Super Mario Monti and the Dictatorship of Austerity in Italy

Andrew Gavin Marshall

The following is Part 2 of a two-part excerpt on ‘Italy in Crisis.’ These excerpts are rough-draft, unedited samples of a chapter on the European debt crisis to be featured in my upcoming book (as yet ‘Untitled’), to be done by the end of the summer. The book covers the following: the origins, evolution, and effects of the global economic crisis; the acceleration of international imperialism; the elite global social engineering project of constructing a system of ‘global governance’; emerging resistance and revolutionary movements (and elite attempts to co-opt, control, or crush them), including the Arab Spring, European anti-austerity protests, the Spanish Indignados, the Chilean student movement, the Occupy movement, the Quebec ‘Maple Spring’, and the Mexican student movement, among others. This sample allows you to see the research that is going into this book, and if you would like to see the book come to completion, please consider making a generous donation to The People’s Book Project. With a fundraising goal of $2,500 the Project has raised $810, and just $1,690 to go!

Nigel Farage: Trapped Inside an Economic Prison (Video)

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EU leaders reach deal on debt crisis

European leaders reached agreement in the early hours of this morning on how to tackle the debt crisis afflicting the nations using the single currency, with significant concessions from Germany.

Wiki Commons/Lars Aronsson

Philip Aldrick
Telegraph

"The fundamental path was hacked open," German Chancellor Angela Merkel said.

Along the way, Mrs Merkel made some serious concessions, which might cost her when she faces her electorate at home.

Together with her eurozone counterparts, Chancellor Merkel agreed to boost the region's bailout fund, the European Financial Stability Facility (EFSF), so it can lend the full €440bn (£380bn) that it initially promised.

Up to now, the EFSF was only able to lend about €250bn because of several buffers required to get a good credit rating - fanning fears that it would not be big enough to save a large country like Spain.

The fund will also be allowed to buy the bonds of governments in financial difficulties on the open market, but only if the respective country is locked into a national bailout program based on strict conditions.

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Bloomberg Files Lawsuit Against European Central Bank

UNC Biz Blog

Bloomberg LP, the parent of Bloomberg News, filed a lawsuit Wednesday that asks the European Union’s General Court in Luxembourg to overturn a decision by the European Central Bank not to disclose documents that show how Greece used derivatives to hide its fiscal deficit.

Bloomberg editor in chief Matthew Winkler appeared on Bloomberg Television on Wednesday to talk about the suit. Winkler said, “It’s very straight forward. We are seeking full disclosure of documents that show how Greece was able to finance itself into a predicament that became the European debt crisis as we know it. It’s entirely to the benefit of all the members of the EU, all of the citizens, all the taxpayers and for sure the financial markets. Transparency is something that has a way of enlightening perspective.”

Winkler also commented on the derivatives Bloomberg is seeking more information on:  “In this case, very complicated, intricate financing techniques were deployed to essentially enable Greece to put off consistently any kind of transparent reckoning of its indebtedness. That’s really at the heart of this case and that’s really why we are seeking these documents.”

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'The Euro Game Is Up! Who the hell do you think you are?' - Nigel Farage

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Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again
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Eurozone Debt Crisis 2.0: Dollar Sucks Less than Euro, Again

Eric Blair
Activist Post

The grand symphony of currency manipulation seems more finely orchestrated than ever before. However, it's not necessarily the fundamentals that are moving currencies so much as global perception.  In the battle between the Fed's quantitative weakening of the dollar versus the eurozone debt crisis, the dollar is winning this round of who sucks less.

On October 1st, I posed the question, will the dollar rebound before being dissolved into a global currency? At that time, no one was predicting the dollar to gain strength with the Federal Reserve planning more quantitative easing.  The windbag media promoted QE2 as a stock market stabilizer and a boost to U.S. exports, yet most experts openly called it a backdoor bailout, or monetizing debt, or plain old money printing.  Nearly everyone agreed it would ultimately erode the value of the dollar even further and cause measurable inflation.


Indeed, it was a well-justified gloom-and-doom 6 months for the dollar by Fed critics.  After all the media build-up, the Fed's announcement of the $600B easing plancame strategically on the day after mid-term elections, when most of the media was focused on feeding the false left-right frenzy by digesting the election results.  In other words, QE2 got some mention, but the timing was clearly a tactic to keep a lid on the talking-head backlash.  Then, Obama rushed out of the country for the G20 economic summit taking the remaining media distraction with him.  Between stories of Michelle's shopping trips, it was revealed that China and other foreign economic players were not very happy about the Fed's move. Yet, the dollar started to rally.

Recent commentary by Chuck Butler in the Daily Reckoning questions the commodity sell-off and dollar rally:

But does it all make sense, given what I mentioned above that the FOMC is looking for inflation to inject into our economy? No… But since when, going back to the financial meltdown, does anything the markets do make sense?

Nothing makes sense if we still believe fundamentals actually matter.  Sure the dollar is nearly dead, fundamentally, but it seems that perception now trumps concrete analysis.  As I reported in October:

The fundamentals suggest that it (the dollar) should be finished, but just as the world is about to declare it dead, miraculously a global storyline seems to emerge just when needed and foreign investors rush back in for "safety."  A clear example was the steady drumbeat of a sovereign-foreign-debt war that resulted in reports of whether the Euro would even survive, while the dollar enjoyed a triumphant ride up victory mountain.

Now, here we go again.  As soon as the Fed announcement was made, the media shifted its focus once again to the eurozone debt "crisis."  Story after story, day after day, about the developing crisis in Ireland -- and now Portugal.  News agencies often salivate to repost these headlines, because crisis sells.  And it sells because doom and gloomers, otherwise known as fundamental analysts, are waiting for reality to catch up to the numbers -- not just in the eurozone, but globally. The debt-infected PIIGS is a legitimate story, but it is clearly being heavily pushed to make the dollar look less pitiful.

Dollar on the Rise: 2-month Dollar/Euro Chart (source advfn)

Today's major headlines from leading UK papers show how "critical" the eurozone debt crisis has become.  The first story appeared in the London Guardian titled Ireland crisis could cause EU collapse, warns president, where EU President Van Rompuy warned in a speech in Brussels, that "We're in a survival crisis . . . we all have to work together in order to survive with the eurozone, because if we don't survive with the eurozone we will not survive with the European Union." The article went on to define the pressure cooker facing the PIIGS:

Van Rompuy's speech added to the pressure on the Irish government, which was continuing to resist international pressure to accept a bailout this morning.

Shares fell across Europe as pressure mounted on Ireland to accept an EU or International Monetary Fund bailout to stem contagion to other high-deficit eurozone countries. Portugal, which has seen its borrowing costs rocket along with Ireland's, warned last night that it too might need a rescue package.

But despite fears that the crisis could bring down the euro, Ireland's minister for European Affairs Dick Roche denied this morning that Ireland needed emergency financing.

The next article that encapsulates the heightened fear surrounding the debt crisis was written by the brilliant financial reporter Ambrose Evans-Pritchard of the Telegraph titled The horrible truth starts to dawn on Europe's leaders where he states: "The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict."  Granted, he was basing his analysis on the same Van Rompuy speech, which seems eerily reminiscent ofHank Paulson's dire warning of complete collapse and martial law in the U.S. if the Congress did not pass the TARP bailout.

The situation for the PIIGS hasn't changed in the last six months.  It isn't incredibly more severe than it was then.  And despite mildly encouraging retail numbers this quarter, the U.S. is not much better off than it was when the dollar was sinking like a stone. So, it is vividly transparent that the global banksters use the media to move the FOREX at times of their choosing and in contrast to fundamentals.  In turn, we all buy in and post and repost the crisis headlines feeding the manipulation machine.

The video below shows the absurd shell game that is the eurozone debt mess.  It's comically and obviously robbing Peter to pay Paul to prop up the Ponzi scheme:

The media machine seems unbeatable, but luckily it's somewhat predictable.  I reiterate what I said when I predicted the dollar to rebound in October:

The severely debased dollar is unlikely to rebound to previous highs given the international awareness of America's financial problems.  Understanding that the goal of the global elite is to move toward a global currency, ultimately they must kill the dollar and other major currencies.

Although the end may be very near for the dollar we will likely see the establishment play them off each other for as long as possible.  These cycles have seemed to run for about six months, but I don't think we'll see the dollar rise again for that amount of time.  Nor do I think it will reach its twelve-month highs against the euro again, but I would wager that we'll see very strong gains to the dollar by year end.  The European Union heads are to meet again in December to determine amendments to the Lisbon Treaty, which some leading diplomats are calling "mission impossible."  The lead-up to this meeting, coupled with the eurozone debt issues, will drive this quarter's news cycle and the FOREX.

Another development to watch in regards to the strength of the dollar is food, oil, and gold commodities.  Since they trade in dollars, it would make sense that they would sink if the dollar starts beating up on the euro.  And we already have witnessed some slight movements downward. However, I predict that they will remain relatively stable and fall far less than the euro will against the dollar.  And by the first quarter of next year, commodities will be off to the races again where we will likely see $100 oil and $2000 gold by mid-year.  That may be the real start of the end of the dollar, and the euro.

As a final note: They can't allow the euro to fail before the dollar because the European Union is the banking model they desire for the world currency; separate nation states with local currency but where consolidated economic governance is dictated by a grand central bank.  Incidentally, theeurozone debt crisis 2.0 is a dog and pony show.

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Europe stumbles blindly towards its 'Great Depression' moment

It is the European Central Bank that should be printing money on a mass scale to purchase government debt, not the US Federal Reserve.

Ambrose-Evans Pritchard
Telegraph

Unless the ECB takes fast and dramatic action, it risks destroying the currency it is paid to manage, and allowing a political catastrophe to unfold in Europe.

If mishandled, Ireland could all too easily become a sovereign version of Credit Anstalt - the Austrian bank that brought down the central European financial system in 1931, sent tremors through London and New York, and set off the second deeper phase of the Great Depression, the phase when politics turned ugly.

“Does the ECB understand the concept of contagion?” asked Jacques Cailloux, chief Europe economist at RBS. Three EMU countries have already been shut out of the capital markets, and footloose foreign creditors hold €2 trillion of debt securities issued by Spain, Portugal, Ireland and Greece.



“If that is not enough to worry about financial contagion, what is? The ECB's lack of action begs the question as to whether it is fulfilling its financial stability mandate,” he said. That is a polite way of putting it.

The eurozone’s fiscal fund (European Financial Stability Facility) is fatally flawed. Like Alpinistas roped together, an ever-reduced core of solvent states are supposed to carry the weight on an ever-widening group of insolvent states dangling beneath them. This lacks political credibility and may be tested to destruction if – as seems likely – Ireland is forced to ask for help. At which moment the chain-reaction begins in earnest, starting with Iberia.

It was a grave error for Germany’s Angela Merkel and France’s Nicolas Sarkozy to invoke the spectre of sovereign defaults and bondholder “haircuts” at this delicate juncture, ignoring warnings from ECB chief Jean-Claude Trichet that such talk would set off investor flight from high-debt states.

EU leaders have since made a clumsy attempt to undo the damage, insisting that the policy shift would have “no impact whatsoever” on existing bonds. It would come into force only after mid-2013 under the new bail-out mechanism. Nobody is fooled by such a distinction.

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PIIGS Return to the Slaughter

Chris Gaffney
Daily Reckoning

St. Louis, Missouri – Friday is finally here… The end of what has been an exhausting week here on the trade desk. The dollar continued to get beat down through most of the trading day but started to rally back a bit in the afternoon. Overnight the dollar actually gained with the highflying Nordic currencies falling almost 1% versus the greenback. The euro (EUR) and commodity-based currencies also sold off a bit, and the sharp rally in both gold and silver stalled. A break in all of the price action was to be expected, but it may not last long as we will get the October US jobs report later this morning.

The report due out at 7:30 CST is expected to show the unemployment rate stayed dangerously close to 10% during last month. If the jobless rate comes in at 9.6% as expected, it would be a record 15 straight months that the rate stayed above 9.5%. The FOMC has tied future QE bond purchases to the performance of the US economy, so a poor payroll number will probably lead to another dollar sell-off. On the other hand, if the employment numbers come in stronger than expected, we could see some traders shift to thinking the Fed won’t have to continue the stimulus for as long as they have announced. But this is wishful thinking, as we all know the Fed is like a 17 year-old teenager whose parents just gave them $100 to go to the mall; the $600 billion is all but spent already, and there will probably be more to follow!!

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