Greece is at the epicentre of a new euro crisis

Greece's chaos will spread

By Philip Aldrick

Contagion risks are back with a vengeance. With Greece edging towards the euro exit gates, pressure is building in familiar territories. Yields on Portuguese sovereign debt have spiked even more rapidly than those on Greek debt. Spanish and Italian borrowing costs are creeping up. The markets are pointing to another imminent euro crisis. And, once again, Greece is at the epicentre.

The people of Greece know what they don’t want – they don’t want any more austerity. If another election is called to sort out the mess of last weekend’s result (the talk is of holding one on June 17) and the result is again a roughly 70pc vote against austerity, it will probably mandate the government to ditch the bail-out.

That would mean a euro exit, a return to the drachma, a massive devaluation, and a default on the remaining private sector debt. If that is what the people of Greece do want, it carries enormous risks.

A Strange Austerity Diet

Fiscal Austerity in Europe Doesn't Mean Large Spending Cuts

By Veronique de Rugy

We are told that austerity in Europe has failed. The elections in France and Greece, for instance, are supposedly evidence of people’s opposition to severe cuts in spending. However, the growing anti-austerity backlash against Europe ignores one fundamental point: If there is austerity in Europe, in most cases it hasn’t taken the form of massive spending cuts.

Following years of large spending expansion, Spain, the United Kingdom, France, and Greece—countries widely cited for adopting austerity measures—haven’t significantly reduced spending since “austerity” supposedly started in 2008.

Foreign Policy Theater of the Absurd

You gotta laugh – to keep from crying

by Justin Raimondo

A Russian general has threatened military action if the US and its NATO allies go ahead and build a “missile shield” in Eastern Europe: “A decision to use destructive force preemptively will be taken if the situation worsens,” say Russian chief of staff Nikolai Makarov. That the “shield” is of dubious effectiveness, and is mainly a cash cow for US defense companies, are not factors the Russkies are willing to take into consideration: their main beef seems to be the implied insult of Washington claiming the shield isn’t designed to protect against future aggression emanating from Moscow, but against an alleged Iranian missile threat to Europe. Hey, they seem to be saying: what about us? Aren’t we a threat, too?

The Gold Dinar

“The Dinar and Dirham represent a moral movement of maximum individual freedom”

The following news stories, coupled with the recent unveiling of a gold ATM in Abu Dhabi seem like the first steps on the road to a trend:

1. Apparently the Malaysian state of Kelantan introduced some time ago the gold Dinar and the silver Dirham as legal tender, and the coins are in circulation with at least 3 different banks responsible for coinage and distribution. Interestingly, one of the reasons given by the chief minister of the state of Kelantan for introducing the coins, is that:

“the poor would be protected against inflation by the intrinsic value of the precious metals”

Who would have expected an Islamist party member from provincial Malaysia to speak words straight from an Austrian Economic Theory textbook?

A grand circle of history

A World Tour of Addictive Stupidity - Quite a long journey

Addiction to welfare, deliberately promoted for reckless political aims, is capable of extraordinary damage. The West is about to find out the hard way leaving the door open for a grand circle of history

By Charles Crawford

Let's start in Beijing, back on October 24^th 1860. British and French forces are busy burning down the Old Summer Palace in their fury at the torture and mistreatment by the Chinese of an allied delegation. China accepts defeat; its markets are to be opened up at long last to Western trade.

The Case of the Missing High-Mileage Car

Inaccessible Utopias

By Jeffrey Tucker

How would you like to drive from New York to Los Angeles with just one stop for gas? It seems incredible and wonderful, but it can happen. In late 2010, the Volkswagen Passat BlueMotion set a new world record for the “longest distance traveled by a standard production passenger car on a single tank of gas.” It travels 1,526.63 miles. It translates to a fuel economy of 75 miles per gallon.

Sweet! Only one thing — this passenger car is for the U.K. You can’t drive this car in the United States. We have a Passat, but it gets nowhere near this excellent mileage. Even stranger, many of the engines in these, which are driven all over Europe, are actually built in the U.S. The trouble is that it can’t jump through the regulatory hoops in the land of the free.

Pass the ouzo

Be careful what you vote for ...

By Clive Hal

The voters have spoken; well 65% of them in Greece and 80% in France; a lot better than the mayoral junket in London. In none of the locations were the voters given a candidate worthy of the name. In France the “anyone but Sarkozy” vote squeezed in at 51.6% of the valid votes cast; hardly a resounding victory. Nearly 6% of the eligible voters turned up but spoiled their ballot papers – in effect saying “what choice have you given me?” So only 38% of France went for hollandaise sauce.

 How they will be able to afford this (g)astronomic libation to the Gods of “Equalité” was not sufficiently discussed other than the mob appeal of taxing the rich bastards, who no doubt will have already arranged their affairs to pay far less than the 75% imposition. It reminds me of Denis Healey, before he himself became part of the landed gentry, saying he would tax the rich “until the pips squeak”; thus begetting the UK’s supremely efficient tax avoidance industry.

 In Greece it was even more divisive. With 32 parties standing they have three days to cobble together the Big Fat Raving Monster Euro Moussaka coalition which will be in charge of ouzo production. Growth in this part of the economy is essential as there won’t be any anywhere else and as it slowly dawns on the rag bag of ultra left and right that there is no more money, “austerity”, as defined by the Bundeskanzlerin, will seem like a golden opportunity missed; so pass the bottle Spyros oblivion beckons…

Is This the End of “One Europe”?

Tribalism, radicalism and socialism are the growth stocks of the new Europe

By Patrick J. Buchanan

How Europe’s crisis resolves itself as yet remains unknown.

But with Sunday’s returns from France and Greece, the mega-trends on the Old Continent are unmistakable. And for the European Union, they are ominous.

Nationalism — be it economic nationalism or ethnic nationalism — is ascendant. Transnationalism and multiculturalism are in headlong if not irreversible retreat. The European project is itself imperiled.

Austerity = Reduced Spending Hikes

Hysterity! Global Panic about "Austere" 9 Percent Spending Hike

By Tim Cavanaugh

America’s economic boom is the latest evidence for anti-austerity arguments.

Measured according to the strict two-quarters-of-GDP macroeconomic standard, the United Kingdom is now back in a recession. According to this same standard, the United States is not in a technical recession. 

At Business Insider, Joe Weisenthal cites the UK recession to continue a theme advanced by BI founder Henry Blodget yesterday.

"Basically we have a life test of a country that wants to do what conservatives in the US want to do: reduce national debt," Weisenthal writes. "Doing so is a growth disaster."

Sounds like the contrast between the judicious Keynesianism of President Barack Obama and the small-government extremism of Prime Minister David Cameron is pretty stark, right?

The European Union has finally hit a brick wall

Hollande Wins and Europe Descends Into No-Man's Land

By Paul Roderick Gregory,

Socialist candidate Francois Hollande has won the French election as expected. His high-tax, pro-stimulus, welfare-state-protection platform, in effect, scuttles the Eurozone rescue program engineered by Merkel and a reluctant Sarkozy.

Hollande’s election leaves the European Union with three stark choices, none of which are good: 1) Germany and the European Central Bank cave and bail out any and all debtor countries under the cover of some fictitious future fiscal discipline, or 2) The Eurozone countries muddle along from one band-aid fix to the next as the bond vigilantes breathe down their necks while they hope to catch a break, or 3) Germany and the Nordic states withdraw from the Eurozone to their own currency. The rest of the Eurozone can stay on the devalued Euro or revert to their own currencies.

Where Do Real Jobs Come From?

The pentagon goes rogue…
By Bill Boner

“Jobs engine sputters again in April,” reports the weekend Wall Street Journal.

What kind of humbug recovery is this? Bloomberg adds:

Estimates for the jobless rate, derived from a separate survey of households, ranged from 8.1 percent to 8.3 percent. Unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.

Of course, it’s much worse than that. John Williams puts the real unemployment rate — the people who want jobs and can’t find them — at 22%…the same as the unemployment rate in Spain. And just 3% points lower than in the Great Depression.

The Serial Bubble Blowers

Borrowing to spend is everyone’s favorite game

By Addison Wiggin

The shrinking dollar is a modern problem. The U.S. dollar has been shrinking since the inception of the Federal Reserve — the very crew assigned the task of maintaining its value. Of late, the decline is accelerating at an alarming rate.

For many Americans, the suggestion that the dollar is losing value is unthinkable — even unpatriotic. The problem is not simply a lack of understanding about the nature of wealth and investment used to sustain it.

Our policy makers and economists make no distinction between wealth created through savings and investment in the real economy versus “wealth” created in the markets through asset bubbles brought about by credit policies.

The Pragmatic Republic of China

The Great Fall of China

By Peter Coy

Qi hu nan xia, goes a Chinese proverb: When one rides a tiger, it is difficult to dismount. For the leaders of China’s 1.3 billion people, the import is clear. Stay on the tiger’s back, issue commands, and hope like hell the beast doesn’t turn on you. Over the last quarter-century that approach has served the mandarins of the Communist Party well. China became an economic marvel and staked a claim as the world’s next superpower. Civil liberties, social development, environmental husbandry, and political transparency were subordinate to the imperatives of growth. Increasing complaints about the avarice and gangsterism of government officials could be dismissed as local problems as long as an enlightened elite was thought to be guiding the state with a steady hand. Even when under pressure to reform, China’s leaders could reassure themselves that their grip on power remained secure.

The end of home ownership

The End of An American Dream?

By Walter Russell Mead

The bursting of the housing bubble caused huge financial distress for people all over the United States, and the destruction continues. Millions of people still have negative equity, others have walked away from their homes, and millions of others are coming to terms with houses worth much less than they thought.

Over at the Wall Street Journal, Daniel Gross is asking an important question: is the age of home ownership in America coming to an end — and, if it is, is that good thing?

Looting, the ultimate stage of Socialism

Rogue Democrats Loot Detroit As Nation Sleeps

BY WALTER RUSSELL MEAD

Few readers will be surprised to learn that decades of incompetence and entrenched corruption in Detroit’s government have not only helped wreck the city; firms linked to former Democratic mayor Kwame Kilpatrick also looted the pension fund.

The latest scandal, which leaves even hardened observers of the abysmal Democratic machine that has run the city into the ground bemused, involves a real estate firm which gave the felonious mayor massages, golf outings, trips in chartered jets and other perks as this enemy of the people went about his hypocritical business of pretending to care about the poor while robbing them blind. The firm, apparently run by a sleazy low class crook named by the reprehensible Kilpatrick to be the Treasurer of what was left of Detroit’s finances, used Detroit pension funds to buy a couple of California strip malls. Title to the properties was never transferred to the pension funds, and they seem to be out $3.1 million.

Next, Freedom of Speech

Taking a scythe to the Bill of Rights
By George F. Will

Controversies can be wonderfully clarified when people follow the logic of illogical premises to perverse conclusions. For example, two academics recently wrote in the British Journal of Medical Ethics that “after-birth abortions” — killing newborn babies — are matters of moral indifference because newborns, like fetuses, “do not have the same moral status as actual persons” and “the fact that both are potential persons is morally irrelevant.” So killing them “should be permissible in all the cases where abortion is, including cases where the newborn is not disabled.” This helpfully validates the right-to-life contention that the pro-abortion argument, which already defends third-trimester abortions, contains no standard for why the killing should be stopped by arbitrarily assigning moral significance to the moment of birth.

The pig is no better looking because you paint it blue

Lies, Damned Lies And Statistics

“There are lies, damned lies and statistics.”

                                        -Mark Twain

By Mark Grant

It has often been said by me, over the last ten years, that if one cannot ascertain the truth then one should not put money in that enterprise. It seems like a relatively simple perscription that I have formulated. There is nothing false or complex in this equation. Probably a number approaching one hundred percent of all of the world’s financial institutions would agree with the general precept and yet; that is not how some behave on an ongoing basis which I find quite astonishing. It is surely a matter of human psychology and of accepting what we are told rather than making a realistic appraisal of the facts. It continues to amaze me that various groups continuously try to reorganize the truth to their own benefit, falsify the truth,  on the assumption that you will believe what they tell you without investigation.

“And oftentimes excusing of a fault doth make the fault the worse by the excuse.”

                                      -William Shakespeare

What I find particularly difficult is what they are doing in Europe and continue to do because they are formulating systemic lies and they are doing it knowingly, purposefully; with the single motivation being to fool people. It can no longer be said that it is not systemic as the European Union does not object, has not objected, so that even Germany and the Netherlands and Finland have become accomplices to the schemes. Because the State says it is so does not make it so and this is a history lesson that we all should have learned long ago!

Why Aren’t Banks Lending to Small Business?

 Ask Bernanke

Banks profit by making loans, not refusing them. So why are banks making fewer loans to small business these days?

By Scott Shane

On March 29, at a lecture at George Washington University, Federal Reserve Chairman Ben Bernanke innocuously remarked  that lately “small businesses have … found it difficult to get credit.” Too bad that none of the students at the lecture thought to ask him why. A case can be made that the Fed is partially responsible.

Bankers, small business owners, and policymakers all agree that small business lending has declined substantially since before the financial crisis and Great Recession. Business loans under $1 million fell 13 percent between June 2007 and June 2011, and the amount lent has declined 19 percent when measured in inflation-adjusted terms, Federal Deposit Insurance Corporation (FDIC) statistics reveal.

Disabling America

How more and more ‘disabled’ Americans affects the shrinking U.S. labor force

By James Pethokoukis

Now that the labor force participation rate is at its lowest level since 1981, it’s a good time to take another look at how the rising number of disabled Americans affects the official size of the workforce. Here are disturbing facts from Bloomberg:

– The number of workers receiving Social Security Disability Insurance jumped 22 percent to 8.7 million in April from 7.1 million in December 2007, Social Security data show.

– That helps explain as much as one quarter of the decline in the U.S. labor-force participation rate during the period, according to economists at JPMorgan Chase & Co. and Morgan Stanley.

When coercion and theft are considered moral, anything is possible, and none of it good

Is An Economic Deluge Nigh?

by David Galland

If history has taught one certain lesson, it is that the less fettered an economy, the better humankind is able to do what it does best: run from trouble and run toward opportunity. In this way mistakes are quickly resolved and progress assured.

Conversely, the deeper the muck of regulation, mandates, taxes, subsidies and other bureaucratic meddling, the slower we humans are in following our natural instincts until the point that progress is slowed or even stopped.

It is said that history doesn't repeat itself, but it often rhymes. In the current circumstances, it appears that enough time has passed that current generations have completely forgotten the critical connection between the ability of humans to freely pursue their aspirations and economic progress.