The sound of Euro dominoes: Billions wiped from world stock markets and the currency shaking AGAIN

By Mitch Feierstein
13 April 2012

Regular readers of this column will remember that I’ve got a thing about inflation. You know: inflation is bad, printing money makes more of it, isn’t it about time we stopped making a bad problem worse?

Trouble is, though, constant repetition of a theme gets boring after a while. Yes, fuel prices are up. Yes, asset prices are crazy. Yes, food and utility bills are weirdly expensive these days. But, same-old same-old. So what’s Rihanna wearing these days?

But listen up. I’ve got a new illustration for you. What does €1 trillion buy you these days? Answer: it buys peace and quiet … for about six weeks. That’s how much money the ECB had lent out to weak Eurozone banks by the end of February – and six weeks is about how long the subsequent period of calm has lasted. And because inflation spirals upwards, nobody now thinks that another trillion euros will do much to ease the panic. Would a trillion euros now buy another four weeks, even? I doubt it.

And that’s the point really. There’s a difference between a circle and a death-spiral. If you’re in an infinite loop, you can in principle go on for ever. The death-spiral might look the same to begin with – the same old scenery coming round time after time – but oh boy, the ending is different.

What we saw this week might look like more of the same. A government bond auction in sudden crisis (Spain’s in this instance, though Italy’s auction was pretty ugly too.) Billions wiped from world stock markets. The euro shaking again. Global leaders saying confidently that no bailout would be needed. (Just as the bailout wasn’t needed in Greece. Until it was. Or Portugal. Or Ireland. Just as Greece could never default on its debts, until it did just that.) And a hopium rally may just follow this chatter.

And now we’re starting to talk dominoes again. If Spain falls, then what about Italy? If Italy falls, what about France? And those aren’t speculative questions. If Spain falls, neither France nor Italy could possibly survive as things stand.

Yet please don’t think of this as just another loop of the merry-go-round. It’s more than that; much more. The event which spooked the markets this week was the Spanish government’s dismally unsuccessful auction of €2.6 billion worth of bonds. That sounds like a lot of money, but Spain needs to raise €200 billion this year alone. Then again for year after year after year.

If the country’s finances were under control and the economy was reasonably strong, those things could be manageable. Germany also has a lot of debt – more as a proportion of its income than Spain – but the economy is strong and the government not desperately addicted to spending more than it raises. Spain, unfortunately, has a government deficit which is out of control and an economy forecast to shrink. (Forecasts which will probably turn out to be way too optimistic, by the way. The Greek economy hasn’t shrunk. It’s collapsed.)

That would be bad enough on its own but Spain had a real estate bubble even worse than our own. Even worse than the American one. And the losses stacked up in that boom are still lurking in Spain’s many small savings banks, each of which is like an undetonated bomb. A bomb, whose fuse is ticking every closer to the detonator.

There are different ways you can respond to all this. If you have any savings or investments, you’ll be thinking about how to protect your cash. Just what do you do, when you can’t trust governments to repay their debts? What’s left? What’s safe?

There’s also a human response. Just stop to think a moment about the human tragedy implied by Spain’s worse than 50% youth unemployment. What a heart-breaking statistic that is! It reminds you that behind the cold financial stats, young people’s lives are being ruined by awful decisions made by their political masters. Worse still, those scars may never heal. Economists have found that the ‘earnings scar’ left by a bout of prolonged unemployment is visible for literally decades afterwards. And that’s just to talk about money. What about the injury to self-esteem? To pride and self-fulfilment?

Which brings one, I suppose, to a political response: the place where these considerations need to end. Politicians created this messbecause they forgot the basic rule of capitalism: if you win, you win; if you lose, you lose.

Capitalism, of the sort that’s operated across Planet Ponzi these last decade or two, has played by different rules. The winners win. The losers … well, their losses get shuffled away. They get magicked away by Wall Street. They get bailed out by governments. They get printed away by the money presses of the world’s central banks.

Britain is tiptoeing uncertainly away from that awful politics right now. America hasn’t yet woken up. The Eurozone is resolute in its reality avoidance. But the nature of reality is that you can’t avoid its arrival. Clickety-clickety-click – is that dominoes I hear?

Hungarian PM attacks EU 'blackmail' over IMF loan

Fri, 13 Apr, 2012

Hungarian Prime Minister Viktor Orban attacked the European Union for imposing political conditions on an EU-IMF loan desperately needed by Budapest, in an interview on Friday.

"Creating political conditions -- for example over the justice system -- would amount to blackmail, which is unacceptable within the European Union," Orban told national radio MR1 in his weekly interview.

"The International Monetary Fund (IMF) does not set financial conditions, but the EU is flirting with the idea of imposing political conditions," Orban added.

Hungary asked the International Monetary Fund and European Union for a 15-20 billion euro ($20-26 billion) credit line last November, as the forint dropped to record low levels against the euro and borrowing costs rose to record highs.

But Brussels later warned that any money would depend on Budapest proving its commitment to democratic principles.

Orban's government has come under fire for a series of laws as well as a new constitution that critics say curb the independence of its central bank and judiciary, and limit press freedoms, among other things.

Last month, the European Commission gave Hungary one month to bring two controversial laws -- on the judicial system and its data protection authority -- in line with EU principles or face court action.

On Friday, Brussels appeared reluctant to get drawn into a new argument with Orban.

"I will not react to the Hungarian prime minister's declarations," said Commission spokesman Olivier Bailly.

"We are analysing the response we received from the Hungarian authorities (to Brussels' concerns), we will inform you of the commissioners' response as soon as the evaluation has been made and a decision has been taken."

Orban is due to meet with Commission President Jose Manuel Barroso in Brussels on April 23.

Is an Obama dictatorship in the air?

by Robert Ringer

I began warning about Barack Obama’s dictatorial ambitions before he even won the 2008 presidential election. Now, finally, more people are beginning to take this possibility as a serious threat.

Obama’s recent contention that it would be “unprecedented” for the Supreme Court to overrule congressional legislation had dictatorship written all over it. It was, quite obviously, an ignorant slip on his part.

Rather than lashing out with absurd statements like this, the Marxmeister does much better when he follows the far-left playbook and innocently feigns indignation over anything that isn’t to his liking. Or when he vilifies his natural enemies – primarily Republicans, the “rich” and tea partiers.

Targeting the Supreme Court showed a lack of self-discipline in adhering to his well-planned stealth-Marxism strategy. His angry, careless remark must have given chest pains to cheerleading, brainless Obamaviks everywhere.

Then there’s poor Jay Carney, who appeared to be on the verge of crying while playing with his pacifier and trying to find a way to spin BHO’s idiotic misstatement. How in the world did Obama expect someone who looks 16 and talks like he’s 14 to convince the press that his boss, who supposedly taught constitutional law, was just kidding about the Supreme Court’s not having the power to overturn legislation it deems to be unconstitutional?

I will say yet again what I have been saying for more than three years: If polls indicate that Obama is going to win the upcoming election, no problem. He’ll keep flashing that fake Barry Obama grin until Nov. 7, then move swiftly to begin unleashing a dictatorial full monty – consisting of more regulations, higher taxes and less freedom – that will shock all but his staunchest Marxist allies.

Nothing will be off limits – a national police force, instant citizenship for all Third World people who want to come to America, forced equalization of income (except for Obama’s wealthy supporters), widespread use of tax audits to carry out vendettas against enemies of his administration, a virtual end to oil drilling, coal mining and gas exploration, suspension of habeas corpus, a new sedition act that will make it a crime to speak out against the government, the police, or the military … and much, much more.

On the other hand, two or three months before the election, if the polls clearly show that Obama is going to go down in defeat, I believe there’s better than a 50-50 chance of a major “emergency” coincidentally making its appearance, convincingly manufactured in such a way as to cause the average entitlement junkie to agree that we must rally around the president and “postpone” the November elections.

During a speech in Las Vegas, Obama, railing on about the woeful economy he inherited, said that “we can’t wait for an increasingly dysfunctional Congress to do its job. Where they won’t act, I will.” It was a clear message about his dictatorial intentions in his second term.

Americans who find it difficult to break free of their normalcy bias should think about F. A. Hayek’s explanation, in “The Road to Serfdom,” of how countries travel the road leading from democracy to dictatorship:

Hitler did not have to destroy democracy; he merely took advantage of the decay of democracy and at the critical moment obtained the support of many to whom, though they detested Hitler, he yet seemed the only man strong enough to get things done.

Likewise, notwithstanding his cunning and cleverness, Chairman Obama didn’t walk into a finely tuned republic and reduce it to a redistribution-of-wealth democracy overnight. The reason he and his left-wing cronies have been able to violate the Constitution as though it didn’t exist is that they are merely taking advantage of the decay of our republic into a democracy – and the subsequent decay of our democracy – that was already present when they came to power.

The Founding Fathers realized that a democracy is but a pretense for tyranny of the majority. Like all democracies before it, our democracy has destroyed itself through an excess of democracy. Majority rule has evolved into a free-for-all stampede of citizens appealing to politicians to give them more and more of the plunder. And there is never a shortage of vile human beings who are willing to resort to meaningless slogans like “hope and change” to win over the mindless masses.

In his book “Keeping the Republic,” Indiana Gov. Mitch Daniels brings the reader face to face with reality:

History teaches us that all national greatness is temporary. Every great civilization – from the Roman Empire to the British Empire – has eventually collapsed. Americans have grown complacent in their position of dominance, but the term “the American Century” suggests how relatively brief this period of dominance has been. An ancient Roman would not have been impressed by a less-than-one-hundred-year run on top.

Decline and fall are only occasionally foreseen by those en route to those destinations, and still less often forestalled by forceful and timely action. Denial of reality is a powerful human impulse, as is the tendency to mistake the status quo for the natural and inevitable order of things.

Dictatorship and total collapse is in the air. I can feel it. That’s why it was encouraging when Lt. Col. Terry Lakin, a decorated Army doctor, refused to go to Afghanistan unless Barack Obama would make his birth certificate public, which resulted in his serving six months in prison and being dishonorably discharged. But it’s far more discouraging that no other high-ranking officer has had the courage to join him.

This is an important issue, because I continue to believe that if a dictatorship starts to emerge (many would argue that it already has), it may ultimately get down to a question of whether, at the moment of truth, the military will take orders from Barack Obama or, instead, side with American citizens.

Those who chuckle at all this would do well to bone up on their history.

[ed. Well put. Most people believe the only real sign of a "dictatorship" is "tanks on the streets" but even China doesn't do that unless absolutely necessary...we live in a dictatorship folks and political correctness (cultural marxism) is very much a part of it...]