- Bilderberg dénoncé au Parlement européen




- La solution de la directrice du FMI… nous voilà rassurés !


La solution de la directrice du FMI… nous voilà rassurés !
Curieusement, Christine Lagarde s’est exprimée le jour même où les banques centrales sont intervenues pour freiner l’effondrement des cours des valeurs bancaires, et, dans le même temps, mieux noyer les insouciants qui ne veulent pas voir le monde tel qu’il est, mais plutôt à travers le prisme d’un optimisme aveugle. Les mots choisis par la directrice du Fmi sont très intéressants et absolument pas anodins. Elle a parlé des « atermoiements » des responsables politiques et des « dysfonctionnements politiques » qui en découlent. Puis d’un « cercle vicieux » qui frappe toutes les économies mondiales. Dans la foulée, Mme Lagarde a donné une conclusion logique à tout cela : il y aura encore plus d’incertitude sur les banques, sur les Etats, sur l’endettement des ménages, sur les dysfonctionnements du Système, etc., bref, nous risquons une CRISE DE CONFIANCE. Mme Lagarde ne serait-elle pas en train d’envoyer le message que le scénario de l’HYPER INFLATION est dans les tuyaux ? Si les banques font faillite et doivent être nationalisées par des Etats (eux-mêmes en faillite), comment peut-on assurer que les déposants retrouveront leurs billes ? Et s’ils font la queue dans les banques, ce sera la crise de confiance dans un papier monnaie que les banques centrales sont en train de détruire avec célérité, en imprimant sans contrepartie productive.
Bien évidemment, comme Jacques Attali, la directrice du Fmi a une solution : « l’heure n’est pas au repli sur soi, aux demi-teintes ou aux palliatifs». Une seule solution peut fonctionner: le «front commun». Doit-on entendre Gouvernement Mondial ? Réforme monétaire mondiale ? Explications de Mme Lagarde : « Mon rôle est de m’assurer que cet appel à l’action est entendu. Je ne peux pas penser que les gouvernements ne partagent pas mon avis ». Et d’ajouter que « les pays ont intérêt collectivement à agir dans l’intérêt général de l’économie ». Mais de quelle économie parle Mme Lagarde ?
Certainement pas de l’économie non financière, celle qui assure le bien être des populations. On le voit bien aujourd’hui, les taux d’intérêt sont maintenus au plancher pour aider les insiders à plomber les Etats et les banques en empruntant pour une bouchée d’intérêt à rembourser et juteusement rémunéré sur les produits spéculatifs. Le chef d’entreprise, lui, a de plus en plus de difficulté à trouver du crédit pour créer des emplois.






- [La réunion secrète a fuité : La Grèce va se libérer de l’Union européenne
... en application de l’article 50 du traité de Lisbonne->http://www.decapactu.com/spip/article.php3?id_article=623]



Vendredi dernier, (ndlr : 6 mai) le bruit courut qu’une réunion secrète « de crise » sur une éventuelle sortie de la Grèce de la zone euro était prévue, au Château de Senningen, au Luxembourg. Ces informations, ont été vivement dénoncées par Athènes, parlant de manœuvre en ces termes : « De tels articles constituent une provocation, sapent l’effort de la Grèce et de l’euro et font le jeu des spéculateurs », s’est insurgé le ministère des Finances, dans des propos rapportés par l’AFP.
Autre démenti, celui du porte-parole du président de l’Eurogroupe Jean-Claude Juncker : « Cette information est totalement fausse. Il n’y a pas de réunion de l’Eurogroupe en cours ou prévue ce week-end », a dit vendredi soir à l’AFP Guy Schüller.
La chaîne publique allemande ARD, le Wall Street Journal, et le Spiegel maintenaient toutefois qu’une réunion était prévue. Ils avaient raison. La réunion de l’Eurogroupe a bien eu lieu, ce qui a fini par alimenter davantage les rumeurs. « Nous n’avons pas discuté de la sortie de la Grèce de la zone euro, c’est une idée stupide, c’est un chemin qui ne mène nulle part, c’est une possibilité que nous ne prendrons jamais », a déclaré le président de l’Eurogroupe Jean-Claude Juncker en mangeant son chapeau, à la sortie de la réunion qui ne devait pas avoir lieu.
En plus de la sortie de la Grèce de l’union monétaire, la restructuration rapide de la dette du pays figurait également à l’ordre du jour. Étant donné la situation extrêmement tendue, la réunion de Luxembourg a été déclarée hautement confidentielle et seuls les ministres des Finances de la zone euro et les hauts fonctionnaires furent autorisés à y assister. Le ministre des Finances, Wolfgang Schäuble, (CDU) et Jörg Asmussen, un secrétaire d’État influent au sein du ministère des Finances, étaient présents au nom de l’Allemagne.
Selon le SPIEGEL ONLINE, le ministre allemand des Finances Schäuble a encore l’intention de chercher à dissuader la Grèce de quitter la zone euro. A cet effet, il a emmené à la réunion de Luxembourg un document interne préparé par les experts de son ministère visant à avertir des conséquences désastreuses si Athènes abandonnait l’euro.
« Elle conduirait à une dévaluation considérable de la nouvelle monnaie nationale grecque face à l’euro », indique ce document. Selon les estimations du ministère allemand des Finances, la devise pourrait perdre jusqu’à 50 pour cent de sa valeur, conduisant à une augmentation drastique de la dette nationale grecque.
Les experts de Schäuble ont calculé que le déficit national de la Grèce s’élèverait alors à 200% du produit intérieur brut, après une telle dévaluation. « Une restructuration de la dette serait inévitable », avertissent les experts dans le document.
En d’autres termes : la Grèce ferait faillite.
Il reste à savoir si il serait même possible légalement pour la Grèce de s’écarter de la zone euro. Les experts juridiques estiment qu’il serait également nécessaire pour le pays de se séparer complètement de l’Union européenne pour pouvoir abandonner la monnaie unique. Dans le même temps, il est douteux que les autres membres de l’union monétaire puissent s’opposer à une sortie unilatérale de la zone euro par le gouvernement à Athènes.
Ce qui est certain, selon l’évaluation du ministère allemand des Finances, c’est que « la mesure aurait un impact désastreux sur l’économie européenne. »
« La conversion de devises conduirait à la fuite des capitaux », écrivent-ils. Et la Grèce pourrait se voir forcée de mettre en œuvre des contrôles sur les transferts de capitaux pour arrêter la fuite des fonds hors du pays. « Cela ne pouvait pas se concilier avec les libertés fondamentales instillée dans le marché intérieur européen », indique le document. En outre, le pays serait également coupé de marchés de capitaux pour les années à venir.
En outre, le retrait d’un pays de l’union monétaire commune serait sérieusement dommageable à « la crédibilité du fonctionnement de la zone euro », poursuit le document. Les investisseurs internationaux seraient forcés de considérer la possibilité que d’autres membres de la zone euro puissent se retirer à l’avenir. « Cela aboutirait à la contagion dans la zone euro », poursuit le journal.
Conclusion
Contrairement aux thèses fumeuses et volontairement effrayantes des « experts » du ministère allemand des finances, la dette externe de la Grèce ne doublera pas, dès lors que les créanciers n’auront d’autre choix que d’accepter d’en perdre la moitié, par sa conversion dans la nouvelle monnaie nationale (dans l’hypothèse d’une dévaluation de 50%) ou de tout perdre par la cessation totale des paiements de la Grèce. La Grèce a donc tout intérêt à sortir de l’euro, et tous les scénarios catastrophes des "experts" allemands s’effondrent.
Juridiquement, le traité de Maastricht ne prévoyant aucune sortie, contrairement à celui de Lisbonne, la seule solution est bien de passer par le fameux article 50(dont j’ai été le premier à en découvrir l’extrême intérêt). La Grèce perdra au passage les fonds structurels européens, perte qui sera largement compensée par les retombées de sa nouvelle monnaie en adéquation avec son économie, le rétablissement de la paix sociale et le retour du tourisme.
Ne soyons pas trop optimistes : tout cela ne se fera pas sans heurts. Les difficultés de la Grèce - comme des autres pays encore prisonniers de l’empire - viendront tout d’abord de l’acharnement des dirigeants à privilégier les intérêts des milieux financiers à ceux des nations, des économies réelles et des peuples, de leur enfermement dans le dogme ultra-européiste, deux fautes qui risquent fort de les conduire à faire de la Grèce une victime expiatoire, un épouvantail dérisoire censé dissuader les autres peuples de recouvrer la liberté de leurs nations.
Le ridicule de la réunion « secrète » est symbolique de la schizophrénie des dirigeants européens qui refusent l’évidence : malgré la toute puissance médiatique, malgré la confiscation de la politique par ces pitoyables serviteurs des banquiers faillis, la victoire des peuples d’Europe approche à grand pas, soutenue par un allié implacable : la réalité économique.




- La guerre monétaire est loin d’être achevée entre Washington et Bruxelles

Si le rendez-vous européen de Wroclaw (Pologne) s’est soldé par une absence de concertation entre les Etats-Unis et l’Europe, il a au moins mis en évidence quelques points qui devraient bouleverser l’ordre établi jusque-là entre Washington et certains éléments de Bruxelles.
Pour cette réunion des ministres des Finances européens, l’establishment de Wall Street avait dépêché le secrétaire au Trésor américain, Tim Geithner.Ce dernier a immédiatement mis l’accent sur les inquiétudes des Américains quant au « conflit entre les gouvernements et la Banque centrale européenne», une semaine après la démission fracassante du chef économiste de la BCE. (Voir notre article.) Les économistes américains expliquent que l’administration Obama, qui a en ligne de mire la campagne présidentielle de 2012, s’inquiète d’une contagion de la crise de l’économie européenne dans l’hypothèse d’une fracture de la zone euro. « Si la crise s’approfondit, c’est l’économie américaine qui en subirait le contrecoup, choc inverse de celui qui avait frappé l’Europe après la faillite de la banque Lehman Brothers en 2008 ». L’envoyé spécial de Wall Street a pointé un doigt accusateur vers les oiseaux de mauvais augure qui expriment des « propos inconsidérés sur la fin de la zone euro ». On remarquera le cynisme de ce personnage qui omet volontairement d’avouer que les problèmes européens sont essentiellement le fait de Wall Street et de ses pièces d’artillerie que sont les JP Morgan et surtout Goldman Sachs. Les analystes de JP Morgan parlent d’un « sentiment croissant selon quoi la crise va prendre une tournure très désagréable (…) … la fin de partie de l’Union monétaire européenne approche à grands pas », et leurs collègues de Goldman Sachs s’inquiètent ouvertement de ce que veulent les Allemands : « Où veulent-ils réellement emmener l’euro ? ».
Pour sa part, le Belge Didier Reynders a osé dire à Tim Geithner que les Européens n’ont pas de leçon à recevoir d’un politicien dont le pays croule sous les déficits et où les politiciens ne parviennent même pas à s’entendre sur le moyen de les résoudre. « L’Amérique n’a rien à nous dicter quand elle-même refuse platement nos suggestions », ajoute l’Autrichienne Maria Fekter. Plus diplomatique, Jean-Claude Juncker (président de l’Eurogroupe) a tout de même expliqué à Tim Geithner qu’il existe des « différences d’approche » entre les Américains et les Européens. S’agissant enfin des Européens, on a vu leur désaccord puisqu’ils (Eurogroupe) ont repoussé jusqu’à mi-octobre toute décision sur le versement de 8 milliards d’euros à la Grèce.
Ces éléments ne laissent nullement augurer une cessation de tirs de Wall Street sur le secteur bancaire européen. Les attaques contre les bancaires européennes reprendront de plus belle. N’oublions pas ce que LIESI a dit dans le numéro 238, du 15 septembre 2011 :
Aujourd’hui, l’establishment américain est parfaitement conscient qu’en déclenchant le scénario de cette « bonne crise majeure », ainsi appelée par David Rockefeller en septembre 1994, pour introduire le Nouvel Ordre Mondial, les Etats-Unis sont condamnés à l’effondrement. Par contre, tous les moyens sont employés pour faire tomber l’Europe AVANT. Ce qui arrive concernant le système EURO ne surprendra pas le lecteur, puisque LIESI l’avait annoncé le 31 décembre 2010, en citant le pasteur Lindsey William.
Le 15 décembre 2010, le pasteur Lindsey Williams était interviewé par Alex Jones, tout particulièrement sur les confidences faites par un certain M. Fromm, aujourd’hui décédé. C’était, explique le pasteur, un « homme puissant de l’establishment ». Parmi les sujets abordés, il y eut celui de l’euro.
« L’Union européenne va avoir un très gros problème. (Que dire aujourd’hui, huit mois après? Ndlr) On me l’a déjà dit. L’euro s’effondrera avant le dollar américain et quand cela arrivera, vous n’aurez que deux à trois semaines pour quitter le papier. Souvenez-vous de ce que M. Fromm m’a dit, il y a deux ans. Il a dit : ‘‘Pasteur, quittez tout ce qui est papier. Comprenez bien ce que mon conseil signifie. (…) Vous perdrez énormément si vous ne le faites pas. (…)Quand l’euro va s’effondrer, liquidez tous vos comptes bancaires, sans quoi vous perdrez tout. Je ne sais pas comment dire les choses plus simplement ».



- Durer… dans le court terme…


Hier, les marchés financiers ont effectué un puissant rebond technique, prévu d’ailleurs dans les analyses de Trader Noé. Cela ne changera bien évidemment rien du tout à la tendance de fond, imprimée par ceux qui, au-dessus des banques centrales, ont un projet bien précis à réaliser. Cette crise n’ayant pas encore accouché du projet préparé depuis des décennies dans les officines des sociétés secrètes, elle est bien loin de son terme. Preuve en est : les moyens employés pour donner l’impression d’un « mieux ». Dans le milieu de la journée d’hier, on a appris qu’après concertations, plusieurs banques centrales sont intervenues pour acheter du papier avec de la monnaie électronique. Politique à courte vue qui traduit à la fois une véritable panique de certains intervenants, mais surtout la naïveté de ceux qui se goinfrent de papier de titres bancaires, à chaque fois que l’on dévisse. Comme l’a expliqué Trader Noé, se fondant sur sa grille de lecture (très spéciale) des graphiques,le mouvement de fond est très baissier. LIESI a obtenu confirmation de cette projection par d’autres sources bancaires : tel est l’objectif des super insiders. Cette tendance durera jusqu’en 2012 et pourrait se solder par la fermeture des bourses après l’annonce de mesures actuellement préparées dans un silence sépulcral.

Par conséquent, l’action des principales banques centrales de la planète visant à renforcer l’approvisionnement des banques en dollars, n’est qu’un épisode provisoire que les analystes financiers décrivent comme « rebond technique ». Il est tout de même intéressant de savoir quecette action de refinancement, une première du genre, a été coordonnée par la Banque centrale européenne (BCE), la Réserve fédérale des Etats-Unis, la Banque d’Angleterre, la Banque du Japon et la Banque nationale suisse. A part le Japon, inféodé aux Etats-Unis, la manœuvre est exclusivement « occidentale ». La perspective de ce rebond était parfaitement connu de C. Lagarde quand elle a averti sur les « atermoiements des dirigeants ». Une critique cinglante dont on peut aisément traduire le message : les « dirigeants » perdent le contrôle avec le monde réel et donc préparent très mal celui de demain. Encore une fois, l’establishment bancaire américain fait la pluie et le beau temps : depuis quelques jours, la plupart des fonds monétaires américains, grands pourvoyeurs de liquidités, avaient décidé de réduire leurs approvisionnements. Mais renversement de vapeur depuis hier… Changement de stratégie ? Nous avons répondu par un non catégorique. Les Etats-Unis sont en guerre contre l’Europe et les deux pièces maîtresses de Wall Street que sont JPM et Goldman Sachs sont des ennemis bien plus redoutables que n’importe quel potentat ou terroriste médiatique.


Les européens favorables au protectionnisme

par Bernard CONTE - Depuis la fin des années 1970 et l’arrivée au pouvoir des Thatcher et Reagan, l’idéologie (pour ne pas dire la religion) néolibérale a été imposée. Sans cesse ressassé, tant par la majorité des personnalités politiques que par les medias, le catéchisme néolibéral intègre le dogme du libre-échange, c’est-à-dire le « laisser faire » - « laisser passer », pour les marchandises comme pour les flux financiers.
Le libre-échange et la division internationale du travail qui l’accompagne, seraient les meilleurs vecteurs de croissance économique, de création d’emplois, de progression des revenus… et, in fine, d’augmentation du bien-être des populations. Par conséquent, il est inutile, pour les « élites » au pouvoir, de consulter la population, par un vote ou même par sondage, sur un sujet censé faire l’objet d’un large « consensus ». De plus, il faut éviter le risque de résultats non conformes aux attentes.
Néanmoins, des « agitateurs d’idées 1) » ont commandité, dans plusieurs pays européens, un sondage 2) pour recueillir l’opinion des populations à propos du dogme du libre-échange. Les pays retenus sont : La France, l’Allemagne, l’Italie, l’Espagne et l’Angleterre.
Les résultats, montrent une profonde divergence entre l’opinion des européens et le consensus officiel des élites.
L’ouverture des frontières aura des effets négatifs sur l’emploi dans l’avenir
Pour une majorité d’européens, l’ouverture des frontières aux marchandises en provenance des pays émergents (Chine, Inde) aura, dans les années à venir, des effets négatifs sur l’emploi : France, 75% ; Italie, 62 % ; Espagne et Angleterre, 56% ; Allemagne, 52%.
Car les produits en provenance des pays émergents sont trop peu taxés
C’est ce que pensent à plus de 65% les Français, les Espagnols, les Italiens et les Allemands. Les Anglais ne sont que 50% à déclarer que les importations en provenance de pays comme la Chine et l’Inde sont insuffisamment taxées.
La nécessité du protectionnisme
Hormis les Anglais, une majorité d’européens – entre 60 et 67% - se déclarent favorables à une augmentation des taxes sur les importations en provenance des pays émergents. Les Anglais ne sont que 45% à partager cette opinion.
A mettre en œuvre à l’échelle européenne, ou à défaut, à l’échelle nationale
Entre 67 et 80% des Français, des Allemands, des Italiens et des Espagnols pensent que les droits de douane doivent être placés à la frontière de l’Europe plutôt qu’à la frontière de leur pays. Les Anglais sont partagés sur cette question.
En cas de refus des partenaires européens de relever les droits de douane vis-à-vis des pays émergents, les Français, les Anglais, les Allemands, les Espagnols et les Italiens sont environ 60% à penser qu’il faut le faire quand même aux frontières de leurs pays respectifs.
Les bienfaits escomptés de la thérapie protectionniste
L’augmentation des droits d’entrée sur les importations en provenance des pays émergents devrait avoir des conséquences positives pour le secteur industriel, l’emploi et la croissance économique. De plus ces mesures devraient assurer la protection du savoir faire des différents pays (sans doute en ralentissant ou en arrêtant le processus de délocalisation). Par contre, les européens, dans leur ensemble, anticipent des conséquences « moins » positives sur les prix des produits de consommation.
Les résultats de ce sondage traduisent la capacité d’analyse et la maturité de la réflexion de la population européenne face à la crise financière, économique et sociale. Malgré la presse-tituée qui relaie un discours pseudo-consensuel sur les « vertus » du libre-échange, les européens remettent en cause ce dogme de façon radicale. Ils ont enfin compris que le libre-échange signifie l’égalisation par le bas des conditions sociales sur l’ensemble de la planète, le libre-échange c’est la Tiers-Mondialisation de la planète.

1) - Il s’agit de l’association : Pour un débat sur le libre-échange, regroupant des universitaires et des économistes,
2) - Le sondage a été effectué par l’IFOP en France en mai 2011 et en juin 2011 dans les autres pays européens.
A lire, Bernard Conte : "La Tiers-Mondialisation de la planète"








-La panique crescendo du complexe militaro-industriel


Des sources industrielles européennes, de retour d’une visite à Washington, confirment l’état de panique peu ordinaire où se trouve plongée aujourd’hui l’industrie d’armement US, la branche industrielle du complexe militaro-industriel. Des chiffres extravagants circulent quant aux possibles réductions budgétaires, ou bien les effets des réductions plus raisonnables telles qu’elles sont officiellement envisagées sont décrits comme apocalyptiques.
Un certain nombre d’articles circulent à propos de l’attitude de l’industrie d’armement US dans ces nouvelles circonstances, ou plutôt dans les nouvelles circonstances établies par l’accord sur la dette du gouvernement tel qu’il a été établi début août. Il s’agit essentiellement du mécanisme de réductions automatiques établi avec la mise en place d’une commission du Congrès, dite Super Congress. (Voir le 8 août 2011.)
On jugera comme caractéristique de cet état d’esprit un texte de Dan Goure, du Lexington Institute, un auteur bien connu comme un classique et fort bien subventionné défenseur de l’industrie d’armement. Cet article est publié sur le site AOL.Defense.com, le 14 septembre 2011, marquant ainsi le désir de Goure (qui passe d’habitude par son site Early Warning) de lui donner une plus grande diffusion et une tonalité moins “marquée” (plus “objective”) pour mettre en évidence l’importance du problème qu’il expose.
«The defense industry has clearly decided looming budget cuts pose such a grave threat to its future that it must abandon its usual quiet, behind-the-scenes efforts to influence the American public and go national, using social media as well as its usual combination of education and money.
»Today, the Aerospace Industries Association [AIA] unveiled its new effort, Second to None, designed to convince lawmakers and voters that cutting funding to the Pentagon would hurt an already weakened industrial base, throw tens of thousands of Americans out of work in an already weakened economy and raise serious questions about the country's military strength. “American leadership in aerospace and defense is being threatened by forces in Congress and the administration,” says the top banner on the website. “Join us and act now before it's too late.”
»Boeing executive Vice President Jim Albaugh made the essential pitch. “We really were second to none in the 20th century. The question is, will be second to none in the 21st century,” he said at the press briefing to announce the new push. He pointed to the fact that the United States cannot put a man in orbit any more since the retirement of the Space Shuttle…»
La teneur de l’intervention de la puissante AIA est très largement étendue à la question existentielle de l’industrie aérospatiale US, de sa capacité à maintenir sa position de première du monde dans ce domaine. Cette question est d’ores et déjà posée, et les mesures de réduction budgétaires envisagées donneraient une réponse évidemment catastrophique, selon les conceptions de l’AIA. Goure développe implicitement l’argument par ce passage où il expose, tout aussi implicitement, et peut-être involontairement dans ce cas, que cette industrie est d’ores et déjà dans une crise profonde. (Les dernières réalisations de cette industrie, le 787 de Boeing et le F-35 de Lockheed Martin, au-delà de quoi aucun programme nouveau n’est envisagé, sont d’ores et déjà des programmes plongés dans une très profonde crise.)
«Albaugh also stressed the fragility of the industrial base several times, pointing to the troubled 787 Dreamliner, Boeing's new commercial plane, as a symptom of the problem. Boeing had not designed a new airplane for so long – the last one was the 777 in the mid-1990s – that it had lost the collective talent to do so, he said. At a time when the United States has no new fighters or bomber in the design stage – and precious few new starts for any type of weapon – the danger is that designers and engineers will leave the companies, taking with them the expertise that “cannot be taught in schools.”
»[I used the photo of the F-35 factory floor in Fort Worth to illustrate this story to show the industrial side of the business. Also, the F-35 is no longer in the design phase, leaving the country without an effort to design a new fighter. Air Force Secretary Mike Donley has said we will not invest in a sixth-generation fighter for some time.]»
Il y a certes dans cette mobilisation un aspect de relations publiques prompt à dramatiser le problème qui est ainsi présenté. Il n’empêche que les faits corroborent en bonne partie l’inquiétude exposée, qui est effectivement proche de la panique. Cette situation est présentée implicitement comme la conséquence des problèmes budgétaires, – ce qui est complètement irréel par rapport à l’argent massif dont ont disposé jusqu’ici le Pentagone et l’industrie aérospatiale US. Elle est aussi marquée, cette situation, – et c’est un aspect à la fois complètement fondamental et en général systématiquement dissimulé dans sa signification profonde, – par une infécondité grandissante sinon décisive de cette industrie à effectivement mener à leur terme ses programmes essentiels devant assurer sa base fondamentale de développement. Le 787 et le F-35 sont évidemment les cas éclatants et significatifs, sinon décisifs, mettant en évidence que cette crise est aussi et peut-être d'abord celle d’une situation où le système du technologisme lui-même se trouve sans doute, voire sans aucun doute, dans l’impasse décisive, – renvoyant, cela, à la crise générale du Système.
L’AIA et ses partisans passent bien entendu sous silence cet aspect pourtant fondamental du problème, – fondamental, parce qu’il s’agit bel et bien du fondement de cette industrie de l'avancement technologique et des capacités des USA à réellement se montrer encore capables de continuer le développement de leur activité fondamentale (la créativité et le technologisme). Nous voulons dire par là que la crise du technologisme pose bien entendu un problème de civilisation que l’AIA ne veut pas voir évoqué, et d’ailleurs pour la raison impérative qu’elle n’en est pas consciente, qu’elle est impuissante à en avoir la conscience ; cela, selon ce caractère spécifique de la psychologie de l’américanisme de l’indéfectibilité («…un caractère fondamental de la psychologie US: l’impossibilité de concevoir que les USA puissent connaître autre chose que la victoire»), qui est le complément inévitable de l’inculpabilité. Cette attitude psychologique, qui conduit au jugement absolument sophistique et inverti, est illustré implicitement par le texte de Goure et le passage cité ci-dessus. Goure avance implicitement les échecs de développement des derniers programmes aérospatiaux fondamentaux, comme argument pour alimenter la crainte d’une situation désastreuse à partir de décembre 2011 (décisions budgétaires) alors que ces programmes catastrophiques sont d’ores et déjà la preuve d’une situation désastreuse, sans aucun rapport avec la question budgétaire (qui ne s’est pas posée durant les dix dernières années), et complètement en rapport avec la crise des capacités industrielles créatrices US et le blocage du système du technologisme, jusqu’à son inversion en un système devenu autodestructeur.
Ces vérités dissimulées, écartées, sinon ignorées par l’esprit à partir de psychologies si complètement subverties par l’indéfectibilité et l’inculpabilité, alimentent par conséquence sophistique la panique budgétaire. Les problèmes budgétaires qui apparaissent et qui vont atteindre très vite un stade crucial, sont annexés comme explication centrale d’une situation d’ores et déjà en profonde, sinon catastrophique détérioration ; le passé déjà catastrophique est expliqué par l’avenir proche, d’ores et déjà décrit comme apocalyptique et comme la cause future de tout ce qui existe déjà. C’est le sophisme fondamental de l’inversion du jugement imposé par une psychologie subvertie, et par une situation de crise déjà avancée du Système et d’un de ses deux composants essentiels (le technologisme).
Cette situation totalement sophistique, dont tous ces esprits exubérants mais complètement emprisonnés et déformés par le Système sont à la fois les constructeurs intellectuels et les victimes psychologiques, – puisqu’ils construisent inconsciemment une telle situation sophistique dont ils deviennent prisonniers, – entraîne irrésistiblement à grossir le danger à venir dans les mois qui viennent, dans une vision d’apocalypse. La catastrophe budgétaire à venir doit être d’autant plus perçue et présentée comme catastrophique qu’elle doit expliquer la situation d’ores et déjà catastrophique de la capacité fondamentale de l’industrie. On pourrait même dire que cette obligation pousse inconsciemment l’AIAI et l’industrie de défense à presque favoriser cette situation catastrophique, à presque la souhaiter, pour être ainsi exonérées de la vérité catastrophique où elles se trouvent déjà. Ainsi sont inconsciemment entretenues les rumeurs les plus folles, notamment celles qui disent que la commission Super Congress pourrait rechercher non pas $1.500 milliards de réduction pour les prochaines 10 années dans les dépenses publiques, mais quelque chose allant jusqu’à $5.000 milliards ; et, à Washington, dans le climat actuel d’une situation incontrôlable et d'un désordre conséquent, les rumeurs de cette sorte suscitent des initiatives dans le même sens... On mesure alors la gravité de la situation, alors que ces hypothèses sont plutôt présentées comme illustrant un entraînement irrésistible du Système pour ces réductions, répondant à l’alarme générale sur la situation budgétaire US, qui serait encore plus grave qu’on ne dit. Ces attitudes où les excès de panique répondent aux excès de panique en s’alimentant mutuellement alimentent le risque de déclencher, ou d’accélérer s’il existe déjà, un mécanisme destructeur, pouvant aller à des mesures de réduction complètement incontrôlées, et à une situation de réduction des dépenses plongées en plein désordre, qui peuvent déstructurer décisivement plusieurs grands domaines du gouvernement et de l’industrie, – dont la défense, bien sûr. C'est une possibilité sérieuse où, une fois de plus, la dynamique de surpuissance du Système se tournerait définitivement vers une dynamique d’autodestruction.




- Defense Industry Comes Out Swinging: Don't Cut Us!

By Colin Clark - Washington: The defense industry has clearly decided looming budget cuts pose such a grave threat to its future that it must abandon its usual quiet, behind-the-scenes efforts to influence the American public and go national, using social media as well as its usual combination of education and money.
Today, the Aerospace Industries Association unveiled its new effort,Second to None, designed to convince lawmakers and voters that cutting funding to the Pentagon would hurt an already weakened industrial base, throw tens of thousands of Americans out of work in an already weakened economy and raise serious questions about the country's military strength.
"American leadership in aerospace and defense is being threatened by forces in Congress and the administration," says the top banner on the website. "Join us and act now before it's too late."
Boeing executive Vice President Jim Albaugh made the essential pitch. "We really were second to none in the 20th century. The question is, will be second to none in the 21st century," he said at the press briefing to announce the new push. He pointed to the fact that the United States cannot put a man in orbit any more since the retirement of the Space Shuttle.
While the Super Committee did not give rise to the group, AIA's president Marion Blakey made clear the possibility of cuts of some $600 billion to the defense budget if the panel does not cut at least $1.2 trillion from the budget has her industry very worried.
"If the cuts in the Budget Control Act are enacted, hundreds of thousands of direct and indirect jobs will be lost." said Marion Blakey, AIA President and CEO, "While we need to be part of the solution in addressing our nation's debt, policymakers shouldn't make ill-considered cuts that would jeopardize our national and economic security."
Targeting one of the arguments many politicians have made, that the nation's withdrawal from Iraq and from Afghanistan will free up large sums of cash, Blakey would have none of it. "There is no peace dividend. I do think they need to recognize that," she said.
AIA trotted out some new studies to show how important the industry remains. Aerospace and defense employment "stands at more than one million and revenues are nearly $331 billion [in 2010]," Blakey said, referring to a study by Deloitte Development LLC. The Deloitte study estimates "total direct employment by aerospace and defense companies at over 1 million workers." She cited another study showing that "aerospace and defense supports 2.9 million jobs according to an analysis done for AIA by Barr Group Aerospace."
Boeing's Albaugh pointed to the last time the nation made significant cuts to the defense budget in the mid-1990s as a cautionary tale. He said the Los Angeles Times argued at the time that cuts to the defense budget wouldn't hurt Southern California because it boasted such a diverse economy. But it "took 12 years for Southern California to come back after the defense cuts of the 90s," he said. And deep cuts this time could well add an entire percentage point to the nation's unemployment rate.
Albaugh also stressed the fragility of the industrial base several times, pointing to the troubled 787 Dreamliner, Boeing's new commercial plane, as a symptom of the problem. Boeing had not designed a new airplane for so long -- the last one was the 777 in the mid-1990s -- that it had lost the collective talent to do so, he said. At a time when the United States has no new fighters or bomber in the design stage -- and precious few new starts for any type of weapon -- the danger is that designers and engineers will leave the companies, taking with them the expertise that "cannot be taught in schools."
[I used the photo of the F-35 factory floor in Fort Worth to illustrate this story to show the industrial side of the business. Also, the F-35 is no longer in the design phase, leaving the country without an effort to design a new fighter. Air Force Secretary Mike Donley has said we will not invest in a sixth-generation fighter for some time.]
The space business, which straddles the military and civilian worlds perhaps more than any other industry, is particularly vulnerable to deep and sudden cuts, said David Hess, president of Pratt & Whitney, who made the country's rockets that sent the Space Shuttle skyward. It took Pratt 50 years to build the rockets to take Americans into space, he said.
Should deep cuts come to pass, the country must understand how complex and fragile the defense industry base can be, said Dawne Hickton, CEO of RTI International Metals, producer of titanium products used in vehicle armor and advanced military aircraft. If her company lost enough business to force it shut down one of its vacuum furnaces, Hickton said it would take six to nine months to restart the equipment.




- Voici pourquoi l'euro est condamné



With Europe set to open in a little over 12 hours, and with rumors of Greek default once again flying around in their private taxpayer funded jets (only to turn back to their point of origin shortly after take off), we wish to remind readers that a chart is worth a thousand words. In this case several charts, courtesy of Reuters, which has created the ultimate in interactive data presentations on the Euro crisis. The data aggregates exposure across public debt, bank and non-bank private sectors, debt maturity, default risk. Note that the charts (based on BIS data) only include external-looking debt held on the books, and not debt subsequently repoed back to the ECB, for which the intermediary exposure is back to domestic banks, and the final is to Europe's taxpayers themselves.

And last, and certainly most important, is the chart Zero Hedge created back in February 2010 explaining why Europe is doomed.





- Awaiting the capitulation event as stimulus no longer works


You can hand a heavily indebted person a credit card and let them go off spending for another few months. You could even be kind and foolish and do this again. But you eventually reach the end of the road where their bad credit is a danger to your own financial position, and then you would have to stop.
This is an anology for what has happened to the global economy over the past three years. Debt has been piled upon debt. But right now the flat US yield curve shows that it has become unprofitable for banks to lend, and that is the beginning of the end as Pimco boss Bill Gross has so rightly pointed out (click here).
Eurozone sticking plasters
It is the same story in the eurozone. Last week the central banks of the world came to the rescue of European banks with dollar loans that they are now too afraid to lend each other. It is another sticking plaster to stem the bleeding artery, and this can only be a temporary solution. Inter-bank lending is critical to the system.
For US Treasury Secretary Tim Geithner to be in Europe late last week lecturing European finance ministers on how to deal with the eurozone crisis was a bit much: talk about the pot calling the kettle black. The US is far more deeply indebted than the whole eurozone and its credit system is also at breaking point with the yield curve flat.
Meanwhile, we hear reports back from China about the scale of indebtness there. Is that any wonder? The Chinese stimulus package three years ago was the biggest as a proportion of GDP in the world with a sum equivalent to half of annual GDP thrown mainly into emergency bad loans.
The Chinese subprime crisis is bound to come back to haunt us. That sort of bailout just has to have unintendend consequences. China has seen the inflation this year. The bust part of the boom comes next.
Capitulation event
At what point to do financial markets just roll over and capitulate? J.M. Keynes adage about markets remaining irrational longer than you can remain solvent comes to mind.
Keynes himself made and lost fortunes gambling on markets in the 30s, although he died a wealthy man in 1946 with an astonishing legacy for a British academic of $20 million. Speculators are winners in these markets, not honest investors.
But all the ingredients required for a capitulation event are in place: high volatility with equity markets unsure from one day to the next what the future holds; huge and unsustainable levels of debt in the global economy; massive exchange rate instability; and a collapse in industrial orders predicting an imminent recession. Does anybody have a way out of this?
Staying liquid, long in precious metals and short in just about everything else looks the only rational position in irrational markets that really only have one way to go. The next ArabianMoney newsletter will have some specific ideas for subscribers looking to make money out of this chaos (subscribe here).







- The euro-zone crisis - Fighting for its life - The euro zone is in intensive care



WHAT’S the French for “this sucker could go down”? Echoes of 2008, when the global financial system wobbled and George Bush gave his pithy view of the American economy, now resound on the other side of the Atlantic. Credit-default-swap spreads for European banks, a measure of how costly it is to buy insurance against their default, are at record highs (see chart 1).
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After the fall
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The rates that banks charge each other for loans in the interbank market are rising, too, as they did then. Rumours swirl and panic flares: shares in BNP Paribas, a well-run French bank, dropped by 12% on the morning of September 13th following reports that no one would lend it dollars. BNP’s denials saw the shares bounce back later in the day. Shares in Société Générale, another French bank, whipsawed too. The French banks’ reliance on short-term dollar funding, which American money-market funds are increasingly leery of providing, is one reason why Moody’s, a ratings agency, downgraded Société Générale on September 14th, though exposure to sovereign default is also a key factor.
Meanwhile large banks in Germany, Switzerland and Britain have more cash than they can put to good use as corporate customers shift their deposits from weaker countries or smaller banks. The beneficiaries are loth to tie the cash up in long-term loans because they fear that the flows could reverse at any moment. “It’s hot money,” says one bank chairman.
Thus the role of the Frankfurt-based European Central Bank (ECB) grows larger. The northern banks deposit their excess cash there rather than lend in the interbank market. The banks on the periphery increasingly depend on the ECB for liquidity. More than a fifth of Greek bank funding is now provided through Frankfurt; Italian lenders have upped their ECB borrowing sharply over the summer.
Banks are finding it hard to issue longer-term debt, too. The market for unsecured bonds has been closed for weeks, leaving banks with no option but to sell covered bonds at usurious interest rates that will challenge their profitability.
One way of bolstering the banking system would be to inject more capital into it. Goldman Sachs, an investment bank, reckons that Europe’s 38 biggest banks might need between €30 billion and €92 billion ($41 billion-$126 billion) in extra capital to cope with haircuts to Greek, Irish and Portuguese government bonds and losses on Italian and Spanish government debt. An analysis by the IMF suggests that banks would see a hit of close to €200 billion if the default probabilities implicit in today’s market prices were realised, although European governments and banks dispute the fund’s calculations.
Raising capital in current markets will not be easy. Bank valuations are low; several banks might need to raise several times more than their current market value. Those shareholders that do not participate will have their holdings deeply diluted. That suggests governments might have to underwrite some of the rights issues.
Here the parallels with the credit crisis three years ago become ominously inexact. In 2008 governments did what was needed to protect their banks: guarantees were issued, equity injected. In the euro-zone crisis the threat of sovereign default renders some governments impotent, while those which could act have chosen not to do so decisively.
The government at the heart of concerns again this week is that of Greece. Panicked officials are racing to plug a gaping hole in the budget and accelerate reforms in the face of speculation that international lenders will withhold the next €8 billion tranche of the country’s bail-out. If the funds are not released within two weeks, the government risks being unable to pay wages and pensions. A hastily announced property tax should raise about €2 billion, which may just keep the budget deficit below 9% of GDP this year.
The troika monitoring the Greek plan (the European Commission, the ECB and the IMF) also wants to see a realistic budget draft for 2012. That means making drastic spending cuts as revenues are being squeezed by the deepening recession. The Greek economy is likely to contract by at least 5.3% this year. The government has already decided to increase the number of public-sector workers parked on 60% of their salaries pending dismissal or retirement. About 40,000 workers are now likely to be made redundant by year-end. Greece’s debt managers are also finalising a €135 billion package of debt swaps and rollovers for private-sector investors which would allow the country to delay the repayment of about one-third of its bills for up to 30 years.
The scrambling might be enough to allow Greece to escape immediate default; but it will also make a more brutal restructuring in the future much harder. And such a future restructuring seems inevitable. On September 12th Philipp Rösler, the leader of Germany’s Free Democratic Party, the junior partner to Angela Merkel’s Christian Democratic Union, said it was time to address the taboo subject of a possible Greek bankruptcy. Some go further still: the prospect of a Greek departure from the euro is now widely discussed.
Stark choices
Mrs Merkel is having none of it. On September 14th, after a conference call with George Papandreou, the Greek prime minister, she and Nicolas Sarzoky, the French president, reaffirmed Greece’s place in the euro zone. For now euro-zone leaders seem determined to plough ahead, shepherding the second Greek bail-out package through national parliaments along with measures to increase the scope and firepower of the European Financial Stability Facility (EFSF), Europe’s bail-out fund.
The problem is that although a beefed-up EFSF will be able to cope with the smaller peripherals, it is unable to support the refinancing needs of an economy as big as Italy. At an auction of Italian five-year bonds on September 13th its borrowing costs jumped to 5.6%, up from 4.9% at a similar auction in July.
The pressure on European banks will keep increasing unless something else is done. Rumours that China will ride to the rescue of struggling countries are fanciful. Again, the real last resort is the ECB, which could relieve the pressures on the system by being prepared to buy without limit the bonds of solvent euro-zone countries. But the ECB is itself riven by disagreement.
On September 9th Jürgen Stark, the central bank’s chief economist and a former Bundesbanker, announced his resignation “for personal reasons”. Mr Stark opposed the ECB’s buying of Greek government bonds last year. When the bank began supporting Italian and Spanish government bonds, too, it was apparently more than he could take. Axel Weber, the head of the Bundesbank until May 1st, ruled himself out of the running to replace Jean-Claude Trichet, the ECB president, earlier this year because of similar qualms.
Explore our interactive guide to Europe's troubled economies
The German government moved swiftly to fill the hole left by Mr Stark. Jörg Asmussen, chief secretary at the finance ministry, will move to the ECB, assuming the formalities go without a hitch. Both Mr Asmussen and Jens Weidmann, Mr Weber’s successor at the Bundesbank, appear more flexible personalities than their predecessors. But persuading them, and the German public, to sign up to what amounts to a policy of massive quantitative easing (creating money to buy bonds) will be extremely difficult. In 2008 free-market Americans swallowed their misgivings to rescue Wall Street. Inflation-phobic Germans now face a similar choice.








- Reliability of the grid - Difference Engine: Disaster waiting to happen



LAST weekend’s vigilance against potential terrorist attacks was an impressive demonstration of America’s resolve to prevent events of September 11th 2001 from ever happening again. From your correspondent’s hillside perch above Santa Monica Bay, he watched National Guard F-16 jets make repeated sweeps across the ocean by Los Angeles International Airport and then on to the huge port complex of Long Beach and San Pedro, while a Navy P-3 Orion maritime-surveillance aircraft circled overhead. The cacophony was deafening but reassuring. Angelinos slept easier that night.
Yet, further down the coast, 6m citizens of southern California and south-west Arizona, along with their cousins across the Mexican border, were just recovering from a man-made disaster that had plunged their sweltering world into darkness—shutting down schools, hospitals, offices, factories, shops and restaurants, as lighting, air-conditioning and other essential equipment ceased to function.
Beaches in San Diego had to be closed to the public because raw sewage had seeped into the sea. Passengers on trains stuck between stations and trapped in lifts had to be rescued by the police. Flights from San Diego International Airport were cancelled because of the lack of runway lighting. With traffic lights out of action and petrol stations unable to pump, motorists abandoned their vehicles and added to the gridlock that ruled the roads. By great good fortune, no-one died or was seriously injured. But normal life, for those so affected, ground to a miserable and unnerving halt.
The difference between the two events could not have been more stark. One was all about preparedness and professionalism. The other was a forceful reminder of the chaos wrought by personal negligence and institutional neglect. “We don’t need no lousy terrorists to cause mayhem,” San Diegans must have reflected afterwards. “We can manage just fine by ourselves.”
The power outage that swept across a large swathe of the American south-west on September 8th was the region’s worst cascading blackout in 15 years. It started at the North Gila substation near Yuma, Arizona, where a utility employee “was doing some work” on faulty equipment. Something happened (still under investigation) to cause the substation to shut down, disconnecting a 500kV transmission line connected to it and disrupting the electricity supply to Yuma’s 90,000 residents.
The immediate power shortage at Yuma caused the current—which normally flows along the grid’s key Southwest Power Link from Arizona to California—suddenly to reverse its direction. The result was a violent fluctuation in line voltage that fed back through the grid to trip switches at substations throughout the San Diego area. Altogether, some 15 power stations in the region shut down automatically to protect themselves from voltage swings—the biggest being the 2,200MW San Onofre nuclear power plant up the coast near San Clemente.
With the San Onofre plant disconnected and the umbilical cord from Arizona effectively severed, the delicately balanced grid serving San Diego and its adjacent counties quickly became unstable. Such problems would normally be resolved by ratcheting up the output of surrounding power stations. But with so little base-load capacity in the area, standby plants for meeting peak demand could not be spun up fast enough to stabilise the voltage. The overloaded grid promptly crashed, causing blackouts to spread across the region and into Mexico. The lights did not come back on until the following morning.
The wind was blowing at only 8mph and the sky was partially overcast. So, California’s lauded sources of renewable energy were of little help. If anything, they were part of the problem. Critics point out, with some justification, that California’s energy strategy of focusing on conservation and expanding intermittent sources of renewable energy—while ignoring the urgent need for more base-load generating capacity close to big cities—was the primary cause of the grid failure.
The wider issue is that the original voltage spike which triggered the monster outage should have been isolated at the Yuma substation in Arizona. The two official bodies responsible for overseeing the distribution and reliability of bulk power in the United States—the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC)—have launched an inquiry to learn why that did not happen. Their report will no doubt apportion blame and recommend changes in maintenance procedures. But few expect it to address the underlying problem. Both FERC and NERC are only too aware of the structural reasons why the American grid has become so fragile. They are equally aware of how intractable to solution those reasons are.
As elsewhere, the electrical-power industry in America has changed over recent decades from a collection of heavily regulated regional monopolies to a complex, competitive, national, free-market business. In the process, electricity has become a commodity, with futures and contracts traded by participants just like any other commodity business. Independent power providers and transmission companies construct their own facilities, often paid for with bonds backed by future revenue streams. Retailers sign up customers, buy the electricity from wholesalers around the country, and bill users for it.
Managing supply and demand, once the prerogative of the utilities’ planners, has become a process shaped largely by an energy company’s appetite for risk. Meanwhile, independent system operators who schedule the dispatches of electricity have become, effectively, asset managers—using market-clearing prices to equilibrate between bids by suppliers and those from retailers.
By and large, such changes have made energy markets more efficient. For consumers, the competition created by deregulation has kept a lid on electricity prices. But it has had downsides, too. One of the biggest is the way it has removed what little spare capacity the grid once had. In the power industry’s new competitive environment, transmission companies operate their lines at near full capacity, leaving little room for those threatening fluctuations in voltage caused by accidental outages.
Compounding matters further is the way long-distance transmission lines connecting utilities around the country are being used differently these days. Before deregulation, such links were employed largely for emergencies—for when, say, a utility found its voltage dipping precipitously and a brownout imminent. Today, long-haul power lines are frequently made to handle more power than they were designed to, as wholesalers sell their electricity over longer and longer distances. The juice that comes out of a plug in clean-energy California can easily have come from a dirty coal-fired plant in Wyoming or West Virginia.
As a result, the grid now suffers far greater fluctuations in electricity flow than ever before. The continual cycling of power plants up and down to meet demand from elsewhere in the country causes generating and transmission parts to heat up and cool down repeatedly. No surprise that they then wear out faster. Meanwhile, the amount of money the American power industry spends on maintenance has declined steadily, by 1% a year since 1992. With the grid’s most critical components—the transformers at substations—now typically 40 years old, there are serious consequences for the stability and reliability of the grid as a whole.
Another downside of deregulation has been the decline in investment. As the independent power providers, the electricity retailers and the utilities have no responsibility for the grid’s main links, they have little incentive to maintain them properly. And as long as it is possible to purchase electricity elsewhere, there is little further incentive—as in the case of San Diego—to add more capacity locally. More and more blackouts sweeping the country are therefore inevitable.
Will the so-called “smart grid” improve matters? It could do the opposite. All the smart grid does is add a communications layer to the local electricity-distribution network—so consumers can see at a glance how much electricity they are using at any time of the day, and how much it is costing them. Alerts sent by the utility at peak periods will allow customers to cut back their consumption and save money—or have it cut back for them to reap extra rewards. The real aim, of course, is to save the utility from having to invest in additional capacity.
What is rarely mentioned in all the proselytising about the smart grid is that it adds a vast layer of hackable points to the network—some 440m by 2015, according to Lockheed Martin’s Energy and Cyber Services. Every smart meter in the home will be a hackable device. The same goes for all the routers at substations. As the saying goes, if you can communicate with it, you can hack it. Today, you can cut off the power to someone’s home by shinning up the nearest electricity pole and throwing a switch at the top. Once smart meters become widespread, you will be able to do that remotely, from the far side of the world.
But evil-doers from afar might not stop at that. Instead of switching off the power, they could run the voltage up and down to wreck sensitive electronic equipment, such as computers and television sets. And they could do that not just on single homes, but on whole communities and even to routers in substations—in an attempt to take transformers offline, if not actually fry them. As we saw last week, the failure of just one substation in Yuma was enough to bring a whole chunk of the American south-west to its knees. Unless the grid is made more robust and secure, the threat to the country—from terrorist or technician—can only become more severe.


- Charlemagne - In the Brussels bunker - With the euro under siege, is this the time for more Europe?



THERE is surreal calm in Brussels, amid the greatest crisis to befall the European project in its history. The euro is besieged, several members lie gravely wounded or exposed to heavy fire and the defenders are running out of ammunition. The weakest outpost, Greece, could fall any day. Many fear this might lead to a collapse on all fronts. Yet European institutions churn along, producing myriad meetings, consultations and regulations. “I feel like a filing clerk in Berlin in 1945. The work of government goes on, even as the war approaches,” says one ambassador.
This week, for instance, ministers of European affairs argued ardently over the seven-year EU budget to 2020, even though nobody knows who will be left standing or what currencies they will use, in seven months’ or even weeks’ time. In the corridors the talk is of looming disaster. Without the next tranche of loans Greece will be unable to pay its bills in October. Even if it can get over this test, what of the next quarterly assessment?

Eurocrats talk apocalyptically of the consequences of a euro break-up (Poland’s finance minister has suggested that a real war could erupt within a decade). But now that markets are pricing in the near-certainty of a Greek default, nobody is thinking about how to manage it. One senior diplomat speaks of Brussels gripped by paralysis. Perhaps officials simply do not believe that Germany will act on its public threats to cut the Greeks loose—Chancellor Angela Merkel has made reassuring noises. Or maybe they fear that even a hint of defeatism will increase the panic.
Some in the high command think they can still play for time. If the German parliament approves the second Greek rescue package, if the euro zone’s bail-out fund is beefed up, if tougher fiscal monitoring is endorsed by the European Parliament, maybe the line can hold. Survival might build confidence, and time to turn things around. So put away the cyanide capsules. This is not Berlin 1945, they say, but the Battle of Britain in 1940. EU strategists are already drawing up plans for a counter-offensive. The tactics are still to be decided, but the objective is clear: more Europe.
The first step is to reorganise the command. Herman Van Rompuy, president of the European Council (representing the 27 EU leaders) will present a plan next month that is likely to include regular summits of the 17 euro-zone leaders. This may well shift power from the European Commission (the EU’s civil service) and finance ministers (the regents of the euro zone) to heads of government. The euro is now chefsache—the business of leaders. As their representative, Mr Van Rompuy has much to gain.
Next comes a pincer movement. One prong is to impose far greater fiscal discipline on countries; the other is to push for more fiscal integration. Creditor countries want the thrust to be on national responsibility and penalties for rule-breakers. Debtors want mutual solidarity; if not direct transfers from rich to poor, then at least Eurobonds to pool debt (the commission is studying the options for this). One side wants to change the behaviour of governments; the other wants to move towards a United States of Europe. This will beset the campaign at every turn, like Montgomery and Patton arguing about how to advance.
A big question is whether to reopen the EU’s treaties. Should the euro zone go for a limited push that can be enacted quickly? Or should it seek a more ambitious revision that will take years? Markets are unlikely to wait for the EU to call a constitutional convention, debate schemes for integration and negotiate a text, only to see it buffeted in parliamentary votes and referendums. One idea is to have a new treaty only among the 17 euro-zone countries, separate from the EU’s treaties. This would be quicker to agree but messier to implement, and would heighten fears of exclusion among the ten non-euro members. Some fear that saving the euro could wreck the wider EU and its single market.
There is another conundrum: should the power to tell countries how to run their economies rest with governments or in Brussels? To use the jargon, big countries often prefer “intergovernmental” arrangements in which they hold more sway, while small ones feel less bullied under the “community method”. Take the Netherlands. It is a fiscal hawk, like Germany. But as a smaller country it wants the commission to have big coercive powers—from monitoring budgets to financial sanctions to the loss of voting rights and even of euro membership.
We didn’t vote for this
Beyond such euro-theology, there is a deeper question of democracy. All the options for greater integration involve a transfer of sovereignty that, until recently, few would have thought desirable or even possible. Is this what European citizens really want?
Eurocrats offer several answers. One is that those who signed up to monetary union knew that it was bound to lead to fiscal integration; the crisis has merely hastened the process. Another is that all democracies are constrained by regulators and judiciaries. A third is that democratic control is exerted through governments that still wield great influence in Brussels. And where national vetoes are eroded, there is the European Parliament.
All this might be satisfactory when dealing with, say, competition policy. But dictating a state’s choices over budgets and economic policies intrudes into the heart of national governments. Some countries are more sovereign than others (how many dare stand up to Germany?). The European Parliament is a poor substitute for national legislatures. The crisis has exposed the contradiction between monetary union and national economic policies. The attempt to resolve it will bring out the tension between European integration and national sovereignty. Without more democratic legitimacy, integration is doomed. The danger is that the vanguard may get out too far ahead of the citizens. Before planning the masterstroke, watch “A Bridge too Far”.



- Sliding toward financial crisis

Analysis & Opinion
Why didn’t the Fed release a statement on the dollar liquidity bailout?
The euro zone shuns Geithner
An anti-austerity protester shouts at police officers outside the Greek parliament following an unscheduled cabinet meeting in Athens September 18, 2011. REUTERS/Yannis Behrakis
By Stella Dawson, U.S. Economics Editor
WASHINGTON | Sun Sep 18, 2011 3:01pm EDT
(Reuters) - Three years after the collapse of Lehman Brothers, the world's financial system is sliding toward another major crisis.
At stake is the global recovery and future shape of Europe.
Calls are mounting for financial leaders of the world's biggest economies meeting this week to take bold action, not on the scale of the $1 trillion rescue package of March 2009 but something equally important in policy terms.
The challenge for the Group of 20 talks in Washington on Thursday and Friday is to prevent a sovereign debt crisis centered in Greece from turning into a full-blown banking crisis. Such a crisis could engulf other indebted European countries, lead to messy defaults and plunge the region and world back into economic and financial turmoil.
"We have entered a dangerous new phase of the crisis," said Christine Lagarde, managing director of the International Monetary Fund, last Thursday. "To navigate it, we need strong political will across the world -- leadership over brinkmanship."
World Bank President Robert Zoellick a day earlier said: "The time for muddling through is over."
Pieces of a multipronged approach to the crisis have come into focus and should solidify further this week.
The political hurdles remain significant but if the parts of the program are endorsed by G20 finance ministers and central bankers, and their governments continue to deliver, investment strategists say turmoil in markets should abate.
Two factors are driving the crisis -- political discord within Europe over how much support to give indebted euro-zone governments that are implementing tough fiscal austerity programs; and vulnerabilities within the region's financial system, especially in France where banks hold 671.6 billion euros of government debt of high-deficit euro-zone countries.
These factors have fed upon each other in a vicious cycle. Talk among top German officials of Greece defaulting or leaving the euro zone has accelerated investor withdrawal of short-term funding to French banks, raising concerns about bank solvency.
To halt the cycle, the following steps are coming together:
* To support growth and ease lending costs, a growing number of central banks worldwide are loosening monetary conditions -- an action likely to win the G20's endorsement for countries where inflationary pressures are in check.
The Federal Reserve will play its part on Wednesday when it is expected to announce a plan to lower longer-term interest rates by shifting the balance of its $2.8 trillion securities portfolio away from short-term debt. How aggressively it does this, and whether it also cuts the interest rate paid to banks on their excess reserves held at the Fed, an idea gaining traction in markets, will signal the Fed's degree of concern over the economic slowdown.
* To address concerns about the ability of governments to service their debt, European finance ministers are considering proposals to leverage their 440 billion-euro European Financial Stability Fund, which should be up and running by month's end. The United States has suggested increasing the EFSF firepower roughly ten-fold to give it the capacity to handle a sovereign bailout the size of Italy or help recapitalize banks.
Treasury Secretary Timothy Geithner got a cool reception from EU finance officials on Friday in Poland where he went to propose the leverage idea and warned of "catastrophic risk" if Europe fails to act more firmly. Some EU ministers rankled at what they saw as a U.S. lecture.
But market participants were confident its practical appeal would eventually win the day. Leveraging the EFSF costs European governments nothing upfront, they duck the political difficulty of raising more funds if a major EU country runs into trouble, it provides funds to recapitalize banks if needed and would earn them market confidence. Semi-annual meetings at the International Monetary Fund and World Bank this week give EU leaders a further chance to discuss its merits.
* On bank liquidity, the European Central Bank's bold action last week to arrange three-month dollar funding for banks has shown ECB capacity to lead -- despite German dissent within its ranks -- and alleviate liquidity problems for European banks.
* On bank solvency, the issue is trickier. Europeans sharply disagree with U.S. officials and the International Monetary Fund that their banks need more capital. The IMF has estimated a 200 billion-euro shortfall, a number that may be revisited in an IMF report this week. If EU officials agree to flexible usage of the EFSF, they could recapitalize the banks quickly.
* On sovereign solvency, governments continue to make progress, albeit slow, in reducing budget deficits. Italy last week adopted a plan for a balanced budget by 2013. In the United States, President Barack Obama on Monday lays out his preferred course for medium-term deficit reduction.
The final ingredient is the political resolve to stick to this package of programs. Eswar Prasad, senior fellow at the Brookings Institution, said the job of the IMF this week is to nudge countries in this direction and highlight serious dangers ahead.
"The alternative is political paralysis, which we are seeing in many of these countries and could lead to very substantial risks for the longer term. And that's the big concern," he said.




- Eurozone threat looms over IMF meeting
EU's failure to resolve Greek problem adds to tensions as world's finance ministers and central bankers gather at IMF

Investors are poised for another week of turmoil in the global financial markets as finance ministers and central bankers gather in Washington for the International Monetary Fund's annual meeting amid the biggest crisis since the collapse of Lehman Brothers three years ago.
A weekend meeting of EU finance ministers in Poland failed to resolve any of the issues in the beleaguered eurozone, instead casting more doubt over the future of Greece by delaying a decision on a much needed €8bn (£7bn) bailout payment until next month. Reports in Greece suggested the EU, IMF and European Central Bank were asking for further austerity measures, including 100,000 public sector job cuts, in an attempt to resolve Greece's budget deficit and avoid a default.
Greece's prime minister, George Papandreou, who has cancelled plans to attend the IMF meeting in favour of dealing with the crisis, held an emergency cabinet meeting on Sunday to discuss additional cutbacks before a conference call with the EU and the IMF on Monday.
Meanwhile Moody's is expected to announce imminently whether it plans to downgrade Italy's credit rating, a move that would escalate theEuropean debt crisis and cause problems for French banks exposed to the country's debt.
Many observers believe last week's news of a co-ordinated plan by five central banks to pump dollars into the system was designed to improve liquidity in the event of further turmoil. But the political pressures within the eurozone were in focus once more following a predicted defeat for German chancellor Angela Merkel in another state election at the weekend.
Sony Kapoor, of the economic policy thinktank Re-Define, said: "The inability of EU leaders to handle the problem of Greece, one of the smaller economies in the EU, does little to inspire confidence in their capacity to tackle the much larger threat posed by the continuing failure of Italy and Spain to be able to refinance themselves at reasonable costs."
Before its annual meeting on Friday, the IMF is likely to cut its growth forecasts for the global economy in the wake of the instability in Europe.
At the meeting itself, US Treasury secretary Timothy Geithner is expected to repeat his calls for Europe to stop bickering and take action to tackle the debt crisis, comments that annoyed some EU officials when he made them in Poland on Friday because of America's own debt troubles.
Elsewhere, Adam Posen, a member of the Bank of England's monetary policy committee, said the eurozone crisis was the biggest single threat to the global economy. He told Sky News: "It is bigger for the UK than for the US or for other people who are not as tightly tied to Europe. We're all tied to western Europe, we're all tied financially, politically, economically, commercially."
Posen said Bank officials, including its governor Mervyn King, were working "very hard to make sure we know where all the linkages are", adding that banks were as well capitalised as they could be. He also said that Europe's debt problem was solvable and the rich countries of central Europe should take the loss to alleviate the fear across markets.


- Strauss-Kahn Says Everyone Must Accept Losses on Greece
By Gregory Viscusi - Former International Monetary Fund head Dominique Strauss-Kahn said that forcing Greece to pay back its debts would unacceptably impoverish the country, and that everyone must be willing to accept losses on Greece’s debts.
“They can’t pay,” Strauss-Kahn said in his first interview since charges of assaulting a Manhattan hotel maid were dropped. “The efforts of European leaders have been too little, or too late, or often both too little and too late.”