be felt all over the planet. It could even mean the collapse of the Eurozone, analysts say.

France’s economic prospects aren’t that much better. This state of affairs together with Nicolas Sarkozy’s thirst for war cost him his position as president. But will the change be for the best? Has socialism ever worked for the best? The questions is not rhetorical as France’s new leader is a socialist. France lost its AAA rating, if that means anything, while its unemployment continues to rise, even with cooked numbers to over 10%. The country is today in a similar situation than Spain and Italy, drowning in economic insecurity and a growing inability to pay its debt, which is a country’s best presentation card to gain trust and obtain cheap credit. The lousy results of Sarkozy’s window dressing economic and fiscal policies resulted in no growth, to which he responded with more proposals to change the direction of the country. Too little too late, many would say as he lost the election to François Hollande. Mr. Sarkozy wanted to impose a an increase in the value-added tax on consumption, allow companies more flexibility to negotiate working hours and pay, and enshrine a balanced-budget requirement in the Constitution. His intentions did not pick up speed with the French, who found out about his secret dealing with murdered Libyan leader Moamer Khadafi.

Perhaps the only country that looks better is Germany, both financially and politically. But this state of affairs may not last too long. Angela Merkel is also managed to shine panic among the german people. The latest example of her failure to deliver is the loss of support, although small, could begin to shape what the national election will look like in 2013. As Germany seems to be the only European state with a stronger footing, a different issue becomes center stage. As reported by the Express newspaper, German foreign minister Guido Westerwelle is working secretly to create an all powerful European leadership position that will merge the powers of the presidency of the European Council and the European Commission while leaving the United Kingdom out of the group. “This is a plot by people who want to abolish nation states and create a United States of Europe,” said one of the opponents of the secret group. Tory MP Douglas Carswell said that it doesn’t matter how the powers of the Council and the Commission are arranged, so long as the technocrats in control of Europe don’t have the ability to dictate the people’s way of living. “They are not elected so they have no legitimacy.”

With the new Greek Prime Minister mortgaging the future of the country by adopting new but ineffective austerity programs and calling austerity a “patriotic duty” there doesn’t seem to be a way out for the Mediterranean nation that now lays in the hands of its creditors. Spain, on the other hand seems to be walking in Greece’s direction as its leaders begin to adopt similar policies of indebtedness and government spending without generating any real job opportunities for the growing numbers of unemployed — especially those under 25 years of age — who are now called the lost generation. “This is the least hopeful and best educated generation in Spain,”   said local blogger Ignacio Escolar. Unemployment for the young in Spain has reached 52% this Spring.

It all comes down to the US then, doesn’t it? Will Americans start a ‘summer spring’ that will continue the wave of much needed change, or will they continue to foolishly trust their corporate chosen leaders to bring about change instead of kicking them out for good? It was the Americans who fought the British for temporary independence after all, wasn’t it? With a skyrocketing debt of over $16 trillion and a growing unemployment rate — some 100 million Americans are out of the work force today — Americans will have to choose between the two party dictatorship model that has dragged them downthe hole they’re in today, or the better option that will indeed get the ball rolling to bring about real change. A major shakedown in the United States could be the trigger for a worldwide awakening and/or rise of unimpressed people who will clamp down on their governments out of control collusion with corporate interests. Someone needs to light up the match in order for the fire to ignite.

Does Germany Intend to Leave the Eurozone?

The Economic Collapse
March 12, 2012

For a long time, most analysts have believed that if someone was going to leave the euro, it would be a weak nation such as Greece or Portugal.  But the truth is that financially troubled nations such as Greece and Portugal don’t want to leave the euro.  The leaders of those nations understand that if they leave the euro their economies will totally collapse and nobody will be there to bail them out.  And at this point there really is not a formal mechanism which would enable other members of the eurozone to kick financially troubled nations such as Greece or Portugal out of the euro.  But there is one possibility that is becoming increasingly likely that could actually cause the break up of the euro.  Germany could leave the euro.  Yes, it might actually happen.  Germany is faced with a very difficult problem right now.

German Chancellor Angela Merkel's Party has passed legislation that would allow the country to leave the Eurozone.

It is looking at a future where it will be essentially forced to bail out most of the rest of the nations in the eurozone for many years to come, and those bailouts will be extremely expensive.  Meanwhile, the mood in much of the rest of Europe is becoming decidedly anti-German.  In Greece, Angela Merkel and the German government are being openly portrayed as Nazis.  Financially troubled nations such as Greece want German bailout money, but they are getting sick and tired of the requirements that Germany is imposing upon them in order to get that money.  Increasingly, other nations in Europe are simply ignoring what Germany is asking them to do or are openly defying Germany.  In the end, Germany will need to decide whether it is worth it to continue to pour billions upon billions of euros into countries that don’t appreciate it and that are not doing what Germany has asked them to do.

German Chancellor Angela Merkel’s Christian Democratic Union party recently approved a resolution that would allow a country to leave the euro without leaving the European Union.

Many thought that the resolution was aimed at countries like Greece or Portugal, but the truth is that this resolution may be setting the stage for a German exit from the euro.

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