Well it looks like the much touted Euro economic package for Greece may be coming apart more quickly than expected, thanks to the bombshell announcement by Greek PM George Papandreou. Papandreou has decided, apparently without consulting anyone else, that the package should be put up for a vote. As the Wall Street Journal points out, a no vote could be disastrous:
A "yes" vote in the referendum could deflate the massive street protests and strikes that threaten to paralyze Greece as it tries to enact a brutal austerity program to earn rescue loans from the euro zone and the International Monetary Fund.
A "no" vote, however, could bring down the government and cut off international funding for Greece, leaving the country facing a financial meltdown.
Of course the country is already facing a financial meltdown, austerity measures have sparked violent protests for months and the purpose of the package agreed upon by European leaders was designed to help avert a meltdown and save both the Greek economy (as much of it as can be saved), while propping up the Euro.
As you might imagine, the surprise announcement was not favorably met by other European leaders. In fact, it wasn’t met favorably by a lot of Greek leaders who apparently had no idea that a referendum was in the offing.
Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, refused to rule out a Greek debt default.
"The Greek prime minister has taken this decision without talking it through with his European colleagues," he said in Luxembourg.
Asked whether a Greeks "no" vote would mean bankruptcy for Greece, Juncker responded: "I cannot exclude that this would be the case, but it depends on how exactly the question is formulated and on what exactly the Greeks people will vote on."
I think most understand that no matter how the “question is formulated”, a vote against the plan would most likely send Greece spiraling down the drain and the fear is it would take the Euro with it
Markets, which had calmed down after the plan was announced, have had the expected reaction to the Papandreou referendum plan. They’ve headed down:
Greek Premier George Papandreou said he will put the nation’s bailout deal through a referendum, potentially undoing a long-awaited agreement struck last week and sending European stocks down 3.3 percent. The region’s bank shares fell 6.4 percent.
"European leaders feel as if they’ve been blindsided by Papandreou," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.
He said the move underscored the current risk in Europe and threw a wrench into the region’s stability plan.
The Dow dropped 2% on the news.
While our attention is on the Palinization of Herman Cain, we need to really keep an eye on this impending crisis. If Greece has a referendum and the vote is “no”, what Cain did or didn’t do in the 1990s isn’t really going to matter much. We’ll have another financial tsunami headed our way and we’d better begin to batten down the hatches.
James Pethokoukis reminds us that if we’re not watching the European debt crisis, we should. The one thing Tim Geithner apparently got right was how it could effect the US negatively. Geithner said:
Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand.
And that’s the obvious truth. If you need to catch up, here’s an article in the Financial Times to bring you up to date (you may need to sign up or register to read it).
Pethokoukis then points to a report from Barclays Capital that details what Geithner was talking about:
Our baseline forecast assumes that policymakers will prevent the turmoil in Europe from leading to a full-blown financial crisis similar to 2008 and that US policymakers will not impose excessive fiscal tightening starting in 2012. If, by contrast, either of these risks is realized, the potential for another recession will increase substantially. We use the Fed’s stress scenario under the Comprehensive Capital Analysis and Review (CCAR) as an alternative scenario to our baseline, but ratchet up the intensity modestly and analyze its effect on the outlook for house prices.
1) Our modeling suggests that in a recession scenario, house prices, as measured by the CoreLogic headline index, could decline another 7% in 2012 . … The scenario posits declining real GDP for four consecutive quarters, with Q2 12 having the deepest decline at 6% (q/q saar).
2) Real disposable personal income also declines for four consecutive quarters, albeit with a one-quarter lag relative to the decline in GDP, and the unemployment rate moves persistently higher, peaking at 12.1% by the end of our forecast horizon. …
3) Furthermore, the rising unemployment rate suggests that delinquencies would push shadow inventory higher, putting downward pressure on distressed home prices. Together, the two effects send home prices significantly lower in 2012.
Or in simple terms, if Europe goes, so does the US. Housing down another 7% and unemployment up into the 12% area.
Obviously this is all based on modeling and plugging in various numbers. So just as obviously those numbers could be off a bit. However, the basic premise is correct. If Europe can’t solve its debt crisis, the US will also suffer and, as you can see, suffer mightily (check out the chart at the link).
I think the political implications are clear even for the most partisan among us.
Margret Thatcher boiled it down to its essence years ago – “the problem with socialism is you eventually run out of other people’s money”.
Janet Daley, writing the the UK’s Telegraph, hits a proverbial homerun with her macro look at the “situation” in which both the US and Europe find them selves. It’s not a pretty picture, but quite accurate. Per Daley, what we’re going through right now, at least on the European side of the pond, isn’t some esoteric debate about a crisis that will eventually be solved, it is the predictable endgame of the premise that a capitalist system can support an ever expanding social welfare state. Per Daley, the answer seems to be a pretty obvious “no”.
Her reasoning for her conclusion is painful for those who want to believe that such a premise is actually attainable. Let’s take a look:
The truly fundamental question that is at the heart of the disaster toward which we are racing is being debated only in America: is it possible for a free market economy to support a democratic socialist society? On this side of the Atlantic, the model of a national welfare system with comprehensive entitlements, which is paid for by the wealth created through capitalist endeavour, has been accepted (even by parties of the centre-Right) as the essence of post-war political enlightenment.
This was the heaven on earth for which liberal democracy had been striving: a system of wealth redistribution that was merciful but not Marxist, and a guarantee of lifelong economic and social security for everyone that did not involve totalitarian government. This was the ideal the European Union was designed to entrench. It was the dream of Blairism, which adopted it as a replacement for the state socialism of Old Labour. And it is the aspiration of President Obama and his liberal Democrats, who want the United States to become a European-style social democracy.
The left in this country can deny this all they wish, but Daley succinctly lays out the Democrat’s “ideal” in plain English. Any attempt to deny that is simply counter-factual. European-style social democracy has been the ideal of Democrats for years. And the fight over entitlements makes the point. The difference between the US and Europe is two-fold. We thankfully began pursuing that ideal much later than did Europe and the basic difference in make up between Europe and the US is the primary reason:
But the US has a very different historical experience from European countries, with their accretions of national remorse and class guilt: it has a far stronger and more resilient belief in the moral value of liberty and the dangers of state power. This is a political as much as an economic crisis, but not for the reasons that Mr Obama believes. The ruckus that nearly paralysed the US economy last week, and led to the loss of its AAA rating from Standard & Poor’s, arose from a confrontation over the most basic principles of American life.
Contrary to what the Obama Democrats claimed, the face-off in Congress did not mean that the nation’s politics were “dysfunctional”. The politics of the US were functioning precisely as the Founding Fathers intended: the legislature was acting as a check on the power of the executive.
Precisely. None other than Cokie Roberts noted the “problem” we have here that Europe doesn’t on one of the Sunday shows.
That “problem” and a different but eroding view of the role of government. And all though we’re on the precipice, that “problem” is all that have kept us from sliding into the pit Europe has dug for itself over the decades.
What is going on now is not the fault of the Tea Party, no matter how hard the spinners like David Axlerod and John Kerry attempt to make it so. In fact, the Tea Party contingent actually represents that fundamental but eroding view of the role of government and the “problem” Cokie Roberts refers too.
The Tea Party faction within the Republican party was demanding that, before any further steps were taken, there must be a debate about where all this was going. They had seen the future toward which they were being pushed, and it didn’t work. They were convinced that the entitlement culture and benefits programmes which the Democrats were determined to preserve and extend with tax rises could only lead to the diminution of that robust economic freedom that had created the American historical miracle.
And, again contrary to prevailing wisdom, their view is not naive and parochial: it is corroborated by the European experience. By rights, it should be Europe that is immersed in this debate, but its leaders are so steeped in the sacred texts of social democracy that they cannot admit the force of the contradictions which they are now hopelessly trying to evade.
Facts are a stubborn thing. They have a tendency to destroy beliefs and perceptions. The belief and perception of the “premise” that a capitalist system could forever support an expanding social welfare state is in the throes of being dashed upon the rocks of economic reality. That’s a harsh thing to see if it is your belief. And we all know the various stages of grief. Right now, the true believers are in the “denial” stage. The only one’s dealing in reality are the Tea Partiers. Like the canary in the coal mine, they’ve alerted us to a mortal danger that has been acted out in Europe and is now collapsing from within. They’ve accurately pointed to our problem and how it will lead to the very same conclusion. They’re demanding we stop pursuing that reckless and doomed “ideal” and return to our fundamental governing ideals – limited government, less costly government, less intrusive government.
And, of course, the true believers in the social welfare state, those who’ve gotten us into this mess and want to deny the problem and continue the pursuit of their destructive ideal are resisting with every fiber of their being and ironically, calling the Tea Partiers the radicals.
What the left can’t control though is the example of our future that Europe provides, like it or not:
No, it is not just the preposterousness of the euro project that is being exposed. (Let’s merge the currencies of lots of countries with wildly differing economic conditions and lock them all into the interest rate of the most successful. What could possibly go wrong?)
Also collapsing before our eyes is the lodestone of the Christian Socialist doctrine that has underpinned the EU’s political philosophy: the idea that a capitalist economy can support an ever-expanding socialist welfare state.
Phenomenally, while the problem becomes more and more undeniable, the solutions being considered are precisely the opposite of what is needed.
As the EU leadership is (almost) admitting now, the next step to ensure the survival of the world as we know it will involve moving toward a command economy, in which individual countries and their electorates will lose significant degrees of freedom and self-determination.
That’s right – those who, through the years, have managed to put us in this situation now think they need more control, intrusion and command, not less. Those who’ve managed, through their policies and ideology, to wreck the best economies on earth, want more power. They won’t let go of the belief, despite the reality. Take for example the Democrats almost single focus on higher taxes. They still believe they can have their cake (or your cake actually) and eat it too.
We have arrived at the endgame of what was an untenable doctrine: to pay for the kind of entitlements that populations have been led to expect by their politicians, the wealth-creating sector has to be taxed to a degree that makes it almost impossible for it to create the wealth that is needed to pay for the entitlements that populations have been led to expect, etc, etc.
The only way that state benefit programmes could be extended in the ways that are forecast for Europe’s ageing population would be by government seizing all the levers of the economy and producing as much (externally) worthless currency as was needed – in the manner of the old Soviet Union.
That is the problem. So profound is its challenge to the received wisdom of postwar Western democratic life that it is unutterable in the EU circles in which the crucial decisions are being made – or rather, not being made.
Daley speaks of the EU, but listen carefully to the left and the Democrats in this country. They’re offering exactly the same “solutions” and this administration is attempting that solution by executive fiat through regulation. Look at the health care grab as well. We’re headed down exactly the same road Europe has traveled and the left in this country is telling everyone to ignore the road signs telling us so.
The Tea Party has figured that out as have many on the right. But the left wants to go right on pretending it isn’t so:
We have been pretending – with ever more manic protestations – that this could go on for ever. Even when it became clear that European state pensions (and the US social security system) were gigantic Ponzi schemes in which the present beneficiaries were spending the money of the current generation of contributors, and that health provision was creating impossible demands on tax revenue, and that benefit dependency was becoming a substitute for wealth-creating employment, the lesson would not be learnt. We have been living on tick and wishful thinking.
Couldn’t agree more. We ‘radicals’ who’ve been saying this for years have been proven to be factually correct. It is an inconvenient truth the left doesn’t want to either accept or admit. So the still hold on to the belief that if they could only make the ‘rich’ pay their fair share, they’d find utopia still achievable. Reality, however, in the guise of the European experiment now imploding, already provides proof their theory has no basis in truth.
So what is the solution? Well in the short term Daley prescribes some bitter but necessary medicine:
So what are the most important truths we should be addressing if we are to avert – or survive – the looming catastrophe? Raising retirement ages across Europe (not just in Greece) is imperative, as is raising thresholds for out-of-work benefit entitlements.
Lowering the tax burden for both wealth-creators and consumers is essential. In Britain, finding private sources of revenue for health care is a matter of urgency.
More importantly though:
The hardest obstacle to overcome will be the idea that anyone who challenges the prevailing consensus of the past 50 years is irrational and irresponsible. That is what is being said about the Tea Partiers. In fact, what is irrational and irresponsible is the assumption that we can go on as we are.
Dead on. Fundamental change. Backing government out of our lives. And we’re dead meat if we don’t heed and act on the fact that the social welfare state is a zombie (but doesn’t yet know it) and we need to finally and irrevocably kill it, never let it rise again, and return to the ways which made us great and are enshrined in our founding documents.
As expected global market reaction to the US credit downgrade has been anything but positive.
Global stock markets sank again Monday as worries over the downgrade of U.S. debt outweighed relief at a European Central Bank pledge to buy up Italian and Spanish bonds to help the two countries avoid devastating defaults.
European markets shed their early momentum and losses were heavy in Asia. Most stocks were trading sharply lower amid mounting fears over the opening of U.S. markets, when traders will have their first chance to respond to Standard & Poor’s momentous decision to lower its triple A rating for the U.S.
"The reverberations from S&P’s downgrade are still being felt across the globe," said David Jones, chief market strategist at IG Index.
The European Central Bank’s buy of Italian and Spanish bonds – two Euro countries in deep financial trouble – at first seemed to allay the expected downturn. However that was later reversed and global markets saw a sharp downturn.
At this time one can only speculate what will happen in US markets, but the global sell off is not a good sign.
Monday’s trading came after one of the worst market weeks since the collapse of U.S. investment bank Lehman Brothers in 2008 – around $2.5 trillion was wiped off global stocks last week.
In Europe, Britain’s FTSE 100 index of leading British shares was down 1.7 percent at 5,157 while France’s CAC-40 fell 1.6 percent to 3,227. Germany’s DAX was 2.3 percent lower at 6,091.
Sentiment in Europe was hurt by an expected sell-off at the U.S. open – Dow futures were down 1.8 percent at 11,196 while the broader Standard & Poor’s 500 futures fell 2.1 percent to 1,173.
The one bright spot in an otherwise dismal picture is the US Treasuries market. And “bright spot” is a relative term considering the rest of the markets:
So far, the S&P downgrade doesn’t seem to be having too much of an impact on U.S. government bonds, known as Treasuries. The worry has been that the downgrade would prompt investors to demand more, but the yield on ten-year Treasuries has actually fallen.
"Early market reactions suggest that the treasury market will remain well supported," said Jane Foley, an analyst at Rabobank International. "Even though there may be no sharp sell-off in treasuries this week, S&P’s decision should at least provide a signal to the U.S. government that it may be foolhardy to continue to take its creditors for granted indefinitely."
Two points. One – yes, it should provide such a signal. However, if that signal isn’t acted upon and acted upon swiftly, then two – the treasury market will not remain well supported. Interest rates will rise on demand by investors and servicing our debt will cost more and more.
To add more fuel to the fire, there’s this:
"Investors are concerned about a rising risk of global recession, credit downgrades especially now in the eurozone, such as France, the threat of a major bank bust and a global liquidity trap as investors stay in cash," said Neil MacKinnon, global macro strategist at VTB Capital.
So much to watch and consider. While this may not be the most interesting news to read about, none is more vital. The problems in both Europe and the US have a far reaching effect on global markets. And they will have an effect, at some point, on everyone’s wallet. We’re in uncharted territory here, and unfortunately, there are no easy and painless ways to solve these problems.
So, where’s the UN, NATO and R2P? I mean, this should be bad enough to get them involved given the Libya scenario:
Syrian tanks took up positions outside the city of Hama on Saturday, where tens of thousands of people took to the streets to mourn the deaths of at least 65 protesters gunned down by security forces there the day before.
But wait, there’s more:
The government’s violent crackdown against a three-month-old popular uprising continued, with helicopter gunships killing 10 people in a neighboring province and residents of Hama bracing for a military assault that would be the first on the city since the government bombed it in 1982, killing at least 10,000 people.
Wow, that was enough to get Gadhafi the full might of the UN, NATO and the US to come down on him.
What is that? Is that the sound of hypocrisy I hear in DC, Europe and the UN? Inconsistency? Or just cluelessness?
So many were treated for gunshot wounds at local hospitals that blood supplies ran low, residents said. Throughout the night, loudspeakers on mosques normally used for calls to prayer urged people to donate blood.
Yeah, this isn’t anything like our illegal war in Libya, is it?
Allahpundit provides a roundup of quotes out of Europe concerning the celebration here of the death of Osama bin Laden. As you might expect, the latent anti-Americanism isn’t so latent anymore and the incident of bin Laden’s death provides the superior Euros a chance to do a little self-serving moral preening. For instance:
“At a press conference at Lambeth Palace, The Daily Telegraph asked [the Archbishop of Canterbury Rowan] Williams whether he thought the US had been right to kill bin Laden.
“After declining to respond initially, he later replied: ‘I think the killing of an unarmed man is always going to leave a very uncomfortable feeling, because it doesn’t look as if justice is seen to be done in those circumstances.’”
Really? It doesn’t? How does one define “justice” then? Certainly Europe doesn’t think “death” is justice regardless of how monstrous the deed is. Kill 3,000 people in NY plus Khobar Towers, two African Embassies and the USS Cole? Oh, and those subway deaths in London? Those deeds obviously don’t justify what just happened.
Nope - we should have caught him, tried him (and given him an international platform to spew his hate) and then locked him up? How’s that anymore justice than what happened? We have a mad dog on tape bragging about being the man responsible for all those deaths. We have intel that says he was going to kill more (attacking trains in the US on the 10th anniversary of 9/11). If ever justice was served anywhere, it was served on the night of May 1st in a compound in Pakistan. And no, I’m not uncomfortable in the least about that. Someone needs to remind the Archbishop that “justice” isn’t a process, it’s a result.
Next come those who would like to ignore the elephant in the room and those celebrations simply won’t let them do it:
“Nicolas Demorand, editor of the left-leaning French daily Libération, on Tuesday bemoaned the ‘toxic rhetoric’ of the campaign against terrorism. From that rhetoric, he wrote, stems ‘this base, uncomfortable joy, unprecedented in a democracy, that blew yesterday over the streets of New York.’
“Even the editor of the centrist weekly L’Express, Christophe Barbier, cautioned, ‘To victory one must not add provocation.’ He added: ‘To desecrate the cadaver or the memory of Bin Laden is to revive him. To cry one’s joy in the streets of our cities is to ape the turbaned barbarians who danced the night of Sept. 11. It is to tell them the ghastly competition continues between them and us.’”
Someone get a clue bat for Barbier will you? The “ghastly competition” does continue. Because they initiated it and haven’t said “uncle” yet. And it will continue until the murderous organization that has killed thousands over the years – primarily Muslims, btw – is destroyed, root and branch. Sniffing at the celebrations and calling them an “aping” of the barbarians is to use an equivalence that indicates moral cowardice that would welcome submission before resistance.
Finally, perhaps the most ironic condemnation comes from the country that was on the wrong side of two world wars, one of which required the civilized world rid itself of a monster that country put into power:
“The fashionable critique of Obama and the U.S. achieved its purest form on ARD Television, Germany’s equivalent of the BBC, where commentator Jörg Schoenenborn pompously observed that nothing good could come from Obama’s Bush-like breach of international law. ‘Al Qaeda will seek revenge,’ he asserts, ‘so, is the world any safer? No.’ Yet Americans dance in the streets, which Scheonenborn attributed to something essential, and essentially primitive, in the American character. The USA is, after all, ‘quite a foreign land to me. What kind of country celebrates an execution in such a way?’
I’ll take “primitive” over “barbaric”, “anti-Semitic”, and “murderous” any day. And no, Germany, you haven’t lived down your reputation yet. Not enough to take this sort of a position.
Of course AQ will seek revenge. But as mentioned above, they planned to attack anyway. So should we just sit back and let it happen? Would a few thousand more deaths have soothed your conscience enough to have you condone aggressive and justified action against the murderer? Or would it still have been considered a “primitive” action driven by blood lust? Instead, obviously, we should just roll over and allow these murderers to have their way. Apparently, that’s the European way.
There’s even more irony in this reaction though:
“[N]ow many of Obama’s erstwhile Euro-fans are feeling a twinge of buyer’s remorse. By ordering a covert raid on Pakistan that resulted in Osama bin Laden’s death at the hands of Navy SEALs, Obama has earned the kind of condemnation [from] Europe’s cognoscenti once reserved for his predecessor, George W. Bush…
I’m waiting for the first mention of “cowboy” to come floating across the Atlantic. It does make the point though that as long as you’re submissive and not aggressive in pursuing the best interests of the US, Euro’s will sort of, kind of pretend to like you. And we’ve all seen what that will buy. I wonder when the first calls for Obama’s Nobel Peace Prize to be withdrawn will begin?
I think Jonathan Tobin at Commentary best summarizes the reasons for Europe’s false and snobby self-righteousness:
It’s true that European snobbery is silly. But the factors underlying the Euro unwillingness to treat the battle with Islamist terrorism as a fight to the death are anything but a laughing matter. As Erlanger notes, the Europeans are genuinely afraid of the Islamic world, something that may have a great deal to do with the growing and increasingly assertive Muslim populations in Western European countries.
But the disdain for American joy about bin Laden’s death goes deeper than mere snobbery or concerns about local Muslims. It’s not just that Western European intellectuals don’t like the United States—they never have—but their unwillingness to countenance aggressive Western self-defense against Islamist terror is a function of their loss of belief in Western civilization itself. Many on the continent seem to have lost any sense that their countries and way of life as well as their faith is something worth defending. When it comes down to it that, and not the faux sophistication of Euro elites, is the difference between America and Europe these days.
For all of our problems and divisions, most Americans still believe in their country. All too many of our friends across the pond have lost faith in theirs. And that crisis in confidence, not good taste, is why Americans and not Europeans are celebrating the death of bin Laden.
It is a form of capitulation. If they can successfully continue to delude themselves into inaction by condemning our methods while draping themselves in false moral outrage, they can safely ignore the threat, even as it continues to build and subvert their own cultures. They don’t want to fight. They’ve already given up. All they want now is a way to justify their craven surrender. And that damn America keeps doing things that make that more and more difficult to do.
It’s something we’re ignoring, for the most part, as well:
Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.
But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.
With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The countries are trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits and pensions.
“We’re now in rescue mode,” said Carl Bildt, Sweden’s foreign minister. “But we need to transition to the reform mode very soon. The ‘reform deficit’ is the real problem,” he said, pointing to the need for structural change.
The reaction so far to government efforts to cut spending has been pessimism and anger, with an understanding that the current system is unsustainable.
Reality can be a real problem – in the real world. And Europe has begun to bump up against it. Greece is simply the worst of the bunch. The “social paradise”, as European nations have fashioned it with some variations here and there, is unsustainable. There are a number of reasons, not all having to do with economic profligacy. And we face precisely the same future problems as they are beginning to face now. For instance, just like Europe, we have fewer and fewer people paying for the retirement of more and more people. Unlike Europe, though, we’re projected to have a positive population growth in the future (not that it will make what we have promised to pay in the future any more affordable), whereas Europe has a negative population growth among native Europeans.
This sort of a drop in workers vs. pensioners is not at all uncommon, even here in the US. Unless something is done now, we stand a good chance here of having the very same problem Europe is now facing in the not too distant future.
According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.
One of the things the liberal side of the house likes to do is point to how little the Europeans spend on the various styles of government run health care they have. But since the financial crisis, which pushed the due date on all the debt they’ve piled up and promised to incur within their social welfare states, they’re talking about cuts to their health systems as well:
Figures show the severity of the problem. Gross public social expenditures in the European Union increased from 16 percent of gross domestic product in 1980 to 21 percent in 2005, compared with 15.9 percent in the United States. In France, the figure now is 31 percent, the highest in Europe, with state pensions making up more than 44 percent of the total and health care, 30 percent.
If you wonder why the Tea Party types and libertarians are screaming about cuts in spending and the size of government, it’s because they’ve been watching Europe, understand that’s the way this administration and the Democrats want to push us and are warning of the obvious eventual outcome of such an move. We have the opportunity now to stop what Europe will soon be going through.
But, as one French pensioner says:
“For years, our political leaders acted with very little courage,” he said. “Pensions represent the failure of the leaders and the failure of the system.”
And we’re in exactly the same position now for the very same reason.
Following yesterday’s announcement that Greek debt was downgraded to junk status, today Spain’s debt was downgraded as well. Spain is, in many ways the bellwether for Europe’s debt crisis. Spain has a much larger economy than Greece. So large, in fact, that it may be too big to bail out.
Fortunately, Spain’s debt is still less than 60% of GDP; however, the country is on a reckless fiscal path and the government shows no signs of doing anything about it.
As a result of the growing crisis, the Euro is getting hammered in the FOREX market, while the dollar is soaring. This is, in effect, an interest rate hike for US businesses that export to the Euro zone.
Naturally, this places downward pressure on US export sales at a time where the overall business climate is still weak. So, none of this is good news for the American economy, either.
If you have a friend who is a supporter of the present monstrosity called “health care reform” because they think Europeans are better served by their system than we are by ours and the Democrat’s solution will make us more like them, ask them to watch this 4 1/2 minute video.
By the way, pay particular attention to the rising costs of health care in Europe and, more importantly, the chart which shows costs to include cosmetic surgery, which is the only market based part of health care we have. Amazing how that works, no?
[HT: Maggie’s Farm]
We touched on the fact that there are some tax protests popping up around the country in last night’s podcast.
William Jacobson says:
The beginning of a protest movement against Barack Obama’s redistributive policies is underway. Though still small, every movement starts somewhere. While called the “Tea Party” after the Boston Tea Party, this movement is similar to movements throughout history where the producers of society refuse to have their property and income confiscated.
We all agreed that at this particular moment the movement is mostly a creature of the right-wing. That’s not to say it will stay that way, but certainly it is partly outrage over the so-called stimulus bill and partly an opportunity to engage in a little payback for the last 8 years of the left’s shenanigans.
Will it gain supporters? Will it gain power? I frankly don’t know at this point. But as Debra Saunders points out, if you think it is bad here, in terms of the financial crisis, you ought to be in Europe.
And what is going on in Europe? Well if the UK is any indication, things may be heating up rather quickly there:
Police are preparing for a “summer of rage” as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.
Britain’s most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming “footsoldiers” in a wave of potentially violent mass protests.
Interestingly the Brits would be late-comers to the European protest movement:
In recent weeks Greek farmers have blocked roads over falling agricultural prices, a million workers in France joined demonstrations to demand greater protection for jobs and wages and Icelandic demonstrators have clashed with police in Reykjavik.
So, will the burgeoning tax-protest movement here take hold and grow?
If Europe is any indication (you know, the Europe that was supposed to be so much better off than we are according to some?), yes, it might. In fact, if, as promised, the situation here gets worse and worse, I think we can pretty much count on it.
Will it have an effect? Well that’s an excellent question.
I’ll ask one in return.
Have you seen the deficit?
Someone is going to have to pay for all of that.