What Our Future Holds

[Guest]

Here's an article from London's Daiiy Telegraph describing what is happening with regard to the European financial crisis. We've read about the riots and the election in Greece, the probability that their new government will have to succumb to pressure from Germany to enact another round of deep government spending cuts.

Now on the eve of another big European meeting, Spain and Italy are asking for more money from the European Central Bank (read that Germany). The prime minsters of Spain and Italy are saying that their economies will be ruined without more loans and renegotiation of repayment terms fom the ECB.

Prime Minister Angla Merkel of Germany has told them to essentially go away unil they enact major cuts in spending in their countries. The European Union and the Euro as a currency are at great risk that either will continue.

Watching what is happening in Europe is instructional. Ultimately those that lend to us to finance our profligate spending will ultimately have enough and demand what we have been unwilling to do ourselves. Unless our political leaders finally come together to accomplish the obviously needed major fiscal reform, this could be describing what wil happen here in the future. And while it doesn't get a lot of press coverage yet, if the U.S. dollar continues to lose value as the result of our Federal Reserve increasing the money supply, the future of the dollar as a reserve currency could also be in doubt.

Read what's happening in Europe and think about how it compares to where we stand right now. I've also linked a second article describing how the bankers in Europe are increasingly dictating the terms of money flows as the result of the political leaders of Euroe failing to reach agreement.

Debt crisis: Angela Merkel dismisses Spain and Italy's pleas for aid - Telegraph (http://www.telegraph.co.uk/finance/financialcrisis/9360179/Debt-crisis-Angela-Merkel-dismisses-Spain-and-Italys-pleas-for-aid.html)

http://www.nytimes.com/2012/06/29/business/global/daily-euro-zone-watch.html?pagewanted=1&_r=1&ref=global-home

All this underlines something a very senior banker taught me as a young banker as fundamental to financial negotiations. He called it the "Banker's Golden Rule". He told me never to forget it. It goes like this...He who has the gold rules!

[Guest]

what I see in Merkel is holding the line on give away programs until such time as it is demonstrated those with their hand out are doing what can be done at home first.

She would be very unpopular here with her notions that one should help themselves first. And get their financial house in order first before asking for more hand outs.

It is refreshing to hear a politician demand that countries/governments should run their responsibilities in a fashion that we all must do at home....spend no more than one has.

How dare her.

And until the USA does exactly that....nothing will change. The tolerated business as usual in Washington will one day come to the end of the line on the world's financial stage. So far nothing financial seems to frighten the politicians. And the average American, like the ones who re-elected Rangel will just sit in the political boat while it is headed to go over the falls.

Unfortunately!!!

btk

[Guest]

what I see in Merkel is holding the line on give away programs until such time as it is demonstrated those with their hand out are doing what can be done at home first.

She would be very unpopular here with her notions that one should help themselves first. And get their financial house in order first before asking for more hand outs.

It is refreshing to hear a politician demand that countries/governments should run their responsibilities in a fashion that we all must do at home....spend no more than one has.

How dare her.

And until the USA does exactly that....nothing will change. The tolerated business as usual in Washington will one day come to the end of the line on the world's financial stage. So far nothing financial seems to frighten the politicians. And the average American, like the ones who re-elected Rangel will just sit in the political boat while it is headed to go over the falls.

Unfortunately!!!

btk

Don't necessarily agree that she would be unpopular here, and by that I presume you mean by the majority. Her stand would be very popular among most republicans and a lot of independents. In fact there are moderate or bluedog dems that would be in agreement. Spending has to come under control, but even though many agree with that, they disagree on the ways to do it.

[Guest]

Germany did not want to be a member of the ‘Eurozone’ but was forced to comply at the time of the reunification of Germany. France promised to refuse entry of a unified Germany to the EU market. At that time, France held power over all members of the European Common Market.

Great Britain was not an original member because it refused to all of the ideas put forth by France. Margaret Thatcher, that horrible conservative, maintained that Britain would continue to use the Pound rather than surrender its power over its currency and financial stability. Today we face the very real prospect that Great Britain and Germany will choose to no longer support the bankrupt governments of Europe.

The problems of Greece, Italy, Spain etc. are mirror images of what we are starting to face here. We are seeing the consequences of liberal politician’s coupled with civil service unions. Stockton California’s bankruptcy is simply a preview. If we fail to bring civil service compensation in line with the private sector and fail to stop the continued growth of government, we will become Greece in the very near future. Our choice is clear – continue to pay outrageous salaries and retirement pay to Civil Servants or go bankrupt.

[Guest]

Germany did not want to be a member of the ‘Eurozone’ but was forced to comply at the time of the reunification of Germany. France promised to refuse entry of a unified Germany to the EU market. At that time, France held power over all members of the European Common Market.

Great Britain was not an original member because it refused to all of the ideas put forth by France. Margaret Thatcher, that horrible conservative, maintained that Britain would continue to use the Pound rather than surrender its power over its currency and financial stability. Today we face the very real prospect that Great Britain and Germany will choose to no longer support the bankrupt governments of Europe.

The problems of Greece, Italy, Spain etc. are mirror images of what we are starting to face here. We are seeing the consequences of liberal politician’s coupled with civil service unions. Stockton California’s bankruptcy is simply a preview. If we fail to bring civil service compensation in line with the private sector and fail to stop the continued growth of government, we will become Greece in the very near future. Our choice is clear – continue to pay outrageous salaries and retirement pay to Civil Servants or go bankrupt.I remember that now. I recall that the French had their shorts in a knot because a Frenchman wasn't appointed to head the European Central Bank (ECB). When the Euro staggered for a couple years, falling even lower than the U.S. dollar, the French were near apoplectic, having given up their Franc for the then weak Euro.

The first President of the ECB was Wim Duisenberg, the former president of the Dutch central bank and the European Monetary Institute. The French government wanted Jean-Claude Trichet, former head of the French central bank, to be the ECB's first president. The French argued that since the ECB was to be located in Germany, its President should be French. This was opposed by the German, Dutch and Belgian governments who saw Duisenberg as a guarantor of a strong euro. The Euro wasn't too strong during Duisenberg's term, but tensions were abated by a gentleman's agreement in which Duisenberg would step down before the end of his mandate, after only six months, to be replaced by Trichet.