Report on the Euro for September 16, 2011
Simon Jenkins of the Guardian, argues for national sovereignty, “The European debt crisis is a reformation moment, the EU has overreached its power and now faces a crisis of legitimacy … This is a true reformation moment in Europe’s history … It is turning back to national identity, and there is nothing the EU can do to stop it.”
EurActiv reports Italian Foreign Minister Franco Frattini, in an interview with Süddeutsche Zeitung, says “Different countries have different views on European federalism, but Italy is ready to give up all the sovereignty necessary to create a genuine European central government. We must work seriously towards the formation of a genuine European economic government.”
Simon Nixon of the WSJ relates The Euro Banks’ capital conundrum. For French banks, in common with all euro-zone banks, the real challenge is funding. Short-term dollar funding from U.S. money market funds is shrinking. But banks have plenty of access to short-term euro liquidity, including from the ECB, and can use foreign-exchange swaps to access dollars while they run down positions. BNP Paribas and Société Générale have said they will run down or sell U.S. dollar funded businesses.
The closure of medium and long-term bond funding markets is a potentially bigger challenge. French banks may have largely fulfilled their funding needs for 2011 but they all face heavy refinancing needs in 2012. If markets remain closed, they will be forced to deleverage even faster, threatening a credit crunch and feedback loops to the economy. But this merely underlines the need for the euro zone to come up with a comprehensive solution to its sovereign crisis. Until it does, bank investors are right to fear the worst.
Rachel Donadio of the NYT documents the patronage and pork of European Socialism in Austere Italy? Check the traffic. With only 960 residents and a handful of roads, this tiny hilltop village in the arid, sulfurous hills of southern Sicily does not appear to have major traffic problems. But that does not prevent it from having one full-time traffic officer — and eight auxiliaries.
The auxiliaries, who earn a respectable 800 euros a month, or $1,100, to work 20 hours a week, are among about 64 Comitini residents employed by the town, the product of an entrenched jobs-for-votes system pervasive in Italian politics at all levels. “Jobs like these have kept this city alive,” said Caterina Valenti, 41, an auxiliary in a neat blue uniform as she sat recently with two colleagues, all on duty, drinking coffee in the town’s bar on a hot afternoon. “You see, here we are at the bar, we support the economy this way.”
But what may be saving Comitini’s economy is precisely what is strangling Italy’s and other ailing economies throughout Europe. Public spending has driven up the public debt to 120 percent of gross domestic product, the highest percentage in the euro zone after Greece’s. In recent weeks, concerns about Italy’s solvency and the shaky finances of other deeply indebted European nations have sapped market confidence and spread fears about the stability of the euro itself.
On Wednesday, Italy’s lower house of Parliament gave final passage to a $74 billion austerity package aimed at eliminating Italy’s budget deficit by 2013. But analysts doubt that the measures — primarily tax increases but also cuts in aid to local governments, a higher retirement age for women in the private sector and a change in Italy’s labor law to make it easier for companies to hire and fire — will achieve the advertised savings.
Many of the cuts in financing for local governments may yet be bargained away in annual budget negotiations to be held this year, and nowhere in the legislation are there any measures to reduce the salaries or the number of public sector employees, more than 80 percent of whom have lifetime tenure. But they would lose some retirement benefits, and a hiring freeze is already in place.
Financial markets have remained edgy, with yields on Italian bonds rising to a record high of 5.7 percent at auction this week, before rallying a bit after the government passed a confidence vote on the austerity measures. Investors remain unconvinced, though, fearing a possible downgrading of Italy’s credit rating, which could further drag down the euro, and there is already talk of the government introducing additional austerity measures.
“I have great doubts about whether they’re sufficient,” Stefano Micossi, an economist and the director of Assonime, an Italian business research group, said of the austerity package. “The mechanisms that led to such spending haven’t changed.” The sticking point, he added, was the public sector. “The big problem is the public administration,” he said. “It’s inefficient and corrupt. But corruption is born in politics and politicians don’t want to change.”
Italy is contending with a public debt, built up under a succession of Christian Democratic governments, that helped the country emerge from dire poverty after World War II to become Europe’s third-largest industrial economy. Especially in the poorer Italian south, the Christian Democrats put millions of people on the state payroll in a jobs-for-votes system that many say has persisted under Prime Minister Silvio Berlusconi. The quid pro quo worked so long as the economy was expanding, but now is seen as one of the major threats to Italy’s solvency.
In 2009, the most recent year for which data is available, an estimated 3.5 million Italians were on the state payroll out of a work force of 23 million, according to the Ministry for the Public Administration and Innovation. On Mr. Berlusconi’s watch, government expenditures — including the cost of public administration and defense — rose to more than $1 trillion in 2010 from $753 billion in 2000.
Analysts attribute some of the rise to the introduction of the euro in 2001 and the rising cost of pension spending in a nation that will soon have more retirees than workers, as well as to soaring health care costs. But they say it also stems from deals Mr. Berlusconi has made with powerful politicians from both the north and the south to get the votes needed to hold together his government.
Those votes mean the government is loath to stop the flow of money. Even with the new austerity measures, “They haven’t closed the taps,” Mr. Micossi said. Some say the jobs-for-votes mentality derives from Italy’s feudal heritage. Italy was a patchwork of warring fiefs before unification 150 years ago, and personal networks are often still seen as more powerful than institutions.
Even today, the concept is: “I understand the state if it gives a benefit to my person, family, business,” said Luigi Musella, a historian at the University of Naples and the author of “Clientelism,” about Italy’s quid pro quo politics.
For his part, Nino Contino, the mayor of Comitini since 2002, is proud that he has used public money to create jobs. “I know that 60 people in a town of 1,000 is a good number, it’s a lot,” Mr. Contino, 49, said of his city’s employees. “But if I didn’t let them work, these people would have to go work in America. That’s 60 people with 60 families looking for work elsewhere.”
“Besides,” he added, “the city doesn’t pay them. The state and the region do.” Indeed, Comitini’s city employees are paid 90 percent by the regional government and 10 percent by the town. “This town lacks for nothing,” Mr. Contino added, as he showed off the town’s library, with a children’s play area and an extensive collection of Sicilian history books, including a rare 10-volume set of the “History of Feudalism.”
Upstairs, a small museum featured Arab-Norman pottery fragments and an exhibition on the nearby sulfur mines that employed as many as 10,000 people before they closed in the 1950s and 1960s, forcing many residents to retire early and others to emigrate.
Beyond its 960 residents, the town counts 3,000 emigrants registered to vote there, said Mr. Contino, whose main job is as a specialist in cellulite reduction. Some residents are concerned that the new austerity measures mean that money for local employees might dry up. But Mr. Contino said he was not worried. “I don’t think that’s a risk. Here, there’s a culture of maintaining jobs,” he said. “Political will here is relative,” he added.
Yet the cuts to regional spending in the austerity measures are real, even if changes to local government will likely take years to apply. “We can’t touch salaries,” Raffaele Lombardo, the president of the Region of Sicily, said in a telephone interview, “But now it’s certain that hiring will be blocked for many years.”
Back in Comitini, residents began to gather in the main piazza. A city council member was getting married in the church. Cars stopped and parked beneath a “no parking” sign while their drivers hopped out for a coffee in the bar. Inside, Ms. Valenti and her colleagues said they were not much inclined to give parking tickets. “We try to avoid giving fines,” she said. “It’s a small town, we all know one another.”
Bloomberg reports Spanish regional debt surges to second quarter record, Bank of Spain says. Spanish regions’ debt burden surged to a record in the second quarter, adding to pressure on the central government to rein in spending or risk missing the nation’s deficit goal. The 17 semi-autonomous regions’ outstanding debt burden rose to 133.2 billion euros ($183.7 billion), or 12.4 percent of gross domestic product, from 11.6 percent in the first quarter, the Bank of Spain said on its website today. From a year earlier, the debt surged 24 percent and the outstanding amount has more than doubled since 2007. Spain’s regions are key to the nation’s efforts to cut the euro area’s third-largest budget deficit as they manage more than a third of public spending, including health and education. Fitch Ratings downgraded five regions including Andalusia and Catalonia this week, saying debt levels are climbing and the weak economic recovery will undermine revenue. Spain’s regional governments are behind schedule to meet deficit targets, according to data released last week that Moody’s Investors Service called “credit negative.” Slippage by the regions “adds to pressure on the central government to make the needed cuts to meet the general government deficit targets,” Fitch Director Douglas Renwick said.
Radoslav Tomek of Bloomberg reports: “Greece should default on its debt and abandon the euro as further loans won’t solve its crisis, a Slovak lawmaker whose vote in parliament may decide whether the country backs a bailout package for the currency area said. The Freedom and Solidarity party, a member of Slovakia’s coalition government, will vote in parliament against the European bailout system, founder and parliamentary speaker Richard Sulik said… His party, known as the SaS, wants member states to ‘keep to the rules’ guiding the euro and ‘start saving money.’ ‘The first step is, Greece has to go bankrupt,’ he said… ‘There is no possibility that’ Greece ‘not now, not in the future, not in 50 years, will’ pay back ‘the loans. My personal opinion is it would be better for Greece to leave the eurozone.’”
Wall Street Journal reports ECRI Leading Index still falling, now with more falling-ness. The Economic Cycle Research Institute’s weekly index of leading economic indicators continues to trot in the wrong direction, down. The ECRI’s index ticked lower last week, the institute said today, and the four-week rolling average fell to -7.1%, the worst rate of decline in nearly a year.
Business Insider reports 10 key dates that are crucial for the future of Europe. And Barry Grey in WSWS article European finance ministers delay loan, press Greece for deeper cuts writes European Union finance ministers delayed a decision on disbursing an 8 billion euro loan needed to avert a default by Greece next month and rejected proposals by US Treasury Secretary Timothy Geithner to expand the EU’s bailout fund
Bible Prophecy Reveals That A European Fiscal Union Led By An Iron Chancellor Will Emerge From The Current Sovereign Debt And Banking Crisis.
One of the most prevalent doctrines throughout scripture is the Sovereignty of God as is seen in Isaih 4:9-14, and Epohesian 1:1. From the opening of the Book of Revelation in Revelation 1:1, to where God pronounces, “It is done”, Revlation 16:17, it is clear that mankind’s events which transpire are the result of God’s initiative. Merrill C Tenney in Interpreting Revelation, Hendrickson Publishers, 1957, page 158, relates “Revelation presents a Sovereign God whose purposes must be victorious. He is almighty, Revelation 1:8, everlasting, Revelation, 4:8, seated upon the throne of the universe, Revelation, 4:2, the creator of all things, Revelation 4:11, and his name is security to those who trust in hIm Revelation 4:1.” Another commentary which highlights God’s Sovereignty is Revelation by David Harrell,
The Apostle John provides his prophetic dream of the last days in the last book of the Bible, that being Revelation. We see that in Revelation 2:27, God is destroying national sovereignty, and all current forms of economic experience, such as European Socialism, whether it be in Greece or Italy, so as to reveal the sovereignty of his Son, by providing a Super European Government, as part of a ten toed kingdom of regional economic government, as foretold in bible prophecy of Daniel 2:42 where according to Revelation 17:12-14, ten kings will rule in each of the ten toes, that is the world’s ten regions.
The Milton Friedman Free To Choose Floating Currency Regime, that began when the US went off the gold standard in 1974, failed beginning in May 2011, as world stocks fell lower with the pillars of sovereign debt, credit liquidity, carry trade investing, and rising currencies collapsing.
Some make the case for breakup of the Eurozone. Edward Harrison wrote in early September in Credit Writedowns breakup of the euro zone is likely. Mike Mish Shedlock in June, wrote “the policy decisions that governments and the EU are making cannot be maintained politically in the periphery or in the core”. Nouriel Roubini wrote the Eurozone could break up over a five-year horizon. And Mr. Shedlock writes: “We both stated that the key to maintaining the euro zone at all was the potential for closer integration of the member states. But the German Constitutional Court decision makes this nearly impossible.” Ambrose Evans Pritchard relates German court curbs future bail-outs, bans EU fiscal union. I give Austrian Economists credit for communicating that Eurobonds are dead on arrival. They and Ron Paul, have a philosophy fathered by Rothbard, Mises and Hayek, who envision a world with sovereign individuals and sovereign nations each with its own currency.
The Austrian Economists champion libertarianism and free enterprise as a solution to the disintegration of European Socialism that we see in today’s news. Ludwig Von Mises wrote “State interference in economic life, which calls itself economic policy, has done nothing but destroy economic life. Prohibitions and regulations have by their general obstructive tendency fostered the growth of the spirit of wastefulness.” page 469 Socialism, Google Books. And Fredrick Hayek said: “The Roman Empire crumbled to dust because it lacked the spirit of liberalism and free enterprise. The policy of interventionism and its political corollary, the Fuhrer principle, decomposed the mighty empire as they will by necessity always disintegrate and destroy any social entity.” page 763 Human Action Google Books.
The Beast Regime of Neoauthoritarianism Revelation 13:1-4, is rising before our eyes as Italian Foreign Minister Franco Frattini is echoing the Angela Merkel and Nicolas Sarkozy August 2011 Communique for regional economic government. And this week Carol Matlack and Jeff Black of Bloomberg report Mrs Merkel saying on German Radio: “Everything must be done to keep the euro zone together”, as she denied reports that Germany was preparing for Greece’s exit from the monetary union. All three are ambassadors of the Ten Toed Kingdom of Regional Economic Government called for by the Club of Rome in 1974, which foresaw today’s economic and cultural crisis stemming from the deleveraging, derisking and disinvestment from the former regime; and provided regional economic government as the basis for a new social, political and economic order. The implication is that ten kings will rise to rule in each of the ten toes, that is the world’s ten regions.
Libertarians are of the belief that they are sovereign individuals; this group of individuals includes: individualist anarchists, (Lysander Spooner), anarcho-capitalists (Murray Rothbard, John Locke), constitutionalists (Chuck Baldwin), fiscal libertarians (Kristin Davis), objectivists (Ayn Rand), libertarian economists (Milton Friedman), left-libertarians (Noam Chomsky), and anarcho surrealists (Andre Breton).
Libertarianism, with its precept of personal sovereignty is now a bankrupt philosophy, as it fails to recognize the authority of God’s word, and the effective working of his sovereign will in the 1974 Call of The Club of Rome, which is clarion, compelling, and comes with authoritarian imperative. Sovereign leaders will be replacing sovereign individuals. Freedom and choice are illusions on the Neoauthoritarian Desert of the Real.
Soon, out of a sovereign debt and banking collapse seen in Revelation 13:3, One Leader, the Sovereign Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will arise to speak for, and to the Eurozone, will provide seigniorage, that is moneyness, based upon diktat of austerity and debt servitude.
The people will be amazed and give their allegiance to this new seigniorage, that is, the new moneyness, Revelation 13:3, The Iron Lady, Angela Merkel, is simply a herald and precursor of one greater, the Iron Chancellor, who will rise to power and rule in a type of revived roman empire. Daniel 8:22-23 relates that He will be one familiar with the scheme of regional framework agreements, which waive national sovereignty; his way must be fierce, as he will face a broad spectrum of angry people. A leading candidate for the position of Sovereign is Herman Van Rompuy, as he orchestrated the original Greek bailout, and who the Daily Mail reports as saying, the age of the nation state is over and the idea that countries can stand alone is an ‘illusion’ and a ‘lie’ State corporatism, that is statism, will rule in all of mankind’s seven intuitions and through out all the world’s ten regions.
The sovereign has an illustrious future as has an appointment: he will be on the plains of Megiddo for The Apocalypse, that is, The Battle of Armageddon. The word Armageddon appears only once in the New Testament, that being in Revelation 16:16. The word comes from Hebrew har məgiddô (הר מגידו), meaning “Mountain of Megiddo or “place surrounded by hills”. Megiddo was the location of many decisive battles in ancient times. And it will be the location of a dramatic future battle as the King of kings, Jesus , comes forth to do battle with the sovereign, Revelation 19:11-19. Both he and the false prophet will be seized and defeated,Revelation 19:20-21.
Eventually, the Beast Regime, being mired in the ten toes of clay of democracy and the iron of diktat, will crumble. The Sovereign will gain the upper hand, and install a one world government, as foretold in Daniel 7:7, and form a one world bank, and provide global seigniorage, as prophesied in Revelation 13:11-18.
Detroit is an epicenter of childhood poverty
Catherine Dodge of Bloomberg reports “The U.S. poverty rate rose to the highest level in almost two decades and household income fell in 2010, underscoring the lingering impact of the worst economic slump in seven decades. Data released by the Census Bureau showed the proportion of people living in poverty climbed to 15.1% last year from 14.3% in 2009, and median household income declined 2.3%. The number of Americans living in poverty was the highest in the 52 years since the U.S. Census Bureau began gathering that statistic. Those figures may have worsened in recent months as the economy weakened.
Nancy Hanover in WSWS article 30,000 children face destitution from welfare cut in Michigan relate an estimated 12,600 families, including 11,188 adults and 29,707 children, will lose an average of $515 a month in welfare benefits beginning on October 1.