True Economic Governance

The ongoing Euro zone crisis and the potential collapse of the single currency have led to Merkel and Sarkozy calling for ‘true economic governance’ in the EU. Who would have thought it, eh?

Of course, by ‘true economic governance’, our kind European masters really mean a drive towards fiscal union and European taxation. The proponents of ‘ever closer union’ never fail to exploit a crisis for their benefit and further their goals.

However, this attempt was inevitable. You cannot have a currency covering such a wide geographic area, with a single interest rate set by a central bank and just hope that it will work. The collapse of Ireland, Greece, Spain and Italy were predictable, given the cheap rates of credit they were able to obtain in contrast to the state of their national economies and levels of demand.

Yet, while the Eurocrats will always argue that a crisis is caused by a lack of integration (rather than ‘ever closer union’ itself being the actual problem), their road to full fiscal consolidation will be long and contentious – and they are very quickly running out of time and money, with events increasingly playing out beyond their control. At the end of the day, they will be swept along by the markets and events, just like the rest of us. That is European equality for you.

Deceived Once Again

Is the political and economic fraud of the United States deal on the debt ceiling fooling anyone? So asks Brandon Smith at Alternative Markets, who reveals why the agreement amounts to nothing.

The U.S. debt ceiling was raised by the machinery of Government. The GOP and Democrats struck a deal which, while a compromise, planned to lower state expenditure and reign in the debt and public deficit. Crisis averted, right?

Wrong. In much the same vein as the supposed cuts our Chancellor of the Exchequer, good old little George Osborne has (generally not) implemented, the U.S. deal raised the debt ceiling, increased U.S. debt and did not make actual cuts in U.S. expenditure.

The ‘cuts’ made in the deal were reductions in the increase of U.S. public expenditure – not an actual cut, just a decrease in the increase – or in other words United States state expenditure will increase, though at an ever so slightly slower rate. An historic deal!

Far from solving the United States’ dire economic problems, they have been put off for another dark day. Mr Smith continued:

The debt decision and the above mentioned dire indicators leave us with two inevitable consequences: One, our credit rating WILL be downgraded, by S&P certainly, followed by Fitch and Moody’s later on. Two, we are, without a doubt, soon to see an announcement from the Fed of a third QE. Both of these items WILL lead to the final abandonment of U.S. treasuries and the dollar by the East, and likely by OPEC, ending in stagflation. That is, if they don’t commit to a dump beforehand. What we are looking at is the turning point of the final phase of total structural debasement of the U.S. economy. This is it, folks. This is where illusions are lifted, lies are revealed, assumptions are squashed, and things start to get really ugly.

Meanwhile, as the problems stack up across the Atlantic, the Euro zone countries are lurching into the latest phase of the Euro crisis. News of Spain and Italy readying for likely default has sent the markets spiralling downwards, and the European Commission are flapping as the Euro begins to come undone.

It is likely the Eurocrats have another bailout up their sleeves, but, like the last, it will only put off the inevitable. There is only so long you can put off paying your debts – and for the United States, the EU and probably the United Kingdom too, that day is coming – and coming very soon.

Departed From Reality

There is something deeply disturbing about the publicity the media and political class has given to the supposed phone ‘hacking’ scandals recently.

The sheer volume of coverage has been somewhat staggering, with the broadcast media having given the matter virtually wall-to-wall treatment, with every miniscule new event turned into ‘breaking news’, all reported in wide eyed, breathless tones by metropolitan elite newsreaders.

Likewise, the print media have gone into overdrive, filling hundreds of pages and columns with mindless prattle on the technological equivalent of rummaging through someone’s dustbins (something that, incidentally, our beloved and benevolent state does to us with little comment or complaint by that same media and politicians).

Yet, for all the quantity of reporting then there has been very little in the way of quality, with most articles rarely scratching beyond the surface of the issue and indulging in the typical kind of bubble-journalism which is increasingly prevalent in the mainstream media.

If only the media elite expended as much effort examining Britain’s membership of the European Union, the financial crisis into which we are rapidly sinking, or the way in which (as Christopher Booker weekly highlights) children in this country are let down in the ‘care’ of the state. But, then again, this is the British media…

During this manufactured scandal, the political and media classes have shown the full extent of their regressive and symbiotic relationship, with each feeding off the filth disgorged by the other and revelling in the spectacle: one rotten establishment propping up another equally rotten institution, like two corpses with rigor mortis.

Meanwhile, as our politicians and media vie for the limelight in their race to the bottom, dealings of far greater significance are taking place across the Atlantic. Ambrose Evans-Pritchard tells us:

On the other side, the recovery has sputtered out and the printing presses are being oiled again. Brinkmanship between the Congress and the White House over the US debt ceiling has compelled Moody’s to warn of a “very small but rising risk” that the world’s paramount power may default within two weeks.

This, as he highlights, is an incredibly scary prospect. Whether it will actually happen is another matter, but the spectre of default now hangs over the US economy and consequently the world. After the Wall Street crash in 1929, it was said that when America sneezes, the rest of the world catches the cold – and it now appears that the same or worse may well happen again unless the US institutions can pull the country back from the brink with debt reduction.

Of great interest has been the way in which the price of precious metals has risen as paper currency has receded in value due to the inflationary pressure of printing money. I recall reading an article in the Daily Mail back in May, which noted that the US State of Utah became the first in the country to legalise gold and silver coins as currency. This was a warning sign of events to come, and Evans-Pritchard highlights the increasing flight by the markets to Gold.

Yet, so absorbed in its own sordid affairs is our British media that the crisis that is gripping the world is treated as almost purely an economic rather than political issue. This is the news that should be on the front page of newspapers. This is the news that should be leading daily broadcast news bulletins on the BBC and Sky. Instead though, we have to contend ourselves with the dreary mug shots of Rebekah Brooks and company as the world crashes and burns.

The Dividing Line

If the broadcast and printed media were your only sources of material for current affairs and news, you might be forgiven in thinking that the upheaval at News Corp was the most important issue of the day.

Yet, while the liberal media and Westminster village continue to absorb themselves with the fantastically important matter of News Corporation’s aborted takeover of BSkyB and supposed phone hacking, those of us still residing in the real world have to contend with the prospect of an Italian debt crisis, as the credit agencies again downgraded the country’s credit status.

Meanwhile, our wise, hardworking MPs have rushed like brain-dead sheep to condemn Murdoch’s various organisations, presumably in the vain hope that it would divert attention away from their own scandals, the most recent of which took place on Tuesday night when the House of Commons kindly donated £9bn of our money (or at the least money borrowed at our expense) to the International Monetary Fund, who, in turn, will pass that money to Greece which will soon default on its debts. Excellent work gentlemen. Well done.

Thus, the divide between the political class and electorate widens ever further, and yet more of our money is poured down the drain. In all probability, once the liberal media has given up flogging the Murdoch horse, they will return to the ‘nasty cuts’ agenda, blissfully unaware that their world is collapsing around them.