Bad News, Good News about anti-Islamic, Neo-Nazi European Racism

Mystic Politics

Bad News, Good News about anti-Islamic, Neo-Nazi European Racism

‘There is alarming news about the rising racist and xenophobic movements in Europe, often called “Far Right”. A hundred years ago European racism was directed against Jews, and today virtually the same prejudice: Back then it was the “Can you be Jewish and European” question, today it is the “can you be Muslim and European” provocation.’

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Greek Tragedy and Keys to Europe’s Treasury

The introduction of the Euro was the most audacious financial experiment in European history. 17 countries gave up their right to print money surrendering their domestic currencies to the European Central Bank (ECB). Greece, Portugal, Ireland and Spain are said to be the reasons behind EU’s current financial mess. Greece was projected to have a public debt to GDP ratio of about 135% for 2011. Deficit spending forced excessive borrowing to the extent that sovereign debt default became imminent forcing a freeze on funding, and a near collapse of Euro. Bailout packages saved the Euro and the affected countries from bankruptcy. A new treaty European Stabilization Mechanism (ESM) has been signed which will essentially hold the Keys to the Treasury of 17 member countries in the Euro Zone once it’s ratified. Based in Luxemburg, ESM which will become the dominant economic czar of the EU.


Some economists argue that single currency is only possible in a zone of economic homogeneity. With every crisis we learn that Europe has strong and weak countries. There are many countries in Europe, with different resources and different potentials of production. It is not fair to compare Greece, Portugal, Ireland and Spain with Germany. To understand the impact of a single currency, assume Country A (like Germay) and country B (like Bhutan) formulate a single currency called EuroTaka. Countries A and B can no longer print their own currency through their state banks, only a new central bank can do that. Only fiscal policies like Taxing, Spending, Subsidies etc, can be controlled by A and B. Consumers prefer products from country A due to superior quality, precision, price. Armed with a single currency EuroTaka there is no problem for B to import more from A. Country B agreed not to create a deficit above 3% of GDP but that was never going to be possible anyway and everybody knew it. B starts increasing its deficit spending. Loans are available to support ambitious expenses, so why slow down. B’s economy soon needs more money to manage its finances but economic benefits from social projects are not sufficient to keep up with debt obligations. Any material change in the carefully crafted funding strategy can destroy the game plan.


Trouble erupted first in the US, where large banks invested in real estate with very clumsy credit risks. Loan portfolio went from sour to toxic. US portfolio had a major impact on European banks, from Wikipedia:

Many European banks held assets in financially troubled American banks, and because the need to bail out troubled banks has worsened the budget deficit for governments. The size of the budget deficits has frightened investors, who have demanded higher interest rates from struggling governments. This in turn makes it difficult for governments to finance further budget deficits and service existing high debt levels.


Especially in countries where government budget deficits and sovereign debts have increased sharply, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany.


While the sovereign debt increases have been most pronounced in only a few eurozone countries, they have become a perceived problem for the area as a whole.


Concern about rising government debt levels across the globe together with a wave of downgrading of government debt for certain European states created alarm in financial markets. On 9 May 2010, Europe’s Finance Ministers approved a rescue package worth €750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF).


In October 2011, eurozone leaders meeting in Brussels agreed on a package of measures designed to prevent the collapse of member economies due to their spiralling debt. This included a proposal to write off 50% of Greek debt owed to private creditors, increasing the EFSF to about €1 trillion and requiring European banks to achieve 9% capitalisation.


Despite the debt crisis in a number of eurozone countries the European currency remained stable,[7] trading even slightly higher against the Euro bloc’s major trading partners than at the beginning of the crisis.The three most affected countries, Greece, Ireland and Portugal, collectively account for six percent of eurozone’s gross domestic product (GDP).


Rescue packages come with a bitter pill for borrowing governments. Two things will almost always appear, cut in spending and raising of taxes. Meaning, jobs would be cut, people will pay more to government than consume for themselves, pay higher bills for electricity, water, gas etc. These are not popular measures by any standards, on the contrary such measures make room for instability. As the rescue package for Greece was announced there were protests in Athens, where 3 people were killed.


There is a consequence to sovereign default. Greek tragedy best explains that situation (from Wikipedia):

Japan, Italy and Belgium’s creditors are mainly domestic institutions, but Greece and Portugal have a higher percent of their debt in the hands of foreign creditors, which is seen by certain analysts as more difficult to sustain. Greece, Portugal, and Spain have a ‘credibility problem’, because they lack the ability to repay adequately due to their low growth rate, high deficit, less FDI, etc.


In May 2011, Greek public debt gained prominence as a matter of concern.The Greek people generally reject the austerity measures, and have expressed their dissatisfaction through angry street protests. In late June 2011, Greece’s government proposed additional spending cuts worth 28bn euros (£25bn) over five years. The next 12 billion euros from the Eurozone bail-out package will be released when the proposal is passed, without which Greece would have had to default on loan repayments due in mid-July.


On 13 June 2011, Standard and Poor’s downgraded Greece’s sovereign debt rating to CCC, the lowest in the world, following the findings of a bilateral EU-IMF audit which called for further austerity measures. After the major political parties failed to reach consensus on the necessary measures to qualify for a further bailout package, and amidst riots and a general strike, Prime Minister George Papandreou proposed a re-shuffled cabinet, and asked for a vote of confidence in the parliament. The crisis sent ripples around the world, with major stock exchanges exhibiting losses.


Greece’s first adjustment plan was launched in March 2010 with 80 billion euros in support from the European governments and 30 billion euros from the IMF. This adjustment program hoped to reestablish the access to private capital markets by 2012. However it was soon found that this process would take longer than expected. In July 2011 there was a new package instilled in which an extra 109 billion euros in support of Greece which included a large privatization effort. Some believe that this will cause more debt for Greece. With this new package it is projected that there will be a 3.8% decline in 2011 but a .6% growth in 2012, following with a 3.5% increase in 2013, where it will eventually plateau in 2015 at 6.4%.


Some experts argue the best option for Greece and the rest of the EU should be to engineer an “orderly default” on Greece’s public debt which would allow Athens to withdraw simultaneously from the eurozone and reintroduce its national currency the drachma at a debased rate. Economists who favor this approach to solve the Greek debt crisis typically argue that a delay in organising an orderly default would wind up hurting EU lenders and neighboring European countries even more.


In the early hours of 27 October 2011, Eurozone leaders and the IMF came to an agreement with banks to accept a 50% write-off of (some part of) Greek debt, the equivalent of €100 billion. The aim of the haircut is to reduce Greece’s debt to 120% of GDP by 2020.


One analyst who favors an “orderly withdrawal” wrote, “European Union has the free market economy as laid down principle. Meanwhile, almost everybody has understood that deregulation of banks, privatizations of infrastructures and the abolition of governmental functions lead to a harsh society, plagued by crises. These principles are outdated. The advocates of these principles will only be able to push them forward with violence. Greece won’t be the last victim”.