There have been waves of threats by Eurozone politicians to bully people into accepting “whatever it takes” to keep the shaky construct of the monetary union glued together. These threats peaked last year with disorderly default, and when that wasn’t enough, with the collapse of the Eurozone. But now, the ultimate threat has been pronounced: war.
The ECB and the national central banks of the Eurozone set out to collect “micro-level information” on household wealth. A massive bureaucratic undertaking. Surveys went out in 2010. Results are now ready. No one in Europe had ever done a survey on that scale before. And no one might ever do it again. Because, in the era of bailouts, the results are so explosive that the Bundesbank is keeping its report secret—and word has leaked out why.
Senator Warren set him up brutally. HSBC had admitted “to laundering $881 billion that we know of from Mexican and Colombian drug cartels,” she said. David Cohen, the Treasury’s point man, twitched on her skewer. Why were megabanks and their bankers able to dodge serious punishment for crimes they’d been committing for years? They’re officially too-big-too-jail. And a deeper problem: regulators have been taken over by the banks.
Euros entered circulation on January 1, 2002. For six years, they grew on trees in southern Europe. But the bubble got pricked. Since then, the monetary union has been in crisis. Almost half of its existence! Until suddenly, its problems were solved. But now confidence in the monetary union is weaker than ever. With a hue of resignation in Germany.
By the irony of timing, the Dow hit an all-time high as markets opened. Exuberance wafted through the air. Hype was flowing thickly. Happy days were back. New highs beget new highs. And everyone knew why: the Fed’s money-printing and asset-purchase operations. By the irony of timing… because 30 minutes later, kitchen-table reality polluted the scene.
Former Italian senator Sergio De Gregorio confirmed: “The Cavaliere paid me,” he said about the €3 million he’d received in 2006 from Silvio Berlusconi. “Of course I took the money.” Frustrated with this daily display of corruption, 8.7 million angry Italians voted for Beppe Grillo’s 5-Star movement. While it wasn’t enough to govern, it was enough to give the political establishment conniptions—and show that anger and frustration finally count.
Now that the “sequester” is in effect, horrid budget cuts would hit the US. 750,000 people would lose their jobs, planes would stop flying, children would go hungry, the Navy would no longer be able to operate its ships, according to the media. Fear-mongering that the White House drove to shameless heights. But suddenly, furious backpedalling has commenced.
Spain is on edge. Unemployment is nearly 26%, youth unemployment over 55%. The government is mired in a corruption scandal. The economy is grinding to a halt. On January 23, the Catalan assembly declared that the region constituted a “sovereign political and legal entity.” A step closer to secession. And then a general gave a speech.
That state and local government pension funds are going broke isn’t a new problem. That it’s much worse than reported by those pension funds isn’t a new problem either. Last June, Moody’s determined that the already dizzying unfunded pension liabilities were actually three times higher than reported. To top it off, trustees are blowing a bunch of retiree money on an exotic boondoggle.
“I’m appalled that two clowns have won,” said the man who’d try to knock German Chancellor Merkel off her perch this year. He was referring to former comedian Beppe Grillo and former Prime Minister Silvio Berlusconi. One of them is “a professional clown who doesn’t mind being called that,” he explained; the other is “a clown with special testosterone boost.”