The European crisis continues to mushroom, even as Eurocrats meet in Brussels to try to stave off implosion of the eurozone. Tuesday’s sale of Italian debt forced the government of Italy again to accept interest rates or “yields” in excess of seven percent, a level proven by experience to be unsustainable. Thursday will be another bellwether day, as Spain and Belgium — both of whose bonds are commanding steep yields — auction off debt of their own. But at the rate interests on government debt are rising across the eurozone, a few more weeks could write the epitaph for the once-touted international currency.
While European politicians continue to insist, as politicians will, that Europe’s problems will be resolved and that the eurozone will be kept intact at any cost, the world’s financial and banking elites are apparently coming to a different conclusion. Banks and banking regulators in Asia, the United Kingdom, and North America are busily drawing up contingency plans for a eurozone breakup while trying to reduce their exposure to European debt. “We cannot be, and are not, complacent on this front,” declared Andrew Bailey, a regulator at Britain’s Financial Services Authority, last week. “We must not ignore the prospect of a disorderly departure of some countries from the euro zone.”
According to the New York Times’ Liz Alderman, writing on November 25:
On the lookout for perceived injustices in the marketplace, Cornell University professor Robert Frank decided that Black Friday needed his attention and wrote in the New York Times about just what was needed: more taxes to discourage unreasonable behavior.
His first complaint was about the unreasonable hours that stores were opening in an effort to respond to consumer demand: “For many years, stores opened at reasonable hours. Then, some started opening at 5 a.m., prompting complaints from employees about having to go to sleep early on Thanksgiving and miss out on time with their families. But retailers ignored those complaints, because their earlier start time proved so successful in luring customers away from rival outlets.”
He then iterated the now-familiar theme of major retailers opening earlier and earlier, also in response to consumer demand. He said it was thoughtless of those greedy merchants to make such demands on their employees: “The costs to store owners and their employees are enormous: millions must now spend time away from home on the one occasion that all Americans, regardless of religion or cultural background, share as a family holiday.”
The Federal Reserve Bank committed some $7.77 trillion in funds to major Wall Street banks during the height of the 2008 financial crisis, according to a report published by Bloomberg News November 28 through a Freedom of Information Act request.
It's unclear from the methodology explained by Bloomberg's analysis of some 29,000 Federal Reserve documents released how much overlap there is with the Government Accountability Office audit published last July that counted some $16 trillion in Federal Reserve loans to major Wall Street banks. Bloomberg's explanation of its methodology does indicate at least some overlap.
Throughout the financial crisis, Congress remained blissfully unaware that trillions of dollars were being committed by the Fed with the implicit guarantee of the U.S. taxpayer. “We were aware emergency efforts were going on,” Massachusetts Democrat Barney Frank told Bloomberg, but “we didn’t know the specifics.” Frank, who announced his retirement November 28 after the Massachusetts state legislature gerrymandered him out of his district, served as Chairman of the House Financial Services Committee at the time the bailouts began. That committee is charged with oversight of the Federal Reserve and the banking industry.
Even if Congress' supercommittee had agreed on how to cut the national debt by $1.2 trillion over the next decade, it would still have been a total failure, an inconsequential bit of political grandstanding. With the federal debt officially projected to grow by $11 trillion over the next 10 years (and that’s probably an optimistic undercount), a cut of $1.2 trillion over the same period would simply result in the current $15 trillion federal debt ballooning to $25 trillion.
Jacob G. Hornberger is founder and president of the Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for 12 years in Texas. In 1987, Hornberger left the practice of law to become director of programs at the Foundation for Economic Education in Irvington-on-Hudson, New York, publisher of The Freeman.
In 1989, Hornberger founded the Future of Freedom Foundation. He is a regular writer for the foundation’s publication, Freedom Daily. Fluent in Spanish and conversant in Italian, he has delivered speeches and engaged in debates and discussions about free-market principles with groups all over the United States, as well as Canada, England, Europe, and Latin America, including Brazil, Cuba, Bolivia, Mexico, Costa Rica, and Argentina.
Barney Frank, the first openly homosexual Congressman, whose “alternative” lifestyle at times spilled over into his public life, has announced that he is retiring at the end of his present term, ending a 30-year career as one of the most liberal members of the House of Representatives. In his official announcement, Frank explained that he had been contemplating retirement for the past year, and, facing a reconfigured district that would require him to aggressively campaign among hundreds of thousands of new constituents, he decided instead to drop out.
A political insider told the Boston Globe that “the new district in which Frank would have had to run next year was a major factor in his decision. While it retained his Newton stronghold, it was revised to encompass more conservative towns while Frank also lost New Bedford, a blue-collar city where he had invested a lot of time and become a leading figure in the region’s fisheries debate.”
Frank complained that the political arena had changed “in a way that makes it harder to get anything done at the federal level.” He reflected that as a legislator he had been effective at “working inside the process to influence public policy in the ways that I think are important. But I now believe that there is more to be done trying to change things from outside than by working within.”
The ballyhooed Black Friday protest suggested by the leaders at Occupy Wall Street failed, but OWS has succeeded on two counts. Its members have committed or been involved in more than 330 crimes and other unsavory incidents, and the Associated Press reported last week, the movement has cost municipalities across the country about $13 million in police overtime and damage to public property.
The Wall Street Journal virtually called the Obama administration’s efforts to create “green” jobs a joke, decrying the President’s efforts to jump-start the economy with them as mere “conjuring” and suggesting instead that he drop his “ideological illusions” and face reality.
The reality is that no matter how much of other people’s money the President throws at the “clean” renewable alternative energy sector to force it to generate jobs, his efforts have been an abysmal failure. The name Solyndra is now synonymous with “loser” and the Washington Post reported last month that Obama’s green loan program of $38 billion has created just 3,500 jobs in two years instead of the 65,000 anticipated by the White House.
Instead, real jobs are being created in the real energy industry — in Pennsylvania, North Dakota, Texas, Louisiana, and Oklahoma. In the first six months of this year, 18,000 new jobs were created in the natural gas business in Pennsylvania, with more than 200,000 jobs existing there today where none existed 10 years ago. Overall, the Journal reported that “oil and gas production … now employs some 440,000 workers, an 80% increase, or 200,000 jobs, since 2003. Oil and gas jobs account for more than one in five of all net new private jobs in that period.”
Amid growing speculation over the collapse of the euro, British embassies are now preparing for worst-case scenarios, such as riots and civil unrest. The Telegraph reported, “British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain. As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.”
The euro’s endangerment comes as the International Monetary Fund, of which Britain is a large shareholder, may be forced to give Italy a rescue package that would allow its new Prime Minister, Mario Monti, time to implement tax increases and spending cuts.
Likewise, revelations indicate that a pact has been struck between German Chancellor Angela Merkel and French President Nicolas Sarkozy that did not include Britain, nor did it include countries outside the European Union. Under that plan, EU member states will be forced to have their budgets approved by the European Union before even being approved by their own national parliaments. Likewise, countries will have to sign on to new rules on the size of debts they may take on and will be sued in the European Court of Justice for any breach of those rules.
Despite not being a member of the European Union, Switzerland is under intense pressure from Brussels to raise taxes as companies flee high-tax EU welfare states in favor of more business-friendly Swiss cantons. And if the nation refuses to bow down soon, so-called “eurocrats” are threatening retaliation.
The Swiss government has been in discussions with EU bosses for over a year regarding Switzerland’s non-compliance with the “EU Code of Conduct for Business Taxation.” The EU’s goal, according to the Swiss Broadcasting Corporation, is to eliminate what the supranational regime in Brussels calls “harmful tax practices” — low taxes which attract capital, businesses, jobs, and workers away from the crumbling European super-state.