The ink wasn’t dry yet on the European bailout fund when it paid $1.3 billion to bail out Proton Bank in Greece. Turns out, Proton had siphoned off $1 billion in a scheme of fraud, embezzlement, money laundering, and offshore front companies. Galling: the Bank of Greece knew of the criminal activity before the bailout. And then a bomb exploded….
The Postal Service announced a staggering loss for fiscal 2011: $5.1 billion. Plus $5.5 billion for retiree health benefits that it should have paid in 2011 but deferred to fiscal 2012. Now it’s due. But there’s no money. Default? Nope. Congress will find a way to stick it to the taxpayer. But amazingly if run right, the Postal Service could be a decent business.
Timothy Geithner, already out on a limb, said today that Europe’s response to the debt crisis is “obviously not fast enough.” But he hasn’t been listening. Europe is responding fast, or at least Germany is. In the opposite direction. The massive cornerstone of support for the euro, German exporters, just cracked: “We need a common market, not one currency.”
In his “enough’s-enough” speech in Hawaii, Obama castigated China for its currency peg, a perennial complaint. Congress too regularly hyperventilates about the yuan being “artificially undervalued.” If China just allowed the yuan to trade freely, they say, it would solve the U.S. economic quagmire. Cheap political posturing—and full of bitter ironies.
Judging from the stream of rumors and energetic denials, German bureaucrats, experts, and politicians are furiously working on dozens of projects that all deal with the debt crisis, and they go off in as many directions. But at the end, there is what they call in their inimitable German a Worst-Worst-Case-Szenario.
For months, rumors China would use its foreign exchange reserves to bail out the Eurozone with the stroke of a plastic pen goosed financial markets. But China has a list of demands. German industry refuses to cede ground. People shudder at becoming dependent on money from the communist regime. Clearly, the debt crisis isn’t deep enough yet.
The government forks over another $13.8 billion to Fannie Mae and Freddie Mac to cover their losses for the last quarter. The regular drumbeat of bailout billions handed to these zombies barely enters the nation’s consciousness anymore, but it adds up: $184.8 billion since 2008. And there is no end in sight. Supercommittee, where art thou?
In what may be a precursor of a monumental shift, Toyota and Honda are planning to export U.S.-made vehicles to South Korea. Apparently, it’s now cheaper to produce cars here and ship them halfway across the world than it is to produce them in Japan. But to what banana-republic levels will the dollar and real wages have to sink before U.S. manufacturing is competitive with China?
Yakuza just can’t catch a break. Now it’s life insurance companies that are tightening the noose. Organized crime is big business in Japan. Extortion, built on a culture of shame, is phenomenally successful. But…. In 1963, there were 184,000 yakuza. In 2009, they were 80,900. And new laws disrupt the ambiguous relationship between them and society.
No country is economically more dependent on the survival of the euro than Germany: the export powerhouse thrived because Eurozone countries could borrow unlimited amounts of euros to buy German goods. But now that the gravy train has stopped in front of a mountain of unmanageable sovereign debt, Germany finds itself at war—with itself.