Europe Must Burn the Bridges and Create the Eurobond. US, UK Must Stop Myopic Opposition to Financial Transaction Tax

There is popular support for further European integration, as the Irish vote shows. Furthermore, that may be the only opportunity for the survival of the common currency in the form we know it today. Nonetheless the ECB must be given the authority, if it does not have it already, to devalue the euro and make the economies of the common currency more competitive.

Above all, they all must act fast. There must be a calculated decisiveness in their actions. Actually I tend to think that the two steps – eurobond and devaluation – must be taken together.

Irish Vote Yes in Fiscal Pact Referendum – SPIEGEL ONLINE.

The main stumbling block toward the eurobond is of course Germany although several other countries bordering the Baltic and North Seas are also opposed to the idea for obvious reasons: The eurobond would make borrowing to them more costly than with the national notes is today. But that is what unity is all about. Germany and the others can more than recoup their loses by keeping the huge common, duty free market to their products. The latter will most likely change very rapidly if the euro disappears in which case we may see intra-Europe commerce plummet.

This is actually the great opportunity for Germany to redress the wrongs of two world wars. Yes, Germany has paid huge reparations in the past but this would be a voluntary act, saving the continent’s economy, perhaps the world economy. It would be a reversal of roles: Germany saving the world economy that we screwed up; the opposite from 1939-45.

The exit of Greece from the eurozone is almost inevitable now, due to the country’s political atmosphere. The question now is whether damage control by the ECB, IMF, will be effective enough in dealing with the separation.

ECB chief calls euro ‘unsustainable,’ slams Spanish bank response – The Washington Post.

ECB President Mario Draghi said on Thursday that he believed the euro zone’s current structure  is unsustainable, and added that the region’s governments must surrender far more budget and regulatory power to a central authority if the currency union is to be saved.

As he spoke, the Irish did their part.

The eurozone crisis is affecting the U.S. tremendously but the greatest contribution we could offer to help, instead of sermonizing, is to cease the opposition to the financial transaction tax (FTT) – intended to diminish wild speculation in the financial markets. We triggered this global crisis and it is it the least we could do. But we do not support the (continental) European proposal because of Wall Street’s influence in Washington. I do believe the republican candidate Romney is also clueless in this regard and will cave in to the same forces. We, with the UK, stand alone on the rock of idiocy.

Regarding the FTT, the UK (that is the conservative government) is just being the little selfish twerp that it has been since taking office. UK’s GDP is much more dependent on The City than their continental neighbors are on their respective financial markets. And PM Cameron’s policies reflect that fact.

Our economic sluggishness today is in part caused by Europe’s crisis and Europe’s crisis is caused, in part, by our political surrender to the influence of money. Everybody will lose unless we have the courage to change.

Advertisements

Greek Debt Deal Passes: Europe Must Focus on Growth – U.S. Adds 227,000 Jobs – Governor Christie Throws Environment Under the Bus

BBC News – Greek debt swap ‘success’ welcomed by European leaders.

Probably not many Americans realise how much was at stake here and although the respite gained by Greece is temporary and comes at a cost, it provides time for Europe to energize the euro zone economies.

The first step toward that goal, in my opinion, is to devaluate the common currency, probably to reach parity with the US dollar. This would make imports more expensive and euro-zone exports cheaper abroad. Tourism, one of the industries where Greece can show rapid growth, would greatly benefit from a cheaper €. The Greek economy contracted 7.5% in the last 3 months of 2011 under the weight of austerity measures.

One other factor is to control the price of oil and Europe must make an effort in muffling the war drums in the Middle East. The E.U must take the high ground of reason and diplomacy. High oil prices will make growth more difficult for everyone but the weaker economies will suffer the most.

The prudence in foreign policy that I advocate above applies to the United States as well. We should not be playing firemen elsewhere when our house is smoldering.

The Greek swap deal was welcomed by numerous private sector lenders to Greece, who said it paved the way for agreement on the EU bailout.

“The very strong and positive result provides a major opportunity now for Greece to move ahead with its economic reform program, while strengthening the  €  area’s ability to create an economic environment of stability and growth,” said Josef Ackermann, chairman of the International Institute of Finance, which represents private lenders.

U.S. Extends Its Run of Strong Job Growth Another Month – NYTimes.com.

It is the third consecutive month above 200,000 nationally. Unemployment however remains at 8.3. Nonetheless, the absence of bad news is good news. If this continues, it will help President Obama in November.

Christie administration adopts rule allowing businesses to bypass N.J. environmental regulations | NJ.com.

This was expected because the governor had proposed it in 2011. New Jersey is the most polluted state in the nation, with the possible exception of Louisiana. It is an act of desperation of an administration bent on creating some economic growth on faulty foundations. Growth that comes at the expense of the environment is not sustainable but what does he care? The governor is constantly flirting with higher offices which would involve moving to Maryland or Virginia. It really does not matter (to him) if he leaves a mess behind.

If elected governor in 2013, my policies will aim at sustainable growth with most consideration for maintaining the environmental integrity of New Jersey. Will I be an environmental zealot? Certainly not. But I will not exchange public health and quality of life for the mighty dollar either.

French Presidential Election Could Affect Ours – La Recette – Video

Presideo – La présidentielle à la sauce CNN.

The French presidential election takes place this summer and its results could influence the fate of the euro zone, the European and world economies including our own, and ultimately the election of the next president of the United States in November 2012.

There is so much at stake in the French election that for the first time in history, we see a German chancellor – Merkel – actively campaigning for a French president – Sarkozy. Bismarck and DeGaulle must be turning in their graves.

By comparison, here in the U.S. we have two onions – republicans and democrats – and one chili pepper – Paul – in onion batter.

For London Youth, Down and Out Is Way of Life – NYTimes.com.

The situation for the American youth mirrors that of Europe except that we are much more honest and open when we talk about the shortcomings and difficulties of everyone else. Blame jingoism and the U.S.A. number 1 thing. But actually the two parties have a vested interest in hiding the crude realities, as we can see here in New Jersey – just one example – with education reform and NCLB; there is a deliberate attempt to ignore the crude realities of poverty, broken families, the lack of the education “culture” – even the mainstream media continues to glorify the drop-outs who made it big while it should be emphasizing that those individuals were the exception to the rule.

The epilogue of this story today is this: New Jersey is lagging in almost every economic parameter with respect to the nation.

Europe: Technocrats Run to the Rescue

Merkozy’s Men: Advisers Seek to Bridge Euro Differences – SPIEGEL ONLINE – News – International.

Europe is running out of time and two unheard-of advisers have teamed their efforts to narrow the differences between the two major partners: France and Germany. As Spiegel notes, the alliance of Merkel and Sarkozy has become so tight that they are dubbed as one: Merkozy.

But some believe that it is Germany that calls the shots:

Dinner for One?

http://www.youtube.com/watch?v=ECjz5Y7Antk

Nonetheless, butlers can be very influential. Just ask Anthony Hopkins.

The two points of view:

The French see an approaching catastrophe, the danger of contagion and the threat of the euro crisis spilling over across the entire euro zone. They see fire and want to call the fire department — in other words, the European Central Bank (ECB) — to put it out and to pump fresh money into the system. They view euro bonds, for which all of the 17 euro-zone states would be jointly liable, as an alternative.

The Germans hold little regard for either idea. Euro bonds would make all states collectively liable for the debts of individual states, and that is not a move Berlin has supported. Likewise, the Germans perceive the danger of the crisis spilling over into other countries as being smaller than the French do. They want to combat the crisis at the root level, and they believe that the euro zone will only win back trust if the countries that are part of it were to stop living beyond their means.

The difference is that while the German economy is still growing, the French is close to zero growth. German-style austerity could push France into a recession.

Thereof the proposed agreement for the suppression of sovereignty that the UK vetoed last month and then became the central piece in a treaty – outside the European Union framework – designed to circumvent the British blockade. London is out to protect The City and its quasi unregulated financial practices.

The latter agreement is now pending acceptance in several European parliaments.

2011 Ends in Flux

BBC News – Ireland faces new wave of emigration.

It is not only the Irish. There are also many young Spaniards, French, Portuguese, Italians, emigrating to Germany Australia, Canada, and the U.S. But the euro is dropping and that may mean that European exports will become cheaper. Italy’s bonds are selling at lower interest. There could be light at the end of the long eurozone tunnel.

http://www.nj.com/news/index.ssf/2011/12/unemployment_claims_rise_after.html

Meanwhile, the U. S. economy continues to sputter. It is moving but painfully so.

Employment is a function of supply, which in turn is a function of demand, which in turn is a function of disposable, income, wages, wealth shaped in a reasonably low and widely-based  pyramid. Does anybody understand that concatenated relationship? It is of no use to have cheap credit if there is no demand.

http://www.cnn.com/2011/12/29/opinion/nasr-iran-oil-hormuz/index.html?hpt=hp_c1

Another War?

Who cares if Iran develops a nuclear weapon? That is why we have a nuclear deterrent, isn’t it? North Korea and Pakistan both have nukes and the chances of terrorists getting their hands on one bomb are at least as great in those countries as it would be in Iran.

Is it in the interests of the United States to enter another conflict? My answer is a resoundingly no and I urge the president not to sign the law black-listing the Iranian Central Bank. The ICB sells the Iranian oil. The law would essentially be  an embargo against Iran. President Obama has said he does not like the law but will sign it anyway… Why is he doing it then for?

Every war-monger I have seen would not be doing the fighting.

http://www.aljazeera.com/indepth/opinion/2011/12/20111226145144638282.html

China is looking north. China does not invade anybody for oil. They simply buy it.

China is the largest trading nation and has the largest merchant fleet in the world.  While we develop the new super aircraft carrier, the Ford Class, they build the largest container ships.

http://www.aljazeera.com/news/middleeast/2011/12/2011122944024838879.html

The Arab Spring stretches into Winter:

Fighting continues in Syria, Egypt, Yemen. Tunisia and Libya sound like success stories although un islamist party won the first elections in Tunisia – not a surprise considering they were the spearhead of the resistance for many years.

http://www.nj.com/news/index.ssf/2011/12/during_radio_appearances_chris.html

And poor New Jersey, ends the year with the announcement – by the governor himself – that 2012 will be the year of education. It is ironic, Fidel Castro, a master of demagoguery, used to dedicate the years to some grand enterprise too, at least during the first decade of the revolution. Yes, we had an education year in Cuba too and if I remember well it was 1961.

So for New Jersey, 2012 will be the year of the dismantling of public education while the root factors in the failing districts are ignored. Why are they ignored? Because they are ideological taboos for this governor.

To educate more and better, we must have the children in an education-auspicious-setting for longer time; much longer time.

In the meantime, out New Jersey economy stumbles along at a languid pace, and a dentist in central New Jersey measures our decay in the teeth of his patients:

http://www.app.com/article/20111228/NJNEWS/312280045/Manalapan-dentists-offer-day-of-free-care?odyssey=mod%7Cnewswell%7Ctext%7CFrontpage%7Cs

We are not only losing our jobs and our homes; we are losing our teeth too.

Euro News: France, Turkey in a Row Over French Genocide Law. ECB Lends €489 Billion to 523 European Banks in Massive Effort

BBC News – Turkey recalls envoy from France over ‘genocide’ bill.

The proposed law makes it a crime in France to deny genocide when it has occurred. Turkey on the other hand, has the official position of denying the genocide of 1.5 million Armenians by its precursor, the Ottoman Empire, during WWI.

Turkey also resents French opposition to its entrance in the European Union. French president Nicholas Sarkozy has blatantly said that Turkey does not belong in Europe.

http://www.nytimes.com/2011/12/22/business/a-central-bank-doing-what-central-banks-do.html?hp

The massive offer is initially at rate of 1% and the rate may be lowered within days. The banks will borrow and it is expected that they will put the money to two main uses:

1. Purchasing sovereign bonds which are offering a much higher interest so the banks are enticed by pocketing the difference but in the process they increase the demand for sovereign bonds of the troubled PIIGS and that will lower the interest those nations have to offer to sell their bonds. This is like the ECB buying sovereign debt (something that Germany opposes) by proxy.

2. Increasing the money supply may loosen lending to the private sector thus spurring the continental economies, most of which are almost in recession.

The Two-Speed Europe

There is increased resentment on both sides of the English Channel and in Britain, many are comparing the Franco-German effort to save the euro to the German attempts to conquer the continent in 1914 and 1939, this time by economic means. This cartoon appeared in the British newspaper The Independent. Notice Merkel is at the helm while Sarkozy is the passenger. In its latest act of rejection to Europe, Britain has refused to contribute to the IMF euro-rescue fund and many Brits would like to leave the E.U altogether.