Stephen LendmanMore About: Economy - International
Crisis Conditions Grip Eurozone
From inception, the euro system was doomed to fail. In the 1990s, Progressive Radio News Hour regular Bob Chapman predicted it.
So didn't British economist/euro expert Bernard Connolly before its January 1999 introduction. His 1995 book titled, "The Rotten Heart of Europe: The Dirty War for Europe's Money" explained the risks in detail enough to understand.
More recently, he said troubled Eurozone countries can't cut their way to recovery. Austerity is a hairbrained disastrous policy. So is the "malignant lunacy of monetary union," combining 17 dissimilar countries under one monetary/fiscal system.
It's as nonsensical as mixing fire and ice or believing more debt reduces out-of-control levels.
In 1998, Connolly predicted that one or more weak European countries would face rising budget deficits, economic trouble, and a "downward spiral from which there is no escape unaided. When that happens, the country concerned will be faced with a risk of sovereign default."
It's now perilously close to happening. Greece already is bankrupt. Only its obituary hasn't been written. Its moment of truth heads closer, and with it a bang spread round the world.
Euro straightjacket rules destroyed it. Other troubled Eurozone countries face similar problems made worse by austerity and more debt. The system doomed to fail is cratering. From inception it was sure to happen, but fraudulent reengineering made it look workable.
In contrast, mainstream economists are paid to see blue skies and say so even when so often they're wrong. In addition, they consistently miss key turning points. Their Eurozone analysis is wrongheaded, and so aren't major media opinions. At least so far.
On December 9, a New York Times editorial headlined, "Europe's Latest Try," saying:
How many times have "historic" agreements "fall(en) apart as markets judged they were inadequate or irrelevant to the problem of making good on old debts and generating enough growth to pay off future obligations."
"We are not optimistic that" the latest one "will now break that cycle." Europe prefers learning the hard way. Winston Churchill explained US problem solving that way, saying, "The Americans will always do the right thing after exhausting all other options." In other words, when there's nothing left to try.
On January 1, New York Times writer Nelson Schwartz headlined, "Austerity Reigns Over Euro Zone as Crisis Deepens," saying:
"Europe's leaders braced their nations for a turbulent year, with their beleaguered economies facing a threat on two fronts: widening deficits that force more borrowing but increasing austerity measures that put growth further out of reach."
In fact, cut and borrow assures greater crisis conditions ahead than now. According to Graduate Institute of Geneva Professor Charles Wyplosz, "We're going straight into a wall with this kind of policy. It's sheer madness," but Eurozone leaders are pursuing it like lemmings blindly near the abyss.
On January 1, London Guardian writer Heather Stewart headlined, "Economics in 2012: no gain, just pain as austerity brings misery to all," saying:
Last year's problems will pale compared to "when 2012 shockwaves are felt by millions of people in Europe and beyond."
"The policy of collective austerity imposed at the behest of the money men (bankers) has driven the eurozone to the brink of a new recession. In 2012, it will be swept over the edge, carrying with it the jobs of millions."
As a result, public anger will grow. The International Labor Organization warned that people believe "the burden of the crisis is not being shared fairly," especially among young people.
Nearly half of Spain's youths are unemployed and over 40% of young people in Greece. Ireland's little better off at 30%, and things ahead look worse. UN Conference on Trade and Development's Heiner Flassbeck said, "Those (who) were not part of the party are having hangovers. That's the problem."
A lost decade lies ahead. So does greater pain and suffering to assure bankers are paid. As a result, "2012 looks like....a very unhappy new year." According to one observer, similar politics and economics across Europe are broken, and nothing ahead looks promising.
New Year Predictions
Consumer attorney Max Gardner offered "Extreme Predictions 2012," including:
(1) Continued home price declines until Q III 2014.
(2) With housing starts at 1959 levels, America's now a nation of renters because few have the funds to buy.
(3) In 2012, one of America's major banks will fail. Bank of America is most likely. Perhaps others will follow.
(4) Unemployment will stay high and good jobs relocated to China and developing economies.
(5) The Dow will drop below 8,000 after two or more major Eurozone banks fail, the euro's devalued, and three Eurozone countries become bankrupt.
(6) "FHFA will implement NACBA Chapter 13 mortgage principal reduction program for all Fannie and Freddie owned residential mortgage loans by June, and the number of new Chapter 13 cases filed in" 2012 Q III and IV "will reach historic levels."
(7) The Fed will keep throwing good money after bad at Fannie and Freddie. After November's elections, they'll enter final liquidation proceedings. QE III will provide more money for Wall Street.
(8) Obama will pursue permanent war. He'll risk destroying the world to save it for the monied interests that own him.
(9) Iran will be attacked. A "nuclear nightmare" may follow.
(10) Attorneys general will reach meaningless settlements with banker and mortgage servicer crooks. They'll do nothing to resolve America's housing crisis or those affected by it.
(11) Obama will win in November. Expect worse economic conditions, permanent war, and crackdowns targeting dissenters.
(12) Gasoline will cost $5 a gallon by 2012 Q II.
Bob Chapman's view is more dire. Failed policy measures only buy time. Millions across Europe are fed up with corrupt politicians, banking crooks, and bureaucrats wanting world government while the euro system teeters on collapse.
Its debt bomb crushes member countries. One Ponzi scheme follows another. Nothing's done to stimulate growth. Only paying bankers matters. The policy's doomed to fail. Short-term relief only is possible. Europe's experiment is "an abject failure."
Upheavel's on the way. Europe and America are affected. So are other regions. A second Obama term or Republican one "could spell violent revolution in the US." Falling economies will define 2012. Europe, America, China and Japan will be affected. Britain's "in a death spiral."
Europe's next, and America, China and Japan aren't far behind. "We are about to witness the end of the period that developed" post-WW II. Chaos defines the future. On December 31, tyranny arrived in America after Obama signed legislation to arrest and indefinitely detain anyone, including US citizens based on spurious terrorist charges.
Bankers are running economies into the ground. Millions are suffering hugely. In America, "insolvency will touch every family." An unprecedented "aggressiveness and warrior mentality" will drive them. If elitists think they'll get away with more hammering, "they are very sadly mistaken."
America's run by corporate and government criminals. Rebellion's coming. At issue is whether military forces will "kill its own citizens. We hope not, because it's a battle they can't win."
Massive social disruptions are deepening. Social safety net protections are fading. Nations are running out of money. People are running out of patience. History's no longer made in decades or years. It's made in months, weeks, days and minutes.
Looking ahead, expect grim conditions to worsen and people unwilling to stay silent. They already rage on streets. Many more will join them for what only their struggles may achieve.
Anger and and sustained turmoil defines what's coming. Don't expect it to be pretty.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.