Sep 14, 2011

What Happens When A Nation Goes Bankrupt

From Zero Hedge:

Submitted by Simon Black of Sovereign Man

Three years ago today, my best friend called me and told me to turn on my television. I remember the way he described it– “Lehman is finished.”  The TV showed guys packing up their desks on Sunday afternoon, moving out of their offices forever.
That was the precipice from which financial markets plunged the following day, taking the global economy along for the next three years.
We appear to be at that moment once more.
Greece is out of cash. Again. The Greek Deputy Finance Minister said on Monday that his country only has enough cash to operate for a few more weeks.
As I write this note, French, German, and Greek politicians are all on a conference call, feverishly trying to figure out a way to avoid default.  Everyone seems to understand the consequences at stake… given the chain of derivatives out there, a Greek default will completely dwarf the Lehman collapse.
Unfortunately for the bureaucrats, dissent against the Greek bailout plan is spreading across Europe… and leaders can no longer ignore the growing wave of opposition in Finland, the Netherlands, Austria, and Germany.
It’s no wonder, when you think about it.  Why should a German hairdresser who retires at age 65 stick his neck out so that a Greek hairdresser can retire at age 50? This, from a continent that was perpetually at war with itself for over a thousand years.
Europe’s great benefactor over the last several months has been China, whose treasury has been buying up worthless European sovereign debt to ensure that Greece doesn’t default.
It’s a testament to the absurdity of our failed financial system when the highly indebted rich countries of the world have to go to China, a nation of peasants, for a bailout.
Speaking at the World Economic Forum this morning, Chinese premier Wen Jiabao delivered a stern message: there is a limit to Chinese generosity, and it will come at a price.
The Chinese will undoubtedly use any further investment in European bonds as leverage to influence western politicians. They already bought Tim Geithner. The US government refuses to label China a ‘currency manipulator’. Similarly, European politicians will now be forced to acknowledge China as a ‘market economy’.
Ultimately, this charade will fail. It’s a simple matter of arithmetic. China could buy every single penny of Greek debt and it still wouldn’t solve the underlying problem: Greece would still be in debt! And more, still hemorrhaging billions of euros each month. Throwing more money at the problem only makes it worse.
Then there are those Greek assets for sale… like state-owned Hellenic Railways Group. It lost a cool billion euros last year. Or the notoriously inefficient, highly unionized, traditionally lossmaking Greek postal service, Hellenic Post. Any takers?
These are not exactly high quality assets… nor can Greece expect to get top dollar in what’s clearly a distress sale.
Over 200 years ago, Napoleon was forced to sell France’s claim to 828,000 square miles of land in the New World in order to cover his war expenses. US President Thomas Jefferson happily obliged, paying the modern equivalent of around $315 million (based on the gold price), roughly 59 cents per acre in today’s money.
According to US census records, there were around 90,000 people living within the territory during that time who literally woke up the next day to a different world.  This is the sort of thing that happens when governments go bankrupt.
With the Lehman collapse, a lot of people got hurt… but it was mostly a financial and economic issue. When an entire nation goes bust, the pain is felt much deeper: the most basic systems and institutions that people have come to depend on simply disappear.
Argentina’s millennial debt crisis is a great example of this… suddenly the power failed, the police stopped working, the gas stations closed, the grocery stores ran out of food, the retirement checks stopped coming, and the banks went under (taking people’s life savings with them).
European leaders (with Chinese help) can postpone the endgame for a short time, but they’re really just taking an umbrella into a hurricane. It would be foolish to not expect a Greek default, and it would be even more foolish to not expect significant consequences. The only question is– how are you prepared to deal with what happens?

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Britain Suing The ECB!

Secret EU Plans To Create EuroTeams Leaked
In conjunction with Eurobonds, EU officials have been working on plans to create Euroteams for the Olympics, World Cup, and the Eurovision Song Test.  Officially, the effort is supposed to solidify the fiscal union that will have to occur to make Eurobonds the success the market has already decided they would be.  Off the record, at least one official felt that letting Brussels be in charge of the Euroteams would make their jobs more important.

Silvio Berlusconi Said Something Really, Really Rude About Angela Merkel

The Daily Mail reports that the comments were "too vulgar to repeat but referred to sex and Mrs Merkel's physique" and were made during a phone conversation with a newspaper editor last year.
The conversation was picked up during an investigation about a plot to blackmail Berlusconi, and was subsequently leaked.
The comment was made in the same conversation where he labeled Italy a "shitty country" and said it made him feel physically ill

LATEST ON BERLUSCONI: Hiding Witnesses, Strippers Dressed As Nuns


The voice of the voters? The European Commission despises such 'populism'

By Mary Ellen Synon
From Synonblog, 12 September 2011 :

The voice of the voters? The European Commission despises such 'populism'

European commission flags wiki Watch for this one: the European Commission propaganda machine has started pulling the levers on its latest campaign -- this one meant to smear anyone who wants to stop the transfer of fiscal powers to Brussels and Frankfurt. Anyone who fights against the so-called 'eurozone economic governance' is now to be despised as a 'populist.'
You might have caught an echo of this new EU line last week in the commisssion's house paper, the Financial Times. An FT leader denounced any resistance to a centralised eurozone government as 'populist pandering.' (So now you know how the FT views democracy: with contempt.)
Of course, the Brussels propaganda is garnishing 'populist' with other terms, too This new wide variety of smears is helped along by the taxpayers' money sucked into the £2bn a year (by Open Europe's calculations) propaganda budget run by the unelected, untouchable European Commission (no chance of any 'populism' there, then). The garnishes include the terms 'politics of fear,' frenzy, 'irrational feelings,' 'anti-immigration,' 'xenophobic' and -- just how desperate is the commission? -- 'Tea Party Movement.'
There is a 'frenzy,' all right, and it is the frenzy of the Brussels vested interests to stop the democratic movement against ever-more powers being shifted out of national parliaments and into the hands of the EU elite.
What terrifies the Brussels imperialists is that growing numbers of people in the member      Ecb w logo wiki countries of the EU don't want ever-more control of their national budgets passed into the hands of unelected eurocrats, unelected European Central Bankers, and politicians elected only by Germans.
Somehow this growing demand by plain people (and some pretty damned sophisticated people, too) that national taxation be controlled only by national representation is seen by the commission and its fellow-travellers as so dangerous that the smears must start.
Take a look at a paper just out today from the European Policy Centre, a Brussels think tank which announces itself as 'independent' but which in fact takes money from the European Commission and from some organisations which themselves receive money from EU institutions.
The paper is called 'The rise of anti-EU populism: why, and what to do about it.' The author is Antonio Missiroli, who works at the commission as advsor at the Bureau of European Policy Advisors.
That is what passes for 'independent' thinking in Brussels.
Anyway, Missiroli says that populism must be fought because 'it can create a dangerous mix that could potentially undermine mutual solidarity and trust inside the European Union.'
Well, one hopes.
Missiroli-of-the-commission -- though he insists that in the paper he is speaking in a purely personal capacity -- goes on: 'For its part, vintage "euro-scepticism" (originally from Britain) has shaped some core elements of the anti-EU arsenal, although Britain's political and constitutional make-up have mostly managed to contain its most destructive effects, if not its rhetoric.'
Got that? Trying protect the right of the British people to control their own laws and taxes is 'destructive.'
As for the direct democracy of referenda, Missiroli thinks letting the people have a say just Irish ref lisbon vote no wiki stinks: 'Referenda have often acted as powerful catalysts for speading populist sentiments and messages, regardless of the legitimate reasons for calling them. This has occurred as referenda tend to over-simplify the debate and resort to a quintessential populist theme: just saying "No" to the establishment.'
Which propaganda line, you can bet, is exactly what Nick Clegg has been feeding to David Cameron as the pressure builds in Britain for an in-or-out vote on membership of the EU, and Cameron insists he won't allow it. But then, Clegg used to work for the European Policy Centre, the EU-funded outfit publishing this stuff, so you shouldn't be surprised the deputy p.m. knows the anti-referendum line well.
Missiroli goes on: 'Since 1992 with the referenda on Maastricht, popular votes on subsequent EU Treaties have become recurrent occasions for campaigning against "Brussels" and consolidating a populist narrative. As a result, few people have dared proposing sweeping treaty reforms or launching an open debate on the need for more and better integration.'
Actually, the last 25 years have been nothing but rolling treaty changes -- indeed, just last week Wolfgang Schauble, the German finance minister, was demanding another treaty change to create eurozone economic government, and Jean Claude Juncker, prime minister of Luxembourg and head of the eurogroup, was backing him -- and a 'debate' on integration has been relentless as monsoon rain on a corregated iron roof.
Moreover, when there have been referenda on treaties that have resulted in a No vote -- the French and Dutch referenda on the European Constitution, the Irish referenda on both the Nice Treaty and the Lisbon Treaty -- the Brussels powers either just ignore the result or demand that the voters keep voting until they come up with the right answer. So what is Missiroli's grouse about referenda?
His grouse is that he is against anyone even campaigning against Brussels, even when the result of this democratic campaigning is just swept aside.
The only good thing about this latest propaganda drive, about these smears against the millions of people -- and yes, they number in millions now -- who want to resist eurozone fiscal union, is that is show just how frightened the EU elite are. They fear voters across the EU member states actually taking back control of their own countries.
So, carry on, all you 'populist' chaps. You're getting to them.

Come on, come on lets get on the Gravy Train, Join the EU Officialdom!

By Fabienne Fleury – Sovereign Independent Contributor
Perks and allowances a day, won’t keep the Eurocrats away

 Brussels, capital of the Manneken Pis, renowned for its chocolate and yet overshadowed by the Eurocrats.   Indeed, Eurocrats are lathering themselves in money, while the taxpayers are suffering hardship. In a recent article written by the Daily Telegraph, it has been found that 1,000 EU officials were earning more than David Cameron, The British Prime Minister. An EU civil servant with a few years experience and a family of two children will take home a net  wage of €8,810/month, and on his gross pay he will only have to pay €570 in tax, but no VAT on his car or household goods. Also, all schools are free for the EU member’s children.
Meanwhile, when most of the EU citizens are struggling with high taxes, high unemployment, job losses and barely any pensions, an Eurocrat will only fork out 8.5% of basic pay towards his pension, which is only a third of the real cost. On retirement, all family, household and education allowances will continue. Last year, the EU paid out to 8,700 pensioners, an average of €34,763 per annum, from its operating budget. A far cry from the average EU citizen who will have to work past 65 years of age in order to get a reasonable pension.
Indeed, a Data from the European Commission has showed that pensions in the UK, for instance, will experience the biggest drop in income when they will retire, with an average incomes slashed to 30% of their last salary. Unlike Mr Mandelson who, if he serves a second five term as Commissioner will net a pension worth £172,000/per annum after ten years of work.
Mr Nigel Farage, a British MEP from the UK Independence Party said: “ Just as people’s wages are falling and unemployment is rising, the man in the street should be appalled at the amount of money that these EU officials are being paid, many for pretty menial tasks”.
Eurocrats and their red tape
Menial tasks such as passing legislations that hinder the majority of EU citizens and are absurd and costly. The EU has passed a staggering 666,879 pages of laws since its inception in 1957. 26% of them are still active. Legislations such as a directive on the use of condoms or Wellington Boots which now come with a 24 pages user’s manual in accordance with the EU Directive for Personal Protective Equipment (storage conditions, resistance to electricity, oil but not water).
Recently, a greengrocer has been stopped selling a batch of kiwi fruits because EU rules said that they were a millimetre too small. Tim Down, 53, from Bristol was asked to pay £100 to throw his 5,000 perfectly edible fruits because they had failed the size and weight standards brought in under EU regulations. He was also, warned that he could face a £5,000 fine if he tried to sell them away. Yet, Eurocrats just reversed their ban on knobbly carrots, nevertheless 20% of the British harvest is thrown away to comply with the never ending EU regulations, that in a long term could lead to add as much as 40% to the price of vegetables and fruits. Unsurprisingly, Eurocrats came up with new targets such as banning moth balls light bulbs or non EU tyres.
Presently the use of Eurocrats is in question as some steps need to be taken to reform the exclusive right of the Commission to decide how much its employees earn and public opinion needs to be taken into account as one Irish MEP said:” At the end of the day, it is the European taxpayers who are footing the bill”. Indeed, the public needs to be informed about any arbitrary decisions and obtain a democratic oversight of Europe as Eurocrats seem to guide and direct the lives of its subjects without a democratic point of view. But will Commission officials view ordinary Europeans as citizens of a supposedly democratic Europe or just as an Orwell’s Animal Farm dictum:” All animals are equal but some animals are more equal than other”.