Guerra contra o Euro (VII) - Agências de notação, uma quadrilha americana

Fear of the Executioners

The Sinister Power of the Rating Agencies

By Michaela Schiessl, Christoph Schult and Thomas Schulz

As the debt crisis worsens, governments fear the rating agencies, which have the power of life and death over whole economies. The Big Three helped to cause the 2008 financial crisis and are now accused of worsening the euro zone's woes. But a look behind the scenes shows that there are few alternatives to the mighty agencies.


The man who will decide on the financial health of entire countries this summer wears dark suits and square wire-rimmed glasses. He has graying hair, but his face is youthful. He speaks in a sonorous baritone tinged with a southern German accent. Yes, this ratings guru is from Germany.

His name is Moritz Kraemer and he makes a friendly and relaxed impression. But when his critics talk about Kraemer's work, they characterize him as "highly dangerous" and a "firebrand," one of those murderous men "who destabilize all of Europe." His powerful opponents include the German chancellor, the president of the European Commission and the French head of state, to name just a few.

Kraemer is the head of the European sovereign credit ratings unit at Standard & Poor's. Together with his colleagues at the rating agency, he has helped ensure that Greek government bonds are now seen as "junk" and those from Portugal and Ireland are rated only slightly better. Being saddled with such a low rating makes it far more difficult for these countries to take out additional loans.


Kraemer and his team have repeatedly downgraded Greece's credit rating over the past two years -- and each step down the rating ladder has escalated the European debt crisis. "That was really rough," Kraemer admits in a surprisingly calm manner, "but we're simply obligated to promptly inform investors of our opinion of the risks involved." Kraemer assesses the creditworthiness of countries and addresses the question of how likely it is that they will become insolvent. Working with his colleagues, he takes hundreds of pieces of data, combines this with people's views and opinions, and finally distills this to a rating. The highest rating, AAA, has become the ultimate seal of approval. From there it goes downhill over nearly two dozen rungs to D, for default. Germany is rated AAA. Greece is hovering just above D.


Repercussions for Whole Continents


Kraemer's job is normally a rather low-profile position that is only important for bond dealers, central bankers and other financial professionals. But these are no ordinary times. The currency market is teetering on the brink of disaster and suddenly everything Kraemer does has repercussions for entire countries -- and even continents.


Ever since he and his colleagues downgraded the US government's AAA sovereign credit rating on the Friday before last, shockwaves have been reverberating around the globe. Stock markets are plunging and politicians are dashing from one crisis summit to the next. When the rating agencies give the thumbs-down, the markets are obliged to follow. Indeed, most investors have no choice but to rely on the assessments of rating agencies. Their role is enshrined in countless statutes and regulations stating that institutions such as banks, insurance companies and pension funds may only invest in companies, financial securities and government bonds that are classified as practically risk-free. If the rating falls, they are forced to sell.


This gives enormous power to this tiny sector. The agencies' verdict decides whether, and at what price, a country can raise money on the capital markets -- and if the crisis will continue to escalate. If a country is downgraded, this price rises, which exacerbates its plight -- which could in turn lead to the next downgrading.


The governments of the euro zone, which are struggling to find a way out of the crisis, are forced to watch helplessly from the sidelines as the rating agencies make life more difficult for them. When they moved to have private-sector creditors shoulder part of the burden of a new aid package for Greece, the rating agencies threatened to give Greece a "default" rating, which would have caused renewed turmoil in the markets. It took intense negotiations to hammer out a compromise.


To make matters worse, all of this power lies largely in the hands of three private companies that have their headquarters in the US: Standard & Poor's (S&P), Moody's and Fitch (which has dual headquarters in New York and London). They form the infernal trio of the financial world.
Is it acceptable for so much power to be concentrated in private companies whose objective is not a stable financial system, but their own profit? Or is this precisely what global public finances need: an independent oversight that forces governments to tighten their belts and keep their budgets in order? Americans are only beginning to truly ask these questions now. The debate has been raging in Europe for months, however. European politicians across the political spectrum have harshly condemned the agencies, arguing that they are a threat to the global financial system and that they fuel the bloodletting on the markets.


These critics contend that in the run-up to the 2008 crash, the agencies helped spark the crisis by giving far too lenient ratings to American mortgage-backed securities. Now, they say that the agencies are being too harsh -- and are thus again responsible for widespread misery.


'You Need to Have a Thick Skin'


What effect does this have on Kraemer? Can he still sleep at night? And when he sees protests and street battles in Greece and Spain, does he feel partly responsible?
"No," says Kraemer. "You need to have a thick skin in that respect. Countries don't have to trim their budgets for our sake, but because they have accumulated too many debts."
Kraemer's office is located on the 27th floor of the Frankfurt Main Tower. The view extends all the way to the Taunus mountain range, but Kraemer is rarely here. Instead, he spends much of his time traveling around the world. "At least once a year we send a team to every country that is rated by S&P," he explains.


Many doors are opened for Kraemer, right up to the heads of government: "Ministers brief us on policy guidelines." He says that this dialogue with the governments is part of the rating process. "We of course listen to what they have to say -- anything else would be unreasonable."
At the same time, he adds, the rating agency doesn't rely too much on the plans and data presented during these visits. "We make our own analytical decisions."


'There Were No Calculation Errors'


That's hardly surprising. After all, many official figures are questionable. It's been common knowledge for some time that Greece's deficit figures were unrealistic. But how do you rate a country in such cases? "If the flow of information is too slow, we don't pull a rating out of a hat," says Kraemer, explaining that S&P withdrew its rating for Libya for this very reason. In the case of Greece, he adds, "there was, in our opinion, sufficient information available for an assessment."

Apparently, the information didn't shed a positive light on the country: In only 500 days, S&P downgraded its rating of Greece by seven notches. "The situation in Greece deteriorated much faster and more dramatically than was initially apparent," says Kraemer. "From today's perspective, though, no one would say that these steps were exaggerated."
Generally speaking, Kraemer also sees very few problems with the work of his agency -- not even with the fact that S&P initially apparently misinterpreted the US federal deficit. When analysts decided to lower the long-term sovereign credit rating for the first time from AAA to AA+, the US Treasury immediately sounded the alarm and contended that S&P had made a $2 trillion (€1.4 trillion) error in its calculations of the country's future debt. The agency asked for a few hours to think it over. It then confirmed the downgrade, but the reason had suddenly changed. Now, instead of highlighting its financial calculations, the agency cast doubt on the country's political leadership.


"There were no calculation errors," Kraemer says. "We only used an alternative scenario to examine the anticipated growth in expenditure." The reaction from politicians is not surprising, he says: "If there is bad news, they often first try to play it down and discredit the analysis." The US Treasury sees things differently: "They (S&P) have handled themselves very poorly and they've shown a stunning lack of knowledge about basic US fiscal budget math," said Treasury Secretary Timothy Geithner.


Reproduzido de DER SPIEGEL, 16/08;2011
http://www.spiegel.de/international/business/0,1518,780304,00.html

Guerra contra o Euro (VI) - A guerra psicológica ilustrada

US covert dirty war

Ilustrações: domínio público

Guerra contra o Euro (V) - Direita e mídia norte-americana

 

Ilustrações: domínio público

The truth about so called Euro Debt Crisis and 
why Euro is still beating the pants off US Dollar

Doubtless you have been reading and/or hearing the near non-stop doom & gloom reporting from US & UK Media about "Euro Debt Crisis", and if you are like most people you are wondering what the hek does this mean! And I am not just referring to you as if you are an American or a Canadian etc. as to wondering what the hek does all this talk of "Euro Debt Crisis" that is coming non-stop from US/UK Media means, but even if you are a European you are wondering the same question. For if you are in a typical European city and you ask a typical European what do you know or think of this non-stop doom & gloom coming from US & UK Media about "Euro Debt Crisis", their answer would be either what "Euro Debt Crisis are you talking about" or "I really do not know what they are talking about" or "It has no effect on me so I dont really pay any attention to it" etc. indication that the "Euro Debt Crisis" is really more of a creation of US & UK Media than reality in Europe, much as the US & UK Media in 2002 in total non-stop brain-washing unison tried to sell to the World of the need for War in Iraq for one made up reason after another, they are now engaged in a similar campaign against Euro. Now there is some truth to this so called "Euro Debt Crisis", but it is not at all what the right-wing fear-mongering Media has been reporting, this article will explain what is really going on in this regard and most likely what will happen to address it and what all this means for average investor.

The truth about so called "Euro Debt Crisis"

So "Euro Debt Crisis" is mainly non-sense and really just the continuation of the Con Job of Republicans, specifically the right wing Media/Cabal behind them, so that they can then say:


"US is next if we do not stop Government spending or if 
we adopt European style social services such as universal 
socialized health care"

However there is some truth to "Euro Debt Crisis", but it is not at all what the
US (right-wing Media) is telling you. 1st in summary the causes of this
"Euro Debt Crisis" are:

1- Near collapse of US economy in 2008, reduced growth world wide and for those
smaller economies that were dependent on growth to service their Bond interest payments, these payments became harder to make.

2- Euro being a very strong currency has put a straight jacket on the weaker economies, such as Greece, who cannot devalue their own currencies, and thus grow their way out of their Bond payments this way.

So "Euro Debt Crisis" is more a problem of Euro being a currency of a Union that is not backed by a single Fiscal policy.

Euro is a deeply flawed currency but still beating the pants off US Dollar!

So Amongst all doom reporting from US Media, about "Euro Debt crisis" there is one truth:

Euro is a deeply flawed currency.

Because Euro is currency of a monetary Union with no Fiscal Union. This means
countries that use Euro have different Tax rates, Bond rates, etc. serious lack of monetary Union. This is really crazy when you think about, this means that for example Greece would have to borrow at 8% whereas Germany can issue Bonds at 2%, or Greece has 30% Tax on income over 250K, whereas Germany has 50% and collects it.

With above FACT stated, here is another FACT, a deeply flawed currency Euro is beating US Dollar, given that Euro has GAINED a MIGHTY % against US$ since its introduction in 2000 at 1 to 1 to US$. This is really BEST proof of the fundamental problems of US economy, which are:

1- Lack of something as essential as universal socialized health care, something that would give health care to all Americans while cut health care costs by 50%

2- Our Taxes wasted on One War after another and a Gargantuan Military

3- Plus lack of other social services, such as the fact that in Germany, France, etc. European country you can go to college pretty much for free, free for the Taxes that you pay through your life, whereas same college education in US will cost you an INSANE amount of $100,000 and more, thus saddling you with Debt for years to come even if you get a good Job and God help you if you do not, thus retarding your economic growth and enjoyment of life.

So just think how screwed up USA is, that a deeply flawed currency such as Euro, the currency of a Union that supposedly is having a "Debt Crisis", is still beating the pants off the US Dollar.

This is really the best indication of how fundamentally screwed up USA has been
and continues to be. After all how screwed up can you be that it is 2012 and US does not have something as essential for the functioning of a Modern economy as universal socialized health care (NHS), something that the ENTIRE developed World has, something that the Conservative parties, repeat the Conservative parties, in UK, Canada, Israel, etc. 100% support. And why Conservative parties in entire developed World are 100% for their NHS, it is because in countries that have not-for-profit Government run NHS, health care is taking on average 9% of GDP while in US with Wall Street run for profit health care, 50Mill+ have NO health care, 2Mill+ go bankrupt each year due to health care costs, and health care is taking a DEFICIT busting 18% of GDP.

It gets worst for USA

So here is what tells the World that even a currency as flawed as Euro is better than US Dollar. Because one major party in US, the Republicans are such
lunatics, to actually oppose such sensible socialized services as universal socialized health care (NHS), or socialized college education, etc. as they have in UK, Canada, Israel, Germany, France, Japan, China, etc.

And the other party, although talked about it, they actually never even proposed NHS, set aside pass NHS. And vast part of US Media are such enemy of American people, that they report non-stop lies and lies in opposing NHS and other necessary socialized services, such as they print in their US version, but not their European or Canadian versions, that European, Canadian, etc. are dying waiting in line to get health care because of their socialized health care. Which of course as a European, Canadian, Japanese, etc. citizen with NHS in your country you know to be a total lie and that is again why US Media outlets do not write the same in their European, Canadian, Japanese, etc. versions.

How about S&P downgrades Euro banks

No one in Europe gives a SQUAT anymore about what US firms or Media says. After all a country that is so miserable, because it is mislead by its Media, to have as one of its main parties the Republican lunatics, and as its main Media sources such lying right-wing machines as Talkradio, Fox news, Wall Street Journal, which party and so called News sources are about one Con Job after another, who for example say to anything that is for benefit the American people at the expense of the Wall Street gang, such as having universal socialized health care (NHS) so that all Americans will have health care while health care would cost 50% LESS: "Socialist Socialism Socialist Socialism" when one of their favorite organizations is the US Military which is a 100% Socialized entity,
then a country this miserable, this mislead by its most powerful institutions, has nothing to say that anyone cares about.

And again that is why a deeply flawed currency such as Euro, is still beating the pants off the US Dollar.

What about Greece going bankrupt?

1st, If you were in Greece now you will see that all this doom & gloom talk about Greece is mainly non-sense. As typical restaurants, clubs, beaches, etc. are packed until wee hours of the morning, etc. indication of how Greek are having a great life. So does Greece have some problem, yes they do and it is what Greek called "fakeleki", which basically means a systemic problem of bribing under table, you could actually think of it as rampant capitalism.

So these non-stop negative reporting about Greece "debt crisis.." by US Media is meant to enable the Republican lunatics to then say, See:
"US is next if we do not stop Government spending..."
or
"Socialism only works until you run out of other people's money to squander..."

etc. Psycho babble

Demonstrating yet again the Con Job Republicans & right-wing Media are playing on American people, FOR:

1- Germany, Norway, etc. European countries whom have lil Debt and much LOWER Un-Employment, compared to US, have much more of a "Socialism" based economies than Greece.

2- In fact main reason behind Greece's debt is that it has not been enough of a "Socialism" based country as other European countries are. To be exact this means that Greece has NOT been collecting Taxes as other European countries do. Although there are other problems specific to Greece, they range from what they call "Fakeleki" to Euro being too strong compared to competing tourist destinations such as Turkey or Bulgaria.

All of which points you can see proven by Euro being a MUCH More valuable than US Dollar. Or by the FACT that while most US Auto makers went bankrupt NOT 1 European Auto maker went bankrupt, etc. Or by the fact that when the real Rich in US, such as Murdoch of Fixed news & Wall Street Journal (LIES), wants to buy a Vila or vacation he goes to Europe and would not be caught dead in US States that Vote Republicans such as Kentucky, Missouri, Tennessee, Oklahoma, etc.

More about what is really going on in Greece and why European economies will continue to MUCH better than US: http://www.realnewspost.com/sa.php?a=39732

What about EU leaders failed December meeting?

Once EU leaders, less UK, decide they are going to finally address the deeply flawed aspects of Euro, which is that it is a currency of a Union that does not have the same fiscal policy, which is insane to put it mildly. After all how in Gods name are the Greek to have same currency as Germany when they have to issue Bonds at 8% to finance their operation when Germany can issue Bonds at 2%! So once EU leaders agree to create a fiscal Union, much like US has, then the deep flaws of the EU will be removed and only thing that will remain are the fundamental problems of US economy, which problems Republican champion and Obama Admin did not address at all!

So here is KILLER FACT you need to realize, should EU address the deep flaws of Euro, then US Dollar will be TOAST vs Euro. That is Euro has gained a MIGHTY % against US$ with its current deep flaws, imagine what will happen after these flaws are addressed! You could then see Eur/USD at 2 which for example means Gas costing Americans $6 per Gallon.

Wont UK block the EU Fiscal Union?

Europeans for long have realized that certain elements in UK wants the EU project to fail, or hobble along, so more and more what UK says matters less and less to the EU leaders. In fact the Veto of Dave Cameron, in late Dec 2011 of the steps toward EU Fiscal Union, made the EU leaders to realize that goals of UK still lay in making sure that a true European Union does not come into play, which Union as per the dream of Napoleon and others in Europe, will in time render UK as the back water of Europe. After all, EU economy is TEN times the size of UK economy.

But in fact, what is more likely, is that UK in time, either under Cameron that vetoed the last EU Fiscal Union proposal, or under a new leader, will support the EU Fiscal Union proposal because more and more UK leaders realize that they cannot anchor their economic future to US given the fact that US is suffering from Republican lunatics and the right-wing Media/Cabal that makes them possible, and as a result US has fundamental problems, with no sign that these problems will be fixed soon.

If we have Universal Nationalized health care we will go bankrupt like Europeans

One of most amazing, but typical, of the Republican and right-wing Media Con Job about the so called "Euro Debt crisis" is that then they will then say, see:

If we have Universal Nationalized health care (NHS)
 like Europeans we will go bankrupt like Europeans"

The answer to which amazing non-sense is:

1- It is not just the Europeans that have NHS, the entire developed World has NHS, from Canada, to Japan, to Australia, including their beloved Israel.

2- If Europeans were not operating health care on Socialized basis, aka NHS, then their Debt would be much higher. Given the fact that in countries that have NHS, health care is taking on avg about 9% of GDP, whereas in US with no NHS and instead Wall Street run health care, where an astonishing 50Mill+ have NO health care, health care is taking a DEFICIT BUSTING 18% of GDP. So because Europeans have NHS, their spending on health care is reduced by $1-Trillion per year. And that is one of reasons why even though Euro is a deeply flawed currency, it is still beating the US Dollar.

So what will happen?

For Europeans to address the so called "Euro Debt crisis", which again means that certain weaker European countries cannot be in Euro and at the same time pay much higher interest rates on their Bonds than others. there are a few solutions:

1- Euro needs to drop much in value against US Dollar and other major currencies, so that the weaker economies like Greece can than compete against surrounding countries such as Turkey which have much lower priced currencies to Euro.

2- EU members need to create a much tighter fiscal Union, they need to create something tantamount to US Federal Reserve and a central Taxing authority, so that that the Taxes in Greece are same as in Germany and paid to a central authority. Which central authority, in ECB, then would issue and back a Euro Bond so that all EU members would have the same interest rates.

But what you can bet on, is that since EU Governments work for their people (aka main street), that they will make the right decision and will come out even stronger.

What is the worst that can happen?

As further indication of what a rightwing fear-mongering Media, US Media is consider that 1000s of stories have appearing in US Media asking: "What is the worst that can happen" with the Euro Debt crisis! In regard to this so called question:

1st, Again "Euro Debt crisis" simply means high Bond rates for certain weaker EU eoconomies. The worst of which that can happen is that these countries will default on their Bond payments, which means (mostly) rich Bankers will get a hair cut on their Bonds. So just as when Argentina defaulted on its debt meant squat for avg person and in fact as a result of this default Argentine economy did great a few years later, same will happen in EU should Greece default on their Bonds.

2nd, Because Europeans Governments are run by their people for their people (aka Main Street) then EU will do the right thing to avoid the worst and result in the best, contrast to US where Government is run by the rightwing Cabal via their puppet Republicans and many Dems too and thus the worst indeed keeps happening.

So here is what you can Bank ON:

US Dollar & economy will NEVER EVER be as valuable as Euro since Europeans are not suffering from Republican lunatics, HOAX Democrats and above all a right-wing Media/Cabal armed with 100s of Billions of Dollars waging War on them, as this Cabal is waging war on American people.

As a result Europeans have fundamental advantages over US, which simply means Europeans get much more value for their Taxes, due to operating a sensibly more of their economy on Socialized basis and not just Military, Police, etc. on Socialized basis as in US. Such as for example ALL Europeans, like all other developed nations, have Universal health care (NHS) as a result of which while ALL Europeans have health care, they spend 50% LESS, NOT MORE, LESS, on health care than US which does not have something as necessary as socialized health care! And also Europeans can go to college for nearly FREE, for Taxes they pay, as a result of which core of Europe (aka Middle class) is getting richer while core of US is getting poorer.


Reproduzido de The Real News Post http://www.realnewspost.com/sa.php?a=55156&PHPSESSID=cbjvt1k9lvlgg5pjqd7hv3mh15

Guerra contra o Euro (IV) - Relatório secreto da Goldman Sachs

Eurozone Collapse And How To Profit From It

Michele Lin   

8 September 2011

On the 16^th of August, Goldman Sachs released a report, State of the Markets – Long and Short Risk Strategies, that is currently making its way around the Internet. Originally intended as a private report for its institutional clients – hedge funds that is – a copy was leaked to the Wall Street Journal who was also the first media outlet to break the news.

Though the international mainstream media has been largely silent, the Goldman report has been causing quite a stir with the online community.

The author, Alan Brazil, a key Goldman strategist who sits on the firm’s trading desk, made three major calls about the state of global markets.

One, that China’s growth is unsustainable, and secondly, the U.S. economy is still languishing and small businesses that have traditionally been the key drivers of jobcreation were still fighting to stay afloat. Finally, Mr. Brazil declares that European bank funding requirements may be substantial compared to their sovereign capacity, estimating that close to US$1 trillion in capital may be needed to shore up European banks.

In Mr. Brazil’s pessimistic report, he also provides various charts and figures, detailing the numbers surrounding European financial institutions and expounds upon the depth of the problems in Europe, the U.S. and China. In particular, he spells out in detail the borrowing by 77 European financial institutions, identifying some that are highly leveraged.

Related: 

Diseased and Dangerous – The US and Europe’s Grand Debacle: Joseph Stiglitz

Related: 

Europocalypse - Are The Days of The Eurozone Numbered?: Nouriel Roubini

Yet, such gloom and doom reports are nothing the markets have not heard of. The financial markets have been moving erratically, reacting sharply each time a negative data report is released – a key sign that investors are paranoid, jittery and staring out into an uncertain future for the world economy.

Economists and governments have also been sounding out the same worries for quite some time.

So why is there so much chatter surrounding the latest report by Goldman Sachs?

To be fair, Goldman Sachs does not have the best track record in methods of profiteering. In 2009, theRolling Stone magazine published an extensive and scathing article about Goldman Sachs, The Great American Bubble Machine, documenting the numerous instances and ways in which Goldman manipulated markets for their own corporate gains. 

“From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression – and they’re about to do it again.”

“If American is now circling the drain, Goldman Sachs has found a way to be that drain.”

“Goldman scammed housing investors by betting against its own crappy mortgages.”

“Goldman turned a sleepy oil market into a giant betting parlor – spiking prices at the pump. Matt Taibbi, Rolling Stone July 9^th, 2009

In the aforementioned report by Goldman, Mr. Brazil suggests ideas for trading on the downward analysis; A fancy option play the offers a way to take a bearish bet through an index of insurance contracts on the credit of European financial stocks. 

“Goldman sometimes took the bearish end of such trades even as it was selling the bullish end to clients.” The Wall Street Journal,September 1, 2011

Perhaps, it is because the painful reminiscences from the 2008/09 financial crisis are still deeply etched in the memories of many, causing the burst of dissonance within the online community.

However, there is perhaps a worthy takeaway from this contentious Goldman report.

Moving beyond the fuss, a pertinent question to ask is: Given the position Goldman Sachs is advocating, should we prepare for the euro’s breakup?

Many have been quick to jump into the popular rhetoric surrounding the possibility of a euro breakup. But such arguments often miscalculate the consequences and the political, social, and economic costs involved. Many who advocate a euro breakup also fail to account for the legality of such propositions. 

Constitutionally, the Treaty of Lisbon addresses the issue of withdrawal by a European Union (hereafter, EU) Member State in its Article 50. 

Article 50 explicitly states that a member state is able to negotiate an exit from the EU, though it fails to provide details about execution. Most importantly, however, Article 50 provides a legal framework for a Member to leave the EU, but not to leave the European Monetary Union (hereafter, EMU). 

An appropriate remedy here would require an amendment of The Treaty of Maastricht. Yet, constitutional changes governing the EU and the EMU calls for unanimous consent from all 27 EU Member States.

Assuming all legal obstacles were out of the way, there is also a need to account for the high costs involved should the euro breakup. 

Just two days ago, UBS published a paper on the euro, and quantified the economic costs at stake should a country like Germany leave the Euro:

“Were a stronger country such as Germany leave the euro, the consequences would include corporate default, recapitalization of the banking and collapse of international trade. If Germany were to leave, we believe the cost to be around €6,000 to €8,000 for every German adult and child in the first year, and a range of €3,500 to €4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over €1,000 per person, in a single hit.”

UBS, 6^th September 2011

The same report goes on to say that “the economic cost is, in many ways, the least of the concerns investors should have about a breakup. Fragmentation of the euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that also no modern fiat currency monetary unions have broken up without some form of authoritarian or military government.



The problem with the euro is that it was promoted (to the general public) as an instrument towards foreign exchange integration. What was not acknowledged initially was the immense difficulty in achieving fiscal integration, or at least fiscal coordination, between member countries with distinctly different economic repertoires.

“I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to introduce that now. But some day there will be a crisis and new instruments will be created - ”Romano Prodi.

While many may not like what the Goldman Sachs report had to say, it is nevertheless time to rethink the outlook for the euro and the European Monetary Union.

Related: 

Europe’s Last Hope – Will Germany Step Up? : George Soros

Related: 

Eurozone Divorce Imminent: Nouriel Roubini

Reproduzido de

http://www.economywatch.com/economy-business-and-finance-news/goldman-sachs-secret-report-eurozone-collapse-and-how-to-profit/08-09.html

Guerra contra o Euro (III) - O inevitável colapso do Dólar

Ilustração: domínio público

The Inevitable Collapse of the Dollar

November 16th, 2009  

by Len Hart, The Existentialist Cowboy

Americans live beyond their means, Asia finances it and China props up the buck so that the US can buy Chinese made stuff at Wal-Mart. Eventually the Asians/Europeans will stop financing the USA, China will pull the plug on the buck and the bubble will burst.

The CIA's World Fact Book lists the US at the very bottom of a list with the world's largest negative Current Account Balance. China, which pegs the Yuan to the dollar, is at the top with the world's largest positive Current Account Balance.

If the GOP had been correct, US exports should have risen! The 'balance of trade deficit' i.e, the NEGATIVE Current Account Balance would have been reduced! If the GOP had been correct, the US could have paid off huge amounts of national debt run up in incompetent and dishonest GOP regimes. The US might have survived decades of conservative budgets which forced the US to borrow from other countries. But --not surprisingly --things have not worked out as the GOP would have you believe.

Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan/dollar rate fixed, even when the dollar declines, may be doing even more harm now.

Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it’s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere.

But China has been keeping its currency pegged to the dollar — which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead.

It was hoped that by taking the dollar off the gold standard, US products would enjoy greater sales abroad. But like 'trickle down theory', it just has not worked out as planned. The CIA's World Fact Book proves it.

The enormous scale of foreign borrowing and money creation necessary to finance Washington’s wars are sending the dollar to historic lows. The dollar has even experienced large declines relative to currencies of third world countries such as Botswana and Brazil. The decline in the dollar’s value reduces the purchasing power of Americans’ already declining incomes.

Despite the lowest level of housing starts in 64 years, the US housing market is flooded with unsold homes, and financial institutions have a huge and rising inventory of foreclosed homes not yet on the market.

Industrial production has collapsed to the level of 1999, wiping out a decade of growth in industrial output.

If the US is a 'failed state', it is because it has been impoverished by at least two trends: 1) the transfer of US wealth upward to just one percent of the US population which now owns more than 95 percent of the rest of the nation combined; 2) the decline of the US dollar, a trend begun when Richard Nixon eschewed the Bretton-Woods agreement.

Reducing the chances that we will weather this crisis are US wars of aggression which benefit only the defense contractors. Wars, in fact, reduce the GDP, destroy jobs, reduce productivity, and increase the trade deficit! If wars are so 'bad' for the economy, then how are they sold so easily? Why are they 'sold' at all? The quick response: they are sold with focus group tested bullshit!

There's a 'living' in killing, we are told! It's a lie -- snake oil for idiots and rank and file GOP. That wars are good for the economy is just a bald-faced lie cooked up by the defense lobby for whom killing IS a living but only for the shrinking one percent who benefit: the Military/Industrial complex. 

In fact, most models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment. In this way, military spending is comparable in most models to any other form of government spending, such as spending on public goods or improving the environment.

This paper shows the projections of the impact of an increase in annual military spending equal to 1 percent of GDP (approximately the actual increase in spending compared with the pre-war budget) of the Global Insight macroeconomic model (see Appendix). The Global Insight model was selected for this analysis because it is a commonly used and widely respected model.1 Other models will show somewhat different projections, but it is unlikely that the direction of the long-term impact on any of the key variables will be different. In fact, because of the structure of the Global Insights model, it likely understates the negative impact of military spending relative to other models.

The Inevitable Collapse of the Dollar

Americans are living beyond their means and Asia is currently financing that. But eventually the Asians/Europeans will stop financing the USA and then the bubble will burst. 

Reproduzido de

http://www.thepeoplesvoice.org/TPV3/Voices.php/2009/11/16/the-inevitable-collapse-of-the-dollar-1

Guerra contra o Euro (II) - O endividamento dos EUA

Ilustrações: domínio público

America’s Unsustainable Debt Crisis

By David Milstein, AFP New Jersey Policy Analyst

The greatest threat to future American prosperity is the debt and deficits that continue to shackle the largest economy in the world. This year, our national deficit will be $1.65 trillion while our national debt is currently $14.3 trillion. The debt comes out to more than $46,000 for every man, woman and child in America. In just four years, the Democrat controlled Congress spent more money than every previous Congress combined, putting their out of control spending on the tab of future generations.

In the last two years, President Obama has warned us about our growing debt yet his rhetoric is never followed by any serious action. In his first two budgets, there was a 24% increase in federal discretionary spending. Including the “stimulus” package, discretionary spending jumped 84% since Obama took office. In response to his spending binge, the President offered to cut merely $6 billion in his new budget for 2011, which is less than 1% of our national debt.

When Republicans took over the House in January, they offered their own plan to cut $61 billion, which is ten times what the President proposed. But $61 billion is a drop in the bucket. Not surprisingly, the Republican proposal failed to pass the Democrat controlled Senate.

Just last month, the US recorded its largest monthly budget deficit of $223 billion, a 14% increase from just a short year ago. And by the end of the year, our national debt will exceed our gross domestic product. Yes, you read that correctly. Since President Obama’s own budget predicts our national debt will be $15.5 trillion by the end of the year and our GDP is about $14.6 trillion, America will soon have more than a 100% debt to GDP ratio. By 2030, the Congressional Budget Office predicts the debt will be double the entire US economy. America hasn’t charged this amount of money on its credit cards since World War II, when our debt as a percentage of our GDP was an astounding 108.6%.

Simply put, we are living beyond our means. We continue to spend money we do not have and our dependence on foreign nations continues to grow. China is the greatest proprietor of our national debt, holding about 10% of our public debt. This may sound like a small percentage, but it amounts to $1.2 trillion, which is the same as China’s national debt. If China’s state and local governments are included, their national debt is only $3.6 trillion, which is a little less than one-fifth the size of our national debt.

Most of their debt is held domestically while more than half of America’s debt is held by foreign nations. Not only are more Americans becoming more and more dependent on government, our country is becoming more dependent on foreign nations to pay its bills. And as the United States continues to barely have positive economic growth, China has just overtaken Japan as the second largest economy. In the last five years, China’s economic growth has averaged 11.2% while the US economy has averaged only 3%. As China’s economy continues to soar, the US is handing our economic future to our biggest competitor.

As our debt continues to balloon, the interest alone will rise from $220 billion to $860 billion by 2020. The interest skyrockets by 400% in less than nine years. To put that in perspective, that is roughly the size of the “stimulus” package, which President Obama promised would keep the unemployment rate below 8%. But our unemployment rate currently sits at 8.9% with 14 million Americans still out of work.

Every single day America is borrowing roughly $5 billion to fund our government and we are borrowing 40 cents out of every dollar just to stay afloat. The largest drivers of our national debt are the entitlement programs, which the White House and congressional Democrats refuse to address and Republicans are simply afraid to reform. Entitlements consume 56% of total federal spending and will double by 2050. By 2052 they will make up all of our tax revenue.

On March 15th House Republicans passed another short-term continuing resolution to fund the government for the next three weeks. It cut $6.1 billion on a day when our national debt increased by $72 billion. These small cuts were more than what the Democrats were willing to cut over the next seven months.

Congress and the White House aren’t even close to seriously addressing our fiscal disaster. It is time our government step up and enact serious fiscal reform by cutting spending, limiting the size of government and reforming the unsustainable entitlement programs for our future as a prosperous nation depends upon it.

Reproduzido de

http://americansforprosperity.org/031811-america%E2%80%99s-unsustainable-debt-crisis