Eurobonds: The Issue That Could Shatter Europe

Would you pool your debt with a bunch of debt addicts that have no intention of reducing their wild spending habits?  Of course you wouldn’t.  But that is exactly what Germany is being asked to do.  Increasingly, “eurobonds” are being touted as the best long-term solution to the financial crisis in Europe.  These eurobonds would represent jointly issued debt by all 17 members of the eurozone.  This debt would also be guaranteed by all 17 members of the eurozone.  This would allow all countries in the eurozone to enjoy the same credit rating that Germany does, and borrowing costs for nations such as Greece, Portugal, Italy and Spain would plummet.  But borrowing costs for Germany would rise substantially.  In fact, it is being estimated that Germany could be facing an extra 50 billion euros a year in interest expenses.  So over ten years that would come to about 500 billion euros.  Needless to say, Germany is not thrilled about this idea.  But new French President Francois Hollande is pushing eurobonds very hard, and he has the support of the OECD, the IMF and many top Italian politicians.  In the end, this could be the key to the future of the eurozone.  If the Germans give in and decide that they are willing to deeply subsidize their profligate neighbors indefinitely, then the euro could potentially be saved.  If not, then this issue could end up shattering Europe.

It is easy to try to portray the Germans as the “bad guys” in all this, but try to step into their shoes for a minute.

If you had some relatives that were spending wildly and that had already run up $100,000 in credit card debt, would you be a co-signer on their next credit card application?

Of course not.

The recent elections in France and Greece made it abundantly clear that the populations of those two countries are rejecting austerity.

Instead, they want a return to the debt-fueled prosperity that they have always enjoyed in the past.

Unfortunately, they need German help to be able to do that.

That is why new French President Francois Hollande is pushing so hard for eurobonds.  He wants the rest of the eurozone to be able to “piggyback” on Germany’s sterling credit rating so that everyone can return to the days of wild borrowing and spending.

But Germans greatly fear what a co-mingling of eurozone debt could eventually mean.  Not only would Germany’s borrowing costs rise dramatically, but there is also a concern that the rest of the eurozone could eventually pull Germany down with them.

Austria, Finland and the Netherlands are also against eurobonds, but the key is Germany.

For now, Germany is not budging on the issue of eurobonds at all.  The following is a statement that German Chancellor Angela Merkel made during a recent speech in Berlin….

“It’s just about not spending more than you collect. It’s astonishing that this simple fact leads to such debates”

And she is right.

Why is it so controversial to insist that people not spend more than they bring in?

But this is the problem that is created when you create a false lifestyle fueled by debt that goes on for decades.  People become accustomed to that false standard of living and they throw hissy fits when that false standard of living begins to disappear.

The Germans don’t want to make great sacrifices just so the Greeks, the French and the Italians can go back to borrowing and spending wildly.

Why would the Germans want to do that?

And as a recent CNN article noted, German politicians believe that eurobonds are explicitly banned under existing EU treaties anyway….

“There is no way of introducing them under the current [EU] treaties. Indeed, there is an explicit ban on them,” one senior German official said, adding Berlin would not drop its opposition in the foreseeable future. “That’s a firm conviction which will not change in June.”

But politicians such as Hollande are complaining that austerity could seriously damage living standards throughout Europe.

And Hollande is right about that.

When you inflate your standard of living with borrowed money for many years, eventually there comes a time when you must pay a great price.

Anyone that has ever been in trouble with credit card debt knows how painful that can be.

It is shameful for the rest of Europe to be pleading and begging Germany to help them.

They should take care of themselves.

As I wrote about the other day, Greece would be much better off in the long run if it left the euro and created a new financial system based on sound financial principles.

But in the financial press all over the world there are calls for someone to come up with a “plan” to “rescue” Europe.  For example, the following is from a recent Wall Street Journal article….

There have been two main responses to the crisis: austerity, and kicking cans down roads. Austerity, in case you haven’t noticed, is so last year. It’s out. Which means that unless something else is found, some other comprehensive plan, the other main response, can kicking, is going to run out of road.

Just about everybody backed the idea of eurobonds, except for the Germans, and since they’re the ones with all the money, they’re kind of the only ones whose vote counts anyway. So, it’s time to go to plan B. Only there’s no Plan B, and there’s no time, either.

If Germany does not agree to subsidize the rest of the eurozone, will that ultimately mean that the eurozone will be forced to break up?

Probably.

And that would cause a huge amount of pain in the short-term.

But the euro never was a good idea in the first place.  It was foolish to expect a monetary union to work smoothly in the absence of fiscal and political union.

And to be honest, the entire world would be a better place with less European integration.  The EU has become a horrifying bureaucratic nightmare and it would be wonderful if the entire thing broke up.

But for now, the only thing that is in danger is the euro.

Increasingly, it is looking like Greece may be the first country to exit the euro.

This week, former Greek Prime Minister Lucas Papademos admitted that the Greek government is considering making preparations for Greece to leave the euro.

Not only that, Reuters is reporting that top officials in the eurozone are now working on “contingency plans” for a Greek exit from the euro….

Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency, euro zone sources said on Wednesday.

Officials reached the consensus on Monday afternoon during an hour-long teleconference of the Eurogroup Working Group (EWG).

As well as confirmation from three euro zone officials, Reuters has seen a memo drawn up by one member state detailing some of the elements that euro zone countries should consider.

So obviously a Greek exit from the euro has become a very real possibility.

A recent Bloomberg article detailed how a Greek exit from the euro could play out during the 46 hours that global financial markets are closed over the weekend….

Greece may have only a 46-hour window of opportunity should it need to plot a route out of the euro.

That’s how much time the country’s leaders would probably have to enact any departure from the single currency while global markets are largely closed, from the end of trading in New York on a Friday to Monday’s market opening in Wellington, New Zealand, based on a synthesis of euro-exit scenarios from 21 economists, analysts and academics.

Over the two days, leaders would have to calm civil unrest while managing a potential sovereign default, planning a new currency, recapitalizing the banks, stemming the outflow of capital and seeking a way to pay bills once the bailout lifeline is cut. The risk is that the task would overwhelm any new government in a country that has had to be rescued twice since 2010 because it couldn’t manage its public finances.

Right now, nobody is quite sure what is going to happen next and panic is spreading throughout the European financial system.

At this point, everyone is afraid of what is going to happen if Greece is forced to start issuing drachmas again.  As CNBC is reporting, some big European corporations are already beginning to implement their own “contingency plans”….

Big tourism operators like TUI of Germany and Kuoni of Britain are demanding the addition of so-called drachma clauses to contracts with Greek hoteliers should the euro no longer be in use here. British newspapers are filled with advice columns for travelers worried about the wisdom of planning a vacation in Greece, or even Portugal and Spain, should the euro crisis worsen. Large multinational companies like Vodafone Group, Reckitt Benckiser and Diageo have taken to sweeping cash every day from euro accounts back to Britain to limit their exposure.

Sadly, this is probably only a small taste of the financial anarchy that is coming.

France is likely to keep pushing hard for the creation of eurobonds.

Germany is likely to keep fiercely resisting this.

At some point, a moment of crisis will arrive and a call will have to be made.

Will Germany give in or will political turmoil end up shattering Europe?

It will be interesting to see how all of this plays out.

Mob Robbers And Rampant Looting: Is This The Future Of America?

Have you ever heard of mob robberies?  What happens is that dozens of young people storm a store at the same time, take whatever they want, and then storm out as powerless store clerks watch helplessly.  Most of the time these “mob robbers” end up getting caught, but unfortunately “group crime” is a trend that is rising.  Is it a sign of the times that large groups of people are starting to recklessly invade retail establishments?  Is this the future of America?  As I have written about so frequently, the U.S. middle class is being destroyed by this economy and large numbers of our young people are losing hope.  Frustration and anger are rising from coast to coast and millions of Americans are losing faith in the system.  The thin veneer of civilization which we all take for granted is already starting to disappear.  So what is going to happen when the economy collapses?  As our economic system fails, mob robberies and rampant looting are only going to become more common.  Let us hope that the economy can hold together for at least a couple more years, because once society falls apart things are going to get really, really ugly in our major cities.

Are you prepared for what America is going to look like during the next Great Depression?  It isn’t going to be pretty.  Over the past couple of decades we have gotten hints of what America is going to look like when society breaks down, and those hints have been very frightening.

This first video is a news report about the mob robberies that have taken place in Minnesota recently.  What would you do if you were a store clerk in this situation….

Unfortunately, these mob robberies are not just an anomaly.  The American people really do seem to be losing it.  Over the past couple of years, some almost unbelievable brawls have been breaking out in restaurants and in retail establishments all over the nation.

In addition, who could forget the wild mob scenes that erupted at stores all over America during the most recent Black Friday holiday sales?

Of course we all remember what happened during the aftermath of Hurricane Katrina.  All along the Gulf Coast looting was rampant.  Sadly, people were even openly looting stores in front of television news cameras….

This third video contains a compilation of footage from all over the United States over the past few decades.  Is this what America is going to look like when the economy breaks down and people are going wild in the streets?….

But don’t think that Americans only act this way in the big cities.  The truth is that human decency is breaking down everywhere.  This was perfectly illustrated by a recently reported case of horrific child abuse in Oklahoma.

According to CNN, a 9-year-old girl, an 11-year-old boy and a 15-year-old boy were actually forced to eat pet food and had suffered burns all over their bodies due to the nightmarish abuse that they had received from the couple that adopted them.

The 15-year-old boy in this case told authorities that at one point he was forced to live in a plastic dog carrier for two months and that all three of the children have had their tongues burned with a hot spoon by their “parents”.

The following is how CNN described some of the abuse that these children were subjected to….

Authorities said the Kluths are accused of burning the children with hot spoons, choking them and locking them “in the storm shelter behind the residence for long periods of time with only chairs to sit in and plastic buckets for bathroom use. It was also alleged that the Kluths deprived the children of meals for punishment and fed them cat food and dog food,” according to a statement from authorities.

Can you imagine?

As Americans, we like to think of ourselves as “good people”, but is that really true?

In the United States today, the percentage of the population that is in prison is more than ten times higher than it is in Japan.

Part of that is because the U.S. is rapidly becoming a “Big Brother” police state, but we also have to admit that the American people don’t seem to be made of the same “stuff” that they used to.

Something has gone dramatically wrong.

We have lost our way.

Is this country going to be able to handle another Great Depression?

Right now more than 43 million Americans are on food stamps.  This is helping keep the population under control.  But what is going to happen when the price of food goes up 50 percent and all of these millions of people can’t even feed themselves anymore?

That is a frightening thing to think about.

Most Americans have never known hard times.  Most Americans cannot even imagine what deep economic suffering is like.

When the U.S. economy does completely unravel, it is going to blindside most of the population.  Many Americans will go completely crazy when they finally realize that the “good times” are gone and are never coming back.

What we are seeing in Wisconsin right now is only a very small foretaste of the kinds of economic protests that we will see in the future.  There are tens of millions of Americans that are just not going to quietly accept that their affluence is gone permanently.

Unfortunately, the time to start saying something was years ago.  Our economy is being gutted right in front of our eyes and yet most Americans just keep on voting for the globalist politicians that continue to ship our factories, our jobs and our prosperity overseas.

Believe it or not, cities like Detroit, Michigan were once the envy of the world.

In 2011, the rest of the world laughs at Detroit.  It has become a global joke.

And you know what?

Hundreds of other communities across the United States are being slowly but surely transformed into new Detroits.

Today, there are many towns across the United States where you can almost reach out and feel the despair.  It is almost as if someone has sucked all of the hope right out of the atmosphere.

People are getting desperate.  As the economy crumbles crime is only going to increase.  In fact, many of our biggest cities have large areas where residents simply do not ever want to venture outside after the sun goes down.  Life is getting crazier in America with each passing year.

The America that so many of us so fondly remember is being rapidly destroyed.

So what do you all think?  Are mob robbers and rampant looting the future of America?  Are people going to go crazy when the economy collapses or are Americans going to be able to handle it fairly well?  Please feel free to leave a comment with your opinion below….

Shortages! Is The World Really Running Out Of Food, Water And Oil?

Everywhere you look today the mainstream news is talking about shortages. Authorities all over the globe are boldly proclaiming that the world is rapidly running out of food, water and oil. So are these doomsayers right? Well, it must be noted that some of the most famous “prophets of doom” of the past several decades have seen their predictions fail spectacularly. For example, in his infamous 1968 book entitled “The Population Bomb“, Paul Ehrlich made the following statement: “I don’t see how India could possibly feed two hundred million more people by 1980.”  Well, India is now feeding well over twice the number of people than they had when Ehrlich originally wrote his book.  But that doesn’t mean that major shortages won’t happen in the future.  It just means that we should be careful not to look incredibly ridiculous like Ehrlich did.  The truth is that there are good reasons why we should be watching global supplies of food, water and oil very closely.  Life as we know it would cease to exist if we had severe shortages of any of them.

So will we actually be facing serious shortages of food, water or oil in the coming years?

Well, let’s take a look at oil first.

Oil Shortage?

Right now oil is absolutely essential to almost everything that we do.  We require oil to drive our cars, we require oil to produce our food, a large percentage of our homes use energy that is derived from oil and most of what we buy at the stores comes in packaging that is made up at least partly of oil.

So if we run out of oil that is going to be a really huge deal.

So are we going to run out of oil?

Well, right now advocates of the “peak oil” hypothesis are getting a lot of attention in the mainstream media.

Basically the idea behind “peak oil” is that the world has reached (or almost reached) the maximum amount of oil that it can produce and that from here on out the amount of oil that will be produced will begin to decline.  Meanwhile, the demand for oil is only going to continue to increase.

So is there evidence that this is actually happening?

Well, it depends on who you ask.  But what is undeniable is that there are some very powerful interests that are doing their best to hype a coming oil shortage.

In recently released report entitled “Signals & Signposts“, Shell Oil warns that global demand for energy is going to be three times as large in 2050 as it was in 2000.

So where will all of that extra energy come from?

Can the world possibly produce two or three times as much oil as it does today?

The Shell Oil report forecasts that the global supply of oil will continue to rise but that the rise in supply will not be fast enough to keep up with the rise in demand.  According to Shell, this is going to cause rapidly rising oil prices which will cause the gross domestic products of all nations to fall.

So just how high could oil prices go?

Well, the truth is that the price of oil is very highly manipulated.  The market for oil is not exactly what you would call a “free market”.

However, it is alarming that almost everyone is forecasting much higher oil prices at this point.

For example, Weeden & Co. oil analyst Charles Maxwell recently stated that he believes that the price of oil will eventually hit $300 a barrel by the end of this decade.

If that were to happen, it would be absolutely disastrous for the global economy.  Yeah, those in the oil industry would make a killing, but for the rest of the world it would be a complete and utter nightmare.

Unfortunately, what most Americans don’t understand is that there are lots of alternative energy technologies out there that have been repressed by the big oil companies and by the big oil producing nations because they threaten hundreds of billions of dollars in profits.

For example, did you know that it is possible to run a car entirely on water?  One Japanese company hopes to start mass marketing them….

But I wouldn’t count on seeing water-powered cars sold on every street corner any time soon.

Why?

Because of greed.

Our entire system of energy is based on making as much money as possible for those who have all the oil.

So if the world has a shortage of energy in the coming years, it is not because that is how it inevitably had to be.

Rather, it will be all about pure, unadulterated greed.

There are plenty of alternative energy technologies out there that are incredibly promising, but those that are getting incredibly wealthy off of our oil-based society are not going to quietly step aside for the good of mankind.

Food Shortage?

So what about food?

Is the world running out of food?

Well, as we have seen so many times in the past, the earth can support far more people than most of the “experts” ever imagined.

In fact, if weather patterns were perfectly stable and we removed human greed out of the picture, the earth could most likely support a whole lot more people.

Unfortunately, weather patterns are becoming increasingly bizarre and human greed is always a problem.

In particular, this year extreme weather all over the globe is causing many to be concerned that we may soon see some very serious food shortages.  In Australia and Brazil, flooding of Biblical proportions has absolutely devastated crops.  Some of China’s most important agricultural areas are experiencing the worst droughts that they have seen in 200 years.  Authorities are warning that two-thirds of China’s wheat crop could be in danger.  A recent cold snap that hit northern Mexico wiped out entire harvests and has sent prices for many fresh produce items in the United States soaring.

But these bizarre weather patterns will hopefully settle down eventually.

What is of even greater concern is that we have been seeing a long-term trend of rapidly rising food prices over the last couple of years that is putting an extreme amount of strain on the 3 billion people in the world that are trying to survive on the equivalent of 2 dollars or less per day.

Most Americans can still handle rising food prices, but for millions upon millions of poor people all over the world a significant increase in the cost of food can mean the difference between life and death.

That is why the sudden rise in price of so many agricultural commodities is so disturbing.  Just consider some of the shocking price increases that we have seen over the past year or two….

*The price of corn has doubled over the last six months and recently hit a new all-time high.

*The price of wheat has more than doubled over the past year and hit a 30-month high on Monday.

*The price of soybeans is up about 50% since last June.

*The price of cotton has more than doubled over the past year.

*The commodity price of orange juice has doubled since 2009.

*The price of sugar is the highest it has been in 30 years.

If prices continue to go up like this we are going to see a lot more food riots all over the globe.

But perhaps that is what those in positions of power actually want.  The truth is that the global elite don’t always have the best interests of the rest of us at heart.

Water Shortage?

So what about water?

Is the world running out of water?

Well, yes, many areas of the world are rapidly running out of fresh water and this is perhaps one of the biggest problems we are facing.

Without oil, most of us could survive for quite some time.

Without food, most of us could survive for a number of weeks.

Without water, most of us would die within a matter of days.

Fortunately North America still has a decent supply of fresh water, but as I have written about previously, in many areas of the globe the situation is quickly becoming absolutely dire….

*Worldwide demand for fresh water tripled during the last century, and is now doubling every 21 years.

*According to USAID, one-third of all humans will face severe or chronic water shortages by the year 2025.

*Of the 60 million people added to the world’s cities every year, the vast majority of them live in impoverished slums and shanty-towns with no sanitation facilities whatsoever.

*It is estimated that 75 percent of India’s surface water is now contaminated by human and agricultural waste.

*Not only that, but according to a UN study on sanitation, far more people in India have access to a mobile phone than to a toilet.

*In northern China, the water table is dropping one meter per year due to overpumping.

*But there are few places where the water shortage is as severe as it is in the Middle East.  Saudi Arabia had been producing enough wheat to be self-sufficient for most of the past 30 years, but in 2008 authorities there realized that the non-replenishable aquifer they had been pumping for irrigation purposes was nearly depleted.  So in response Saudi Arabia made the decision to reduce their wheat harvest by one-eighth every year thereafter.  Wheat production in Saudi Arabia is scheduled to cease entirely in 2016.

In some of the most populated areas of the planet the water situation can only be described as catastrophic.

For example, did you know that a new desert the size of Rhode Island is created in China because of drought every single year?

Did you know that in China 80% of the major rivers are so polluted that they don’t support aquatic life at all?

Did you know that the women of South Africa collectively walk the equivalent distance to the moon and back 16 times a day for water?

Thankfully the water situation in the United States has not gotten that bad yet, but the truth is that even we could be facing serious water shortages in the years ahead.

According to a recent report released by the Natural Resources Defense Council, more than one-third of all counties in the lower 48 states will likely be facing very serious water shortages by the year 2050.

So, yes, there are some really good reasons to be concerned about earth’s dwindling resources.

If the global elite were not so incredibly greedy and if we managed our planet better we would not have problems to this degree.

But here we are.

So what is the solution?

Well, it would be really great if the global elite would just share some of their wealth.  A study by the World Institute for Development Economics Research discovered that the bottom half of the world population owns approximately 1 percent of all global wealth.

But the global elite aren’t about to change the rules of the global economy.  After all, they spent a whole lot of time and effort rigging the game so that virtually all wealth eventually gets funneled into their hands.

Rather, most among the global elite seem to believe that radical population control is the answer.

After all, they argue, if there are half as many people around then we will only be using half as many resources, right?

Well, as alluring as that may sound, the truth is that the world has always had a huge problem with poverty.  Even when the global population was down around 100 million people there was rampant poverty.

The number of people is not the problem.

The problem is the insatiable greed of the elite.

The global elite have systematically exploited the poor all over the planet, they have gobbled up the resources of the world wherever they have found them and now they are hoarding their wealth as millions upon millions suffer desperately.

Well, in the end the global elite will have to answer to a higher power.  In the book of James it talks about those who hoard wealth on this earth….

Now listen, you rich people, weep and wail because of the misery that is coming on you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workers who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty.

According to the most recent “Global Wealth Report” by Credit Suisse, the wealthiest 0.5% control over 35% of the wealth of the world.

That qualifies as hoarding wealth.

Other estimates put the concentration of wealth at the very top of the food chain much higher than that.

But sadly, the problem of greed is not going to be solved any time soon.

Global supplies of food and fresh water are going to continue to diminish.

The world economy is going to continue to become increasingly unstable.

If it was always your desire to live in “interesting times”, then you are about to get your wish.  Things are about to get extremely “interesting” on this planet.

So what do you think?  Do you believe that the world will be facing shortages of food, water and oil in the years ahead?  Feel free to leave a comment with your opinion below….

The Economic Collapse