In its attempt to quell rising uneasiness in the wake of the failed German bond sale last week, the establishment magazine The Economist rushed in over the weekend with a series of four separate articles promoting its globalist and internationalist perspective on the matter.
The first article noted that the risk to the euro within the next few weeks is “alarmingly high” unless measures are taken. The article blamed lack of leadership — “denial, misdiagnosis and procrastination” — for the unfolding and accelerating crisis. First, a recession appears to be imminent as the austerity measures are taking hold across the euro zone and slowing already shaky economies.
Second, there is evidence of a run on banks holding large positions in the sovereign debt of the weaker countries. As the banks are facing a June 2012 deadline to improve their capital positions they are now seizing this opportunity to unload as much of that debt as they can, thus explaining the significant rise in interest rates all across the zone. This reflects the simple fact that the banks have loaned money to each other — loans that exceed their deposits, according to The Economist — and now are unwilling to continue to make those loans. This is putting the various spendthrift — “feckless” is their word for it — governments at risk of default when they can’t borrow the money to pay their bills. Especially at risk is Italy, which has to roll over $42 billion of debt the last week in January and another $62 billion at the end of February.
The Republican Small Business Committee reported on November 8 that small-business optimism “remains extremely low,” and that business owners “simply are not hiring because they are pessimistic about consumer sales, the nation’s economic climate, and the amount of regulations to comply with.” Committee Chairman Sam Graves (R-Mo.) added, "The overall mood of the nation’s job creators is still at historic lows. The [Optimism Index of the National Federation of Independent Business] shows that over the next three months, only 9 percent of small business owners plan to increase employment [while] 12 percent plan to lay off workers. These numbers are … worse than the previous two months."
NFIB's Optimism Index has shown precious little change going back to January of 2009 and is matched by the University of Michigan’s Consumer Sentiment Index, which noted that “more households reported that their finances had worsened rather than improved for the 48th consecutive month [and that] just 22% of consumers expected their finances to improve” in the coming year. Further, in each of the past four months, “the majority of consumers unfavorably rated the policies of the Obama administration.”
The Consumer Confidence Index issued by the Conference Board also showed consumer expectations at 51.8, down 10 full percentage points just since April.
By every appearance, we are entering the final, calamitous act of the European debt crisis, a sprawling, slow-motion debacle that is about to engulf the world in financial turmoil more acute than the American meltdown of 2008. For roughly two years, European authorities have struggled to keep the debt crisis from spinning out of control, doling out bailouts to small, heavily indebted nations such as Ireland, Portugal, and Greece. “Contagion” — the notion that a sovereign default in, say, Athens, might trigger a cascade of woes elsewhere — has been and remains the watchword.
But, with Italy now propelled into the company of the desperately indebted, the Europeans have all but run out of options. Unlike Greece and Portugal, Italy, with its $2.6-trillion debt, is far, far too large to be bailed out. Italy’s political leadership — like America’s — has been absolutely unwilling to cut the expense of government, clinging like ivy to cherished government programs that cannot be sustained by any level of taxation. Over the past couple of weeks, markets have finally taken notice, driving interest rates, or “yields,” on most Italian government bonds to over seven percent. Today, for example, the Italians managed to auction off $10.6 billion worth of six-month bonds at yields of 6.504 percent. Two-year bonds, meanwhile, were selling for 7.64 percent, and 10-year bonds for 7.26 percent. By comparison, consider that six-month Italian bonds were selling for a mere 3.535 percent only last month, while two-year bonds were just above 4.1 percent in early October and at 2.3 percent in mid-March. Borrowing rates for Italy have more than tripled in a few months.
The “disastrous” failure of the German bond auction on Wednesday when buyers failed to bid the offering and Germany’s Central Bank — the Bundesbank — had to step in and purchase nearly 40 percent of the offering came just a day after SpiegelOnline posted an article critical of the country’s finances. The article virtually accused Chancellor Angela Merkel and her Finance Minister, Wolfgang Schauble, of “cheerleading” the economy’s supposed strength while ignoring major weaknesses. Merkel says her country has “a clear compass for reducing debt [and that] getting our finances in order is good for our country.” Schauble was an echo: Germany is a “safe haven [because] the entire world has great confidence in both the performance and soundness of the fiscal policies of the Federal Republic of Germany.”
Cracks in Germany’s economy were noted by Professor Wilhelm Hankel of Frankfurt University back in November of 2010: “Germany cannot keep paying for bail-outs without going bankrupt itself. This is frightening people.” He added,
You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings.
The House of Representatives voted down the latest proposal for a balanced budget amendment on November 18.
Under the terms of the Constitution, a constitutional amendment must be passed by a two-thirds majority vote in both houses of Congress and then be ratified by three-fourths of the states in order to become part of the Constitution. The vote in the House was 261 in favor and 165 opposed. That is 23 votes short of the necessary two-thirds.
In a statement issued by his office after the vote was taken, Speaker of the House John Boehner (R-Ohio) scolded the party across the aisle: “It’s unfortunate that Democrats still don’t recognize the urgency of stopping Washington’s job-crushing spending binge."
Others were pleased with the outcome, however.
Gerald McEntee, head of the American Federation of State, County and Municipal Employees, rejoiced in the rejection, calling it “a win for working families.” He praised Democrats in the House for boldly withstanding the attempt by supporters to pass a bill and “the deep cuts it would have made to Social Security, Medicare and Medicaid.”
Jeff Jacoby listed some of the reasons he was thankful on Thanksgiving Day in 2003, including the feast on the table, the company of his family and loved ones, the good fortunes enjoyed during the year, the privilege of being an American. But what about such common things taken for granted, like airline schedules, and movie theaters, and recipes in the paper — and the turkey?
He wrote, “Isn’t there something wondrous — something almost inexplicable — in the way your Thanksgiving weekend is made possible by the skill and labor of vast numbers of total strangers?” The magnificent choreography of the free market, including the poultry farmers, the food distributors, the truckers, the architects who built the hatchery, the technicians who keep it running, the people prepping the turkey — from slaughter to defeathering to inspecting to wrapping to transporting to pricing to displaying — all of this coming together voluntarily by the mystery of the free market. All of this, he said,
had to be precisely timed so that when you showed up to buy a fresh Thanksgiving turkey there would be one – or more likely a few dozen – waiting. The level of coordination that was required to pull it off is mind-boggling.
With the nation still deeply in debt and Americans struggling to make ends meet, residents in an Ohio valley are proving to the nation that perseverance and optimism are key ingredients to overcoming economic woes.
Mahoning Valley, Ohio, was once a thriving area, but that was before the steel factories were shut down. "The factories no longer spew black smoke into the sky, there are no employees patrolling behind their high metal fences, the lights inside are permanently off and there's an eerie silence all around," Fox News reports. "The buildings stand as large, empty symbols of the industry that used to keep the Mahoning Valley running."
Local historian Jim McFarland explains, “This was the center of the steel industry, mostly because of the location, halfway between Pittsburgh and Cleveland, halfway between New York and Chicago — that led to a lot of manufacturing.”
That manufacturing resulted in a vast number of jobs in steel plants along the Mahoning and Cayuhoga Rivers, where generations of families were employed.
Former employees of the defunct solar company Solyndra are now eligible for a combined $14.3 million in federal aid, the Labor Department announced Monday. Approved through the Trade Adjustment Assistance (TAA) program, the 1,100 employees who were laid off after Solyndra went belly up in late August are set to receive payments of about $13,000 each, which will be tacked on to the $535 million in loan guarantees that taxpayers are already on the hook for.
TAA is a federal program designed to compensate and bolster American workers who have lost their jobs due to foreign competition. The program offers a variety of reemployment services and training to help participants obtain new jobs and retain wages comparable to their prior employment.
The notion that fervent Chinese competition is the sole catalyst to American solar companies’ financial woes has been long touted by congressional Democrats and the Obama administration, particularly as Solyndra’s bankruptcy has placed them in the political hot seat. The Labor Department’s approval of the TAA aid reinforces a trade complaint directed against China by a conglomerate of U.S. solar panel manufacturers, and by granting the assistance the department has seemingly indicated that the allegations hold at least some merit.
From Reuter’s interview with former Canadian Prime Minister Jean Chretien in August came a much fuller understanding of the forces that moved the Canadian economy from a basket case to a decade of robust growth and budget surpluses.
A liberal much in the mold of liberals in the Democrat Party in America, Chretien took over in November 1993 as his country was suffering from high unemployment, a stagnant economy, and increasing interest rates on its national debt. Its ratio of debt-to-GDP was approaching 70 percent while its annual deficits were nearly 6 percent of GDP and increasing. The economy was ranked just above Italy among the Group of Seven, Canada’s peers. As Scott Clark, Chretien’s Deputy Finance Minister put it: “We used to thank God that Italy was there because we were the second worst in the G7.”
In a rare interview, Chretien was forthright about what happened to turn the economy around and set the stage for the country’s “Payoff Decade.” He said, “There would have been a day when we would have been the Greece of today. I knew we were in a bind and we had to do something. I said to myself, I will do it. I might be Prime Minister for only one term, but I will do it.”
We frequently hear from the particularly naïve that they want to take the money out of politics. That claim recently resounded from the Occupiers of Wall Street and other locations — apparently so they could keep the loot for themselves, if the $500,000 they raised was any indication. Scratch a Marxist with a bank-roll, and you’ll expose a hypocrite every time.
Ditto for politicians. Extracting money from their hot little hands is like prying the BlackBerry from Anthony Weiner’s. Just ain’t gonna happen.
Politics is money. Lots and lots of it. Why else would bums with no discernible skills but a burning lust for other people’s hard-earned bucks flock to public office?
Consider the average politician. Tragically, he’s born without the sense God gave amoebas — but with a whale-sized ego. How will he ever reconcile the two?
Then the whiz-kid hits kindergarten. You remember him: the crybaby everybody hated for tattling on us about everything, all the time.