THE POSTS MOSTLY BY GEOGRAPHICAL DISTRIBUTION

THE POSTS MOSTLY BY GEOGRAPHICAL DISTRIBUTION

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Boston artist Steve Mills - realistic painting

Friday, June 24, 2011

The Financial Collapse Of Greece-The Canary In The Coal Mine For The Global Economy?

The Financial Collapse Of Greece-The Canary In The Coal Mine For The Global Economy?


The rest of the world needs to sit up and take notice of what is going on in Greece right now.  This is what can happen when you allow government debt to spiral out of control.  Once it becomes clear that you can't pay your debts, a financial collapse can happen very suddenly and you start losing your sovereignty to those that you must turn to for financial help.  So is the financial collapse of Greece the "canary in the coal mine"* for the global economy?  EU finance ministers have given the Greek government two weeks from Monday to approve another round of brutal austerity measures.  If the austerity measures are not approved, Greece will not receive the next bailout installment of 12 billion euros.  If that happens, the whole globe better buckle up because it is going to get crazy.
July 3rd is the deadline.  Basically the EU has put a gun to the head of the Greek government.  Without this bailout money, Greece will default and economic hell will break loose all across the country.
It is important to keep in mind that this is just the first Greek bailout that we are talking about.  Last year, the EU and the IMF agreed to provide the Greek government with a 110 billion euro bailout. The current 12 billion euro installment is part of that package.
Sadly, it has become apparent that the first bailout is not going to be nearly enough for Greece.  A second bailout, which will be the same size or even larger, is already being discussed.  This is going to put the Greek people even more under the heel of the money powers in Europe.
Keep in mind that all of these "bailouts" are just more loans.  There is no way that the Greeks are ever going to be able to repay all of this money.
But this is what happens when a nation lets debt get out of control.  For years and years it can seem like all of that debt does not have any consequences, but then the day of reckoning comes and it is a complete and total nightmare.
In order to get the next installment of 12 billion euros, European finance ministers are insisting that the Greek Parliament approves a package of austerity measures that will be worth approximately 28 billion euros.
At this point, it is uncertain whether those austerity measures will pass.
However, the pressure on the Greek government to get them pushed through is immense.
These austerity measures include tax increases, budget cuts and a "large-scale privatization program".
This is often what happens to third world nations that cannot pay their debts.  Organizations such as the IMF or the World Bank will come in and insist that they tax their people more, cut back on their spending and sell some of their public assets to big corporations.
As we can see from the wild protests that have been taking place in Greece, a significant percentage of the Greek population is not happy with all of these austerity measures.
Unfortunately, the EU and the IMF are able to put a lot more pressure on the Greek government than the Greek people are.
Greek Prime Minister George Papandreou recently gave the following warning to the Greek people about what could happen if this debt crisis ends badly....
The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks, and the country's credibility.
Not only would a Greek default be a total disaster for Greece, it would potentially be a total disaster for the entire global financial system.
Sung Won Sohn, an economics professor at California State University, recently made the following statement about the seriousness of the debt crisis in Europe....
"The European debt crisis has the potential to have as big an impact as the subprime mortgage crisis did in the United States"
So will these bailouts solve the problem?
No, giving Greece more loans is only going to kick the can down the road for a little while longer.
The truth is that Greece is bankrupt.  Unless huge amounts of Greek debt are forgiven, Greece is going to default sooner or later.
When confidence in the finances of a nation is lost, borrowing costs can go up very quickly.  Today, the yield on two year Greek bonds is up to 28.6%.
Anyone that has ever been late on paying their credit cards knows how painful an interest rate like that can be.
So why doesn't Greece just slash government spending to the bone and get their financial house in order?
Well, it is not that easy.  Harsh austerity measures have already been implemented.  As a result, unemployment is rampant and there is rioting in the streets.
The truth is that, as an article in The Guardian recently explained, austerity has taken a brutal toll on the Greek economy....
A year of wage and pension cuts, benefit losses and tax increases has taken its toll: almost a quarter of the population now live below the poverty line, unemployment is at a record 16% and, as the economy contracts for a third year, economists estimate that about 100,000 businesses have closed.
As the economy crumbles, Greece has descended into an almost permanent state of civil unrest.
The fact that the EU and the IMF want even more austerity measures has sparked some wild rioting In Greece in recent days.  You can see video of the stunning violence going on in Greece right here.
Not all protesters are being violent.  Some of them are showing their displeasure in non-violent ways.  For example, workers for Greece's state-owned electric utility are staging 48 hours of rolling strikes that are designed to create blackouts over large areas.
The frightening thing is that Greece is not alone.  Ireland has already received a bailout and they are probably going to need another one at some point.
Portugal is a financial basket case and they are probably next in line for a bailout.
The employment situation in Spain is absolutely nightmarish.  Spain will probably be able to squeak by without a bailout if the global economy stays stable, but if the dominoes start to fall Spain could be in a massive amount of trouble very quickly.
Not that many people are talking about Italy, but the truth is that Italy has a huge debt problem.  On Friday, Moody's warned that it may downgrade Italy's Aa2 debt rating at some point within the next 90 days.
Belgium and France also have very substantial debt problems.  They probably would not be the first dominoes to fall, but if the "contagion" starts to spread they could certainly have massive problems.
The truth is that Europe's entire financial system is extremely vulnerable right now.  Big banks all over Europe (and especially in Germany) are leveraged to the hilt.  All it would take to topple many of them is a stiff breeze.
When Lehman Brothers collapsed, it was leveraged 31 to 1.
Today, German banks are leveraged 32 to 1.
German banks are also holding a massive amount of Greek debt.
That is why there is so much fear that the crisis in Greece could spread across the rest of Europe and start toppling dominoes.
The sovereign debt crisis in Europe did not happen overnight and it is going to be with us for a long, long time even if the global economy remains relatively stable.
At the moment, the best that officials in Europe can seem to come up with is to put off the pain for another day.  Pimco's Mohamed El-Erian told CNBC the following on Monday....
"This problem is not going to go away. It's going to weigh on markets here and we're going to see the same set of headlines over and over again. We simply cannot continue to kick the can down the road, because we're coming to the end of the road in Greece."
So if Europe starts having major problems will the U.S. step in and help?
Yes, if the crisis in Europe gets worse, the Federal Reserve will probably step in just like they did back in 2008.
But the U.S. is rapidly approaching a day of reckoning like the one that Greece is going through.  The U.S. government has piled up the biggest mountain of debt in the history of the world and faith in the U.S. dollar is dying.
The economic crisis in the United States gets worse with each passing year.  Yes, the Federal Reserve can print up stacks of money and send it over to Europe, but that isn't going to solve anything in the long run.  The truth is that the U.S. is not even going to be able to keep itself from drowning.
The world financial system is far more vulnerable today than it was back in 2008.  The next wave of the financial collapse is going to hit at some point, and when it does it is going to probably be even more painful than the last wave.
Our world is becoming an incredibly unstable place.
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Life for an actual canary in a coal mine could be described in three words: short but meaningful. Early coal mines did not feature ventilation systems, so miners would routinely bring a caged canary into new coal seams. Canaries are especially sensitive to methane and carbon monoxide, which made them ideal for detecting any dangerous gas build-ups. As long as the bird kept singing, the miners knew their air supply was safe. A dead canary signaled an immediate evacuation.
Even as gas detection technology improved, some mining companies still relied on the "canary in a coal mine" method well into the 20th century. Other animals were used occasionally, but only the canary had the ability to detect small concentrations of gas and react instinctively.
Today, the practice of using a bird to test the air supply has become part of coal mining lore, but the ideology behind it has become a popular expression. The phrase living like a canary in a coal mine often refers to serving as a warning to others. The actual canary had little control over its fate, but it continued to sing anyway. In one sense, living this way indicates a willingness to experience life's dangers without compromise.
In another sense, many business and political analysts use the term canary in a coal mine to describe a harbinger of the future. A melting glacier in Alaska, for example, may be described as a canary in a coal mine for global warming. One small event in an isolated area may not seem especially noteworthy, but it may offer the first tangible warning of a larger problem developing. In a political sense, a country's delegation abruptly leaving a meeting could be described as a canary in a coal mine for future negotiations.
Some large corporations also use a "canary in a coal mine" strategy for future growth or reduction. A small company may be used to test the waters for a new product line, for instance. Even if the company only experiences modest profits or losses, the parent corporation can evaluate the feasibility of the product without risking a large investment. By carefully observing any early indicators, industries can avoid major failures down the road or benefit from a jump on the competition.

Israel’s Jewish Exodus

Israel’s Jewish Exodus

Hard-line Israelis reject the idea of reasonable compromises for peace, arguing that any significant concessions to Palestinian sovereignty would threaten Israel’s security or the Zionist cause, but Lawrence Davidson notes that demographic trends, including a growing Jewish exodus from Israel, could have far worse consequences.

By Lawrence Davidson

June 15, 2011

If the historical goal of the state of Israel is to provide the world’s Jews a secure national home, a place of refuge in a world of real or potential anti-Semitism, it seems to have failed.

It has failed not because this writer says so, but because an increasing number of its own Jewish citizens say so.

There have been studies originating both in Israel and abroad that show “as many as half of the Jews living in Israel will consider leaving … if in the next few years the current political and social trends continue.” This finding is in addition to the fact that yerida, or emigration out of Israel, has long been running at higher numbers than aliyah, or immigration into the country.

The Israel Central Bureau of Statistics states that as of 2005, 650,000 Israelis have left the country for over one year and not returned. The great majority of these were Jews. In addition, polls show that at least 60 percent and as high as 80 percent of remaining Israeli Jews “sympathize with those who leave the country.”

Among those who stay, there is the conviction that the safe thing is to have a second passport issued by the United States or a European country.

As the Haaretz reporter Gideon Levy puts it, “if our forefathers dreamt of an Israeli passport, there are those among us who are now dreaming of a foreign passport.”

At present, the United States has issued over half a million passports to Israelis and a quarter million additional applications are pending. Germany runs second with 100,000 passports given to Israeli Jews and 7,000 new ones issued yearly.

Why the scramble for foreign passports? Well, according to Levy, “the excuses are strange and diverse, but at the base of them all are unease and anxiety, both personal and national. The foreign passport has become an insurance policy against a rainy day. It turns out there are more and more Israelis who are thinking that day may eventually come.”

There are two prevailing explanations for this phenomenon. The first is that it reflects the conviction that the safe haven that Zionism was suppose to create is not safe at all.

This is the position taken by the University of Pennsylvania political scientist Ian Lustick, who said:

“The danger for the Jewish state is that, given the choice between convincing Middle Easterners that Israel can be a good neighbor and leaving the neighborhood, more and more Israelis are attracted to the latter. … The logically extreme expression of escape is, of course, emigration.”

Lustick is supported by Stephen Walt, professor of international relations at Harvard University who suggests that “the Zionist ideal is losing hold within Israel itself” because the Israeli government “endlessly delays the [peace] process.”

The second explanation is that suggested by the editors of the Jerusalem Post who cite interviews with “hundreds of Israeli expats in North America.” Their conclusion is that when Israelis go abroad and stay, it is due to economic, and not political or security reasons.

Actually, the explanation offered by the Jerusalem Post is suspect. If the desire to emigrate is motivated mainly by economics, the demand for second passports would not be necessary.

Israelis travel freely in the United States and the economic interconnections between the two countries make it relatively easy for Israeli Jews to get “green cards” to stay and work. This is probably true in some other parts of the West as well, as long as you are not tagged as a war criminal.

However, when you combine the growth in emigration with the desire for foreign passports you get a different sort of message. Planning to possibly emigrate on a foreign passport implies that there are a number of Israelis who foresee the demise of the state.

In other words, they foresee a day when the Israeli passport will be worthless. Given the fact that emigration is something of an ideological sin for Zionists, it is no surprise that some of the emigrants tell pollsters their motivation is economic. It sounds better.

But in the end it hardly matters, leaving for whatever reason is the equivalent of voting with your feet.

Not Without Its Costs

This trend is no doubt encouraging to the Palestinians and their supporters, but it is not without its costs.

If we assume no change and project this development into the future, say 20 years or so, what will Jewish Israel look like?

First, the ratio of Jews to Israeli Arabs within the Green Line will certainly shrink. That is, the Arab population, which already has a higher birth rate than the Jewish one, will grow all the more rapidly, making up an increasing percentage of the population. Factor in the Occupied Territories and there will be more Palestinians than Jews.

One can, of course, say that this is as it should be. The notion that Palestine must have a Jewish majority has always been a perverse one. Nonetheless, as a consequence of the changing demographics, it is almost certain that Palestinian-Jewish Israeli relations, which have never been good, will get rapidly and proportionately worse.

Why so? The second point answers this question.

Second, of the Jews who remain in Israel, an increasing percentage will be ideological fanatics. Take a look at the religiously motivated, armed and aggressive settlers on the West Bank and then imagine them, along with those in black hats and pa’ot (unshaven sideburns), as making up 60 or 70 percent of the Jewish population.

That is a “Masada” majority who will be willing to “defend” their way of life in all of Palestine not due to patriotic propaganda, but out of real racial conviction and religious zeal.

Third, the other remaining Jews, the ones not necessarily fanatical, will be mostly docile. These are the ones who cannot get the foreign passports, who have no relatives abroad to vouch for them, and not enough resources to bankroll a new start even if they could find another place to go.

They will follow what orders they are given by their increasingly fanatical government for the sake of their jobs, their pensions, to put bread on the table, because their peers are doing so, etc.

Fourth, ideological fanatics confronting their worst nightmare, in this case the “demographic holocaust,” are not going to be devotees of democracy and human rights. Israel’s government will become more and more dictatorial.

We can already see this in today’s Israel where the Knesset, presently controlled by ideological parties, is in the process of passing anti-democratic laws. This is may be just the beginning.

In a population shorn of its middle class, there will be no real political opposition and the right-wing parties will become ever more aggressive against what they regard as anti-Zionist elements within the Jewish population.

Organizations such as B’tselem, Gush Shalom, Rabbis for Human Rights, the Committee Against Home Demolitions, and the like will be shut down. Supporters of these groups will become silent or go into exile, as will the small number of Israeli academics who now stand against government policy.

If they do not, they will likely end up in jail.

This, of course, is just conjecture. However, it is reasonable conjecture. And so we really ought to think about this.

In today’s Israel you can still tell the difference between those Jewish Israelis who want a just and humane settlement with the Palestinians and those who do not. If things keep going as they are now there will come a time when it will be much harder to make that distinction.

In other words, when the everyday man or woman just looking for economic or physical safety, just looking for a better place to raise the kids, packs up and leaves, the “neutral zone” of everyday life vanishes with them.

Society becomes a place where, as George W. Bush once put it, you’re with us or against us. And, if to be with us means to be a racist, a supporter of the God-chosen people and an active enemy of the inferior and doomed Amalekites, then that is how everyone still in residence will behave.

When and if that time comes, how are we on the outside, and especially those of us who are Jews, going to react to an Israel where those who seek a just peace are either silenced, imprisoned or exiled?

What do you do with a society where everyone must support injustice or be themselves condemned as traitors or criminals? Under these circumstances how do you tell the difference between the innocent and the guilty?

This is not a potential scenario unique to Israel’s situation. It has been played out before. The difference is that before the Jews were among the victims and not victimizers.

This is what happens when any group gives itself over to a doctrine, be it racial, religious or political, which destroys all notions of common humanity. That is what the prevailing ideology of Israel has done.

And, if history remains consistent, as Zionism “purifies” itself, gets rid of all those who would question it or compromise it, it must take its remaining adherents into the realm of unadorned horror. We should all be afraid of this. Very afraid.

Lawrence Davidson is a history professor at West Chester University in Pennsylvania. He is the author of Foreign Policy Inc.: Privatizing America’s National Interest; America’s Palestine: Popular and Offical Perceptions from Balfour to Israeli Statehood; and Islamic Fundamentalism.