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Robert Samuelson evaluates Europe’s looming debt crisis.
It has come to this. A year after rescuing Greece from default, Europe is staring into the abyss. The bailout has proved insufficient. Greece needs more money, and it can’t borrow from private markets, where it faces interest rates as high as 25 percent. But Europe’s governments are reluctant to advance more funds unless other lenders — banks, bondholders — absorb some losses by writing down their debts. This, however, would constitute a default, risking a broader banking crisis that might torpedo Europe’s fragile recovery in France, Germany and elsewhere. There is no easy escape.
What’s called a “debt crisis” is increasingly a political and social crisis. Looming over the financial complexities is the broader question of the ability — or willingness — of weak debtor nations to endure growing hardship to service their massive government debts. Already, unemployment is 14.1 percent in Greece, 14.7 percent in Ireland, 11.1 percent in Portugal and 20.7 percent in Spain. What are the limits of austerity? Steep spending cuts and tax increases do curb budget deficits, but they also create deep recessions, lowering tax revenue and offsetting some of the deficit improvement.
…The euro helped create the crisis and has made its resolution harder, as a new report from the International Monetary Fund shows. For starters, the euro fostered a credit bubble that led to booms in housing, borrowing and consumer spending. When each country had its own currency, the country’s central bank (its Federal Reserve) regulated local interest rates and credit conditions. With the euro, the European Central Bank (ECB) assumed that job. But one policy didn’t fit all: Interest rates suited to Germany and France were too low for “periphery” countries (Greece, Ireland, Portugal and Spain). …
Michael Barone writes about all the “unexpected” bad economic news that Glenn Reynolds keeps pointing out.
…As megablogger Glenn Reynolds, aka Instapundit, has noted with amusement, the word “unexpectedly” or variants thereon keep cropping up in mainstream media stories about the economy.
…It’s obviously going to be hard to achieve the unacknowledged goal of many mainstream journalists — the president’s re-election — if the economic slump continues. So they characterize economic setbacks as unexpected, with the implication that there’s still every reason to believe that, in Herbert Hoover’s phrase, prosperity is just around the corner.
A less cynical explanation is that many journalists really believe that the Obama administration’s policies are likely to improve the economy. Certainly that has been the expectation as well as the hope of administration policymakers. …
In Investor’s Business Daily, Ralph Reiland says “Buyer Beware” when it comes to Obamacare.
…”Pelosi’s district secured almost 20% of the latest issuance of waivers nationwide,” waivers providing a year-long pass from ObamaCare, reported Matthew Boyle in The Daily Caller.
“Of the 204 new ObamaCare waivers the Obama administration approved in April,” Boyle reports, “38 are for fancy eateries, hip nightclubs and decadent hotels in House Minority Leader Nancy Pelosi’s Northern California district.”
…The question: If these San Francisco hot spots can’t afford to pay for ObamaCare, how is a truck stop in Breezewood selling trucker-sized hot turkey sandwiches at $7.95, a big pile of mashed potatoes included, supposed to survive?
Thomas Sowell illuminates the president’s mistaken beliefs about wealth. It is tragic that the leader of this nation doesn’t understand what has made America great.
One of the painfully revealing episodes in Barack Obama’s book “Dreams From My Father” describes his early experience listening to a sermon by the Reverend Jeremiah Wright. Among the things said in that sermon was that “white folks’ greed runs a world in need.” Obama was literally moved to tears by that sermon.
…The idea that the rich have gotten rich by making the poor poor has been an ideological theme that has played well in Third World countries, to explain why they lag so far behind the West.
None of this was original with Jeremiah Wright. All he added was his own colorful gutter style of expressing it, which so captivated the man who is now President of the United States. …
David Goldman has insightful analysis on the current economy.
I’ve been on Larry Kudlow’s CNBC show arguing that the US will have 2% growth indefinitely–no real recovery, no double dip, no banking crisis, but no bank stock rally. Today’s depressing numbers are in line with my depressing expectations. We’ve got a creative-destruction economy, without the creation: the startups, the venture capital, the entrepreneurship. …
The only thing expanding is the government sector, and that by a spectacular margin. Nearly a fifth of all personal income receipts by Americans now consist of transfer payments, which is to say that a fifth of all personal income received by Americans is redistribution of tax payments from other Americans.
…Government spending now comprises 40% of American national income, up from 30% in 2000. That’s the same proportion as in Germany; “socialist” Sweden is at 47%. By contrast, ex-communist Russia is at just 34%, and China at 18%. Since America’s victory over Russia in the Cold War, in a sense, America and Russia have switched places. …
…And total loans and leases at US commercial banks continue to plunge. I hate to repeat myself, but this kind of implosion of private credit creation, never, NEVER happened before. We are in uncharted territory. We have had NO recovery in the private credit creation mechanism since the 2008 crisis. The banks keep buying Treasuries, and shedding risk assets. …
Clive Crook looks at NLRB v Sanity.
If officials have their way, “Winning the Future” – Mr Obama’s theme of the moment – will include a larger role for labour policies that looked out of date in Britain 40 years ago.
…If absurdist comedy is to your taste…“The Board has repeatedly held that an employer violates [the National Labor Relations Act of 1935] by threatening that employees will lose their jobs if they join a strike, or by predicting a loss of business and jobs because of unionisation or strike disruptions without any factual basis. In contrast, the Board has found that employers may lawfully relate concerns raised by customers. They may also reference the possibility that unionisation, including strikes, might harm relationships with consumers, as opposed to predicting ‘unavoidable consequences’ [emphasis in original].”
Got that? Employers may “reference the possibility” that strikes will harm the business. But if they declare that this will happen – if they judge it to be unavoidable, and dare to say so – they have broken the law. You may wish to reference the possibility that, if the NLRB is interpreting it correctly, the law in this instance is an ass. …
We thank Bill Kristol for injecting some optimism into the political landscape.
Ronald Reagan’s defeat of Jimmy Carter in 1980, and the subsequent rapid American recovery at home and abroad, didn’t come out of the blue. There were plenty of signs before Election Day 1980 that such a reversal and triumph were possible:
* The late 1970s featured a broad-based rebellion throughout America against big-government, welfare-state liberalism—in the form of tax revolts at the state and national level, the rise of religious conservatism, and popular resistance to elite acquiescence in a foreign policy of weakness and accommodation. …
Needless to say, history doesn’t repeat itself. We can’t expect a moment like the pope’s visit to Poland in June 1979. We can’t perhaps expect another Reagan here at home. But there is the real possibility that we are today at a big, pre-recovery-of-the-West moment similar to the late 1970s. The Tea Party is of no less importance than the tax revolt, and the widespread sense that America needs finally to deal with her out-of-control spending and debt is no less fundamental than the sense of liberalism’s failure in the late 1970s. The revulsion (not too strong a word) at the cavalier and disdainful treatment of an old and deep ally like Israel is as heartfelt as the sense of disgust at Jimmy Carter’s foreign policy. The electoral and governing successes of conservative prime ministers Stephen Harper in Canada and Benjamin Netanyahu in Israel are comparable to the achievements of Thatcher and Begin. The Arab Spring in the Greater Middle East, and even the Jasmine Revolution in China, are reminiscent of Solidarity. These developments of 2009-2011 could be precursors of not just a renewal of American conservatism, but a renewal of the West, just as the events of 1977-1979 were harbingers of better days to come. …
In the WSJ, Donald Boudreaux is willing to take on the global warming alarmists.
…Contrary to what many environmentalists would have us believe, Americans are increasingly less likely to be killed by severe weather. Moreover, because of modern industrial and technological advances—radar, stronger yet lighter building materials, more reliable electronic warning devices, and longer-lasting packaged foods—we are better protected from nature’s fury today than at any other time in human history. We do adapt.
…Since 1950 there have been 57 confirmed F5 tornadoes, with winds between 261–318 miles per hour, in the U.S. Of those, five struck in 1953; six in 1974. So far this year there have been four F5 tornadoes in the U.S., including the devastating storm that killed more than 130 people in Joplin on May 22. F5 tornadoes are massive, terrifying and deadly. But they generally touch down in unpopulated areas, thus going unnoticed. The tragedy of Joplin and other tornadoes this year is that they touched down in populated areas, causing great loss of life. Yet if these storms had struck even 20 years ago there would have been far more deaths.
So confident am I that the number of deaths from violent storms will continue to decline that I challenge Mr. McKibben—or Al Gore, Paul Krugman, or any other climate-change doomsayer—to put his wealth where his words are. I’ll bet $10,000 that the average annual number of Americans killed by tornadoes, floods and hurricanes will fall over the next 20 years. Specifically, I’ll bet that the average annual number of Americans killed by these violent weather events from 2011 through 2030 will be lower than it was from 1991 through 2010. …
Andrew Malcolm wraps up the late-night one-liners, in the LA Times.
…Leno: On his trip to Europe President Obama met with Queen Elizabeth in London and she suggested returning to pre-1776 borders.
…Kimmel: Al Qaeda has released a statement vowing to make America pay for Bin Laden’s death. Which I’m pretty sure we did pay for his death. We paid for the whole thing and even took care of the funeral arrangements. Maybe a thank you would be nice.
Conan: Tough week for that pastor who predicted the Apocalypse. His friends told him, “Hey, c’mon, it’s not the end of the world.” …