Watchman Newsletter

24 Signs That We Are Getting Dangerously Close To A Major War In The Middle East

The American Dream (Link) (February 6, 2012)

Is 2012 the year when we will see a major war in the Middle East? For years we have heard about rising tensions in the Middle East, and for years we have heard politicians express concerns about Iran’s nuclear program, but now things really do seem to be reaching a boiling point. In just the past few days, the U.S. government has imposed tough new sanctions on Iran and has totally shut down the U.S. embassy in Syria.

The truth is that we are getting dangerously close to a major war in the Middle East. So will Israel strike Iran at some point in the next few months? Will the U.S. military intervene in the rapidly escalating conflict inside of Syria? If a major war does erupt, it could send the price of oil skyrocketing and there is the potential that the war could broaden very quickly.

Hezbollah has already indicated that it will side with Syria, and there is always the potential that Hamas could as well. Russia and China have both stated that they are completely opposed to military action by the United States against Iran and Syria, and they have even hinted that they would possibly even help defend those countries. As the nations of the world take sides, there is even the potential that we could see World War III develop. Let us hope that it never comes to that, but with the world as unstable as it is right now, you never know what may happen.

What makes war so much more likely now is that nobody has shown any signs of backing down.

Warning Signs That We Should Prepare For The Worst

The Economic Collapse Blog (Link) (January 18, 2012)

The warning signs are all around us. All we have to do is open up our eyes and look at them. Almost every single day there are more prominent voices in the financial world telling us that a massive economic crisis is coming and that we need to prepare for the worst. On Wednesday, it was the World Bank itself that issued a very chilling warning. In an absolutely startling report, the World Bank revised GDP growth estimates for 2012 downward very sharply, warned that Europe could be on the verge of a devastating financial crisis, and declared that the rest of the world better “prepare for the worst.” You would expect to hear this kind of thing on The Economic Collapse Blog, but this is not the kind of language that you would normally expect to hear from the stuffed suits at the World Bank. Obviously things have gotten bad enough that nobody is even really trying to deny it anymore. Andrew Burns, the lead author of the report, said that if the sovereign debt crisis gets even worse we could be looking at an economic crisis that could be even worse than the last one: “An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09.” Burns also stated that the “importance of contingency planning cannot be stressed enough.” In other words, Burns is saying that it is time to prepare for the worst. So are you ready?

But of course it isn’t just the World Bank that is warning about these things. The chorus of voices that is warning about the next great financial crisis just seems to grow by the day.

Some of these voices were profiled in a Bloomberg article the other day entitled “Apocalypse How? Dire ’12 Forecasts.” The following is just a sampling of quotes from that article....

The ‘United States Of Europe’ Beckons

Yahoo! News (Link) - Forbes - Clem Chambers (December 12, 2011)

It has long been said that the euro was just a step towards a federal Europe. When the European currency went into crisis, as it would be assured to do so, it would force closer fiscal integration--effectively meaning closer political union.

Closer union appears to be coming true. The euro, in its old form, has fallen into crisis and the price European countries have to pay is a large loss of sovereignty. Nationalists would consider this disastrous. In reality, there are not so many nationalists in Europe these days and many countries, and their populations, consider themselves European and see little problem with further integration.

What is set to happen is that the European super state will hold the cheque book of euro member countries; or at least be able to snap it shut should any one country wish to run away with its local budget.

Money is power and once ultimate budget power is gone, political power will subsequently be drawn into the federal centre. This illuminates the character of the current crisis; it is purely political. Come what may, economic ramifications of the crisis are secondary to those of the political necessities.

Evolution Securities Warns Of “Total Carnage And Meltdown” As European Bank Sales Of CDS On European Sovereign Debt Soar

Zero Hedge (Link) - Tyler Durden (December 9, 2011)

As much as we hate to say it, Europe is now without a shadow of a doubt the new AIG, only this time such heretofore considered insane (in retrospect) activities as doubling down to infinity on ones TBTF status are out in the public record for all to see. At least AIG conducted Joe Cassano’s “made in London” $2.7 trillion bet on home prices never dropping in the shadows of Curzon 1. Whereas two days ago we made it clear [16]how the unwind of trillions in rehypothecated securities could be the avalanche that buries first Europe and then the world, we explicitly excluded the impact of synthetic products such as CDS. Now it is time to bring the picture full circle, and put CDS front and center. As Bloomberg reports,

“BNP Paribas SA, France’s biggest bank, sold a net 1.5 billion euros ($2 billion) of credit- default swaps on the nation’s sovereign debt, according to data compiled by the European Banking Authority. UniCredit SpA, Italy’s biggest lender, and Banca Monte dei Paschi SpA are net insurers of more than 500 million euros each of their government’s bonds, and Oesterreichische Volksbanken AG, the Austrian lender which has yet to pay interest on 1 billion euros of state aid received in 2009, has guaranteed a net 839 million euros of its national debt, EBA data show.” (EBA source - link [17]).

For those confused by the above, here is the explanation: European banks, in order to generate modest cash flow from collecting on the pariodic interest premiums owed to them in order to plug increasingly large capital shortfall holes that otherwise would simply keep growing ever larger, have sold and continue to sell massive amounts of default protection on their very own host countries! As a reminder, it was precisely this that destroyed AIG when the illusion of the credit bubble burst.

22 Reasons Why We Could See An Economic Collapse In Europe In 2012

The Economic Collapse (Link) (November 29, 2011)

Will 2012 be the year that we see an economic collapse in Europe? Before you dismiss the title of this article as “alarmist,” read the facts listed in the rest of this article first. Over the past several months, there has been an astonishing loss of confidence in the European financial system. Right now, virtually nobody wants to loan money to financially troubled nations in the EU and virtually nobody wants to lend money to major European banks. Remember, one of the primary reasons for the financial crisis of 2008 was a major credit crunch that happened here in the United States. This burgeoning credit crunch in Europe is just one element of a “perfect storm” that is rapidly coming together as we get ready to go into 2012. The signs of trouble are everywhere. All over Europe, governments are implementing austerity measures and dramatically cutting back on spending. European banks are substantially cutting back on lending as they seek to meet new capital requirements that are being imposed upon them. Meanwhile, bond yields are going through the roof all over Europe as investors lose confidence and demand much higher returns for investing in European debt. It has become clear that without a miracle happening, quite a few European nations and a significant number of European banks are not going to be able to get the funding that they need from the market in 2012. The only thing that is going to avert a complete and total financial meltdown in Europe is dramatic action, but right now European leaders are so busy squabbling with each other that a bold plan seems out of the question.

The following are 22 reasons why we could see an economic collapse in Europe in 2012....

Prepare for riots in euro collapse, Foreign Office warns

The Telegraph (Link) - James Kirkup (November 25, 2011)

British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain.

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

Brussels: The New Capital of Eurabia

Hudson New York (Link) - Soeren Kern (November 22, 2011)

Muslims now make up one-quarter of the population of Brussels, according to a new book published by the Catholic University of Leuven, the top French-language university in Belgium.

In real terms, the number of Muslims in Brussels -- where half of the number of Muslims in Belgium currently live --- has reached 300,000, which means that the self-styled “Capital of Europe” is now the most Islamic city in Europe.

In practical terms, Islam mobilizes more people in Brussels than do the Roman Catholic Church, political parties or even trade unions, according to “The Iris and the Crescent,” a book that is the product of more than one year of field research and was released to the public on November 18.

The book’s author, the sociologist Felice Dassetto, predicts that Muslims will comprise the majority of the population of Brussels by 2030.

In Belgium as a whole, Muslims comprise roughly 6% of the total population, one of the highest rates in Europe. This number is expected to rise to more than 10% by 2020.

The Coming European Superstate That Germany Plans To Cram Down The Throats Of The Rest Of Europe

Economic Collapse Blog (Link) (November 18, 2011)

A lot of people were puzzled about what German Chancellor Angela Merkel meant when she recently stated that the ultimate solution to the financial crisis in the EU would “mean more Europe, not less Europe”. Well, now we are finding out. A leaked internal German government memo entitled “The Future of the EU: Required Integration Policy Improvements for the Creation of a Stability Union” actually proposes the creation of a “European Monetary Fund” which would be given the power to run the economies of troubled European nations. This “stability union” would be quickly followed by the creation of a full-fledged “political union”. Essentially, this leaked memo proposes the creation of a “European Superstate” which will be crammed down the throats of the rest of Europe whether they like it or not. National sovereignty would be a thing of the past and European bureaucrats would run everything. Of course this will never be accepted by the people of Europe until they feel the bitter pain of the coming financial collapse, but we are starting to see that there is already a clear plan for what the Germans wish to implement in the aftermath of the coming crisis.

A lot of people have just assumed that if there is a massive financial collapse in Europe and the euro crashes that it will mean that end of the euro and potentially the breakup of the EU. But that is not what the Germans have planned at all.

‘Ireland most hostile country in Europe’

YNet News (Link) - Itamar Eichner (November 16, 2011)

Hatred of Israel reaches new levels in Ireland: An outrageous anti-Israel display was held over the weekend on Dublin’s main pedestrian street, presenting IDF soldiers as Nazi troops.

As part of the display, sponsored by the Dublin City Council, a group of pro-Palestinian activists set up a model of the separation fence and an IDF roadblock.

The activists dressed up as soldiers and beat, humiliated and pointed their weapons at other activists dressed as Palestinians, in front of thousands of Irish citizens and tourists.

The display joins accusations voiced against Israel at the Irish parliament last week, on the backdrop of claims that Israel “kidnapped,” abused and undressed Irish nationals who took part in a Gaza-bound flotilla stopped by the Israeli army recently.

Israel has strongly denied the accusations.

Europe’s Crisis: Beyond Finance

Stratfor Global Intelligence (Link) - George Friedman (November 15, 2011)

Everyone is wondering about the next disaster to befall Europe. Italy is one focus; Spain is also a possibility. But these crises are already under way. Instead, the next crisis will be political, not in the sense of what conventional politician is going to become prime minister, but in the deeper sense of whether Europe’s political elite can retain power, or whether new political forces are going to emerge that will completely reshape the European political landscape. If this happens, it will be by far the most important consequence of the European financial crisis.

Thus far we have seen some changes in personalities in the countries at the center of the crisis. In Greece, Prime Minister George Papandreou stepped aside, while in Italy Prime Minister Silvio Berlusconi now has resigned. Though these resignations have represented a formal change of government, they have not represented a formal policy change. In fact, Papandreou and Berlusconi both stepped down on the condition that their respective governments adopt the austerity policies proposed during their respective tenures.

Europeanists dominate the coalitions that have replaced them. They come from the generation and class that are deeply intellectually and emotionally committed to the idea of Europe. For them, the European Union is not merely a useful tool for achieving national goals. Rather, it is an alternative to nationalism and the horrors that nationalism has brought to Europe. It is a vision of a single Continent drawn together in a common enterprise — prosperity — that abolishes the dangers of a European war, creates a cooperative economic project and, least discussed but not trivial, returns Europe to its rightful place at the heart of the international political system.

A Scary Prediction for the Collapse of Paper Money

The Globe and Mail (Link) - Neil Reynolds (November 15, 2011)

What should U.S. Federal Reserve chairman Ben Bernanke do next? London-based economist Detlev Schlichter says, succinctly: “Abdicate.” What should U.S. President Barack Obama do next? Mr. Schlichter says, succinctly: “Abdicate.” With Mr. Schlichter, you aren’t left with much doubt about his position. He says the world’s major currencies are destined to crash. “The dollar, the euro and the yen are locked in a race to the bottom,” he writes on his website, papermoneycollapse.com. The only question is which one crashes first.

Mr. Schlichter argues that we are only part of the way through the market meltdown – and that the worst is still to come. How much worse? Considerably worse, he says, than the Great Depression.

U.S. industrial production is 12 times higher now than it was in 1929, he says; but the amount of U.S. dollars in circulation is 200 times higher.

The U.S. net debt was 150 per cent of GDP in 1973, when then-president Richard Nixon took the country off the gold standard; yet its net debt reached a record high in 2010: 370 per cent. The United States will fall further, Mr. Schlichter insists, because it has further to fall.

Netherlands: Indebted states must be made ‘wards’ of the commission or leave euro

EU Observer (Link) - Leigh Phillips (September 7, 2011)

The Dutch government has proposed that highly indebted states be put into “guardianship,” with spending decisions seized from the elected government and placed under the direct control of a European commissioner.

If a state is unwilling to surrender its sovereignty in this way, then it would be forced to exit the euro.

“Member states not willing to make themselves a ward, may choose to make use of the option to leave the eurozone,” Dutch Prime Minister Mark Rutte said in a letter to the national parliament co-signed by the finance, economy and foreign ministers.

“To continue to be part of the monetary union, states should fully respect agreements.”

Under the proposals, seen by EUobserver, a special European commissioner would be appointed to oversee the budgets of euro-area countries.

Spectre of fresh EU treaty returns to haunt ‘incomplete’ Europe

EU Observer (Link) - Leigh Phillips (September 6, 2011)

It took nearly a decade of squabbling amongst EU states, a series of referendum disasters and a last-minute game of high-stakes brinksmanship from a stubborn Czech president, but the bloc finally managed to radically refashion the way it worked with the passage of the Lisbon Treaty in 2010.

So exhausted were they by the struggle by the time the soap opera ended, European leaders then swore it would be very long indeed, perhaps a generation, before the EU treaties would be opened again.

But now, in the last few days, as Europe’s economy and the single currency stand on the precipice, these same leaders have begun to eat their words.

On Tuesday, German finance minister Wolfgang Schaeuble called for the second time in a week for changes to the treaties.

“Strengthening the eurozone’s architecture ... may need profound treaty changes,” he wrote in an opinion piece for the Financial Times.

Turkey-Israel ties fall to new low in response to UN flotilla report

Christian Science Monitor (Link) - Ariel Zirulnick (September 2, 2011)

Turkey-Israel relations dipped to a new low today over a long-awaited United Nations report on the Gaza flotilla debacle, freezing a key regional alliance despite more than a year of attempts to resuscitate ties.

Turkey announced today that it is expelling Israel’s ambassador and suspending all joint military agreements after failing to secure a formal apology from Israel for the deaths of eight Turks and one Turkish-American on May 31, 2010, when Israeli commandos boarded the Mavi Marmara, the flagship of the flotilla.

The convoy of ships had been seeking to break Israel’s naval blockade of Gaza, which Israel said was necessary to prevent the Islamist militant group Hamas from obtaining weapons but which many in the international community had objected to on humanitarian grounds.

The UN report, due to be formally released today but leaked yesterday by The New York Times, surprised many by declaring Israel’s blockade of Gaza as legal. While it criticized Israeli commandos for using “excessive and unreasonable” force in halting the mainly Turkish flotilla, it requested merely that Israel “express regret” for the deaths and pay unspecified reparations to the families, the Times reported.

We Are in ‘Worse Situation’ Than in 2008: Roubini

CNBC (Link) - Catherine Boyle (September 2, 2011)

The world’s developed economies are trapped at the “stall speed” of low growth and need to have greater fiscal stimulus and less austerity to kick-start growth, leading economist Nouriel Roubini told CNBC Friday.

Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Roubini said in an interview: “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.”

Roubini, known for his bearish views on the world economy, thinks that there is a 60 percent chance of a second recession imminently. Economic data of recent weeks presents a mixed picture.

On Thursday, the US government announced that jobless claims dropped by 11,000 to 409,000 last week. Friday’s employment report in the US is expected to show a gain of only 75,000 nonfarm jobs during August, with the unemployment rate steady at 9.1 percent.

Recent surveys point to slumping business and consumer confidence across the developed world.

25 Signs That The Financial World Is About To Hit The Big Red Panic Button

Economic Collapse Blog (Link) - Michael (August 31, 2011)

Most of the worst financial panics in history have happened in the fall. Just recall what happened in 1929, 1987 and 2008. Well, September 2011 is about to begin and there are all kinds of signs that the financial world is about to hit the big red panic button. Wave after wave of bad economic news has come out of the United States recently, and Europe is embroiled in an absolutely unprecedented debt crisis. At this point there is a very real possibility that the euro may not even survive. So what is causing all of this? Well, over the last couple of decades a gigantic debt bubble has fueled a tremendous amount of “fake prosperity” in the western world. But for a debt bubble to keep going, the total amount of debt has to keep expanding at an ever increasing pace. Unfortunately for the global economy, sources of credit are starting to dry up. That is why you hear terms like “credit crisis” and “credit crunch” thrown around so much these days. Without enough credit to feed the monster, the debt bubble is going to burst. At this point, virtually the entire global economy runs on credit, so when this debt bubble bursts things could get really, really messy.

Nations and financial institutions would never get into debt trouble if they could always borrow as much money as they wanted at extremely low interest rates. But what has happened is that lending sources are balking at continuing to lend cheap money to nations and financial institutions that are already up to their eyeballs in debt.

For example, the yield on 2 year Greek bonds is now over 40 percent. Investors don’t trust the Greek government and they are demanding a huge return in order to lend them more money.

Why this is the moment Libya’s Islamic extremists have prayed for

Daily Mail (Link) - John R. Bradley (August 23, 2011)

As Tripoli fell to anti-Gaddafi rebel forces, the euphoria that erupted in some parts of the city was matched only by that which broke out among Middle East pundits in the West.

The fall of the Libyan capital represents a clear victory for freedom over tyranny, they tell us, and a new country — defined by an enthusiastic embrace of democracy, pluralism and representative government — will emerge.

However, we have been here twice before in the Middle East in recent months. First, when Tunisia’s strongman, Zine El-Abidene Ben Ali, fled Tunis, and then when Egypt’s dictator Hosni Mubarak vacated the presidential palace in Cairo.

Seven months on, both countries are as authoritarian as ever. The Islamists have hijacked the popular uprisings there. And little evidence of a popular thirst for democracy can be found.

In Tunisia, a paltry 16 per cent of eligible voters had bothered to register before an initial deadline for doing so passed last month.

Israeli-Arab Crisis Approaching

Stratfor Global Intelligence (Link) - George Friedman (August 22, 2011)

In September, the U.N. General Assembly will vote on whether to recognize Palestine as an independent and sovereign state with full rights in the United Nations. In many ways, this would appear to be a reasonable and logical step. Whatever the Palestinians once were, they are clearly a nation in the simplest and most important sense — namely, they think of themselves as a nation. Nations are created by historical circumstances, and those circumstances have given rise to a Palestinian nation. Under the principle of the United Nations and the theory of the right to national self-determination, which is the moral foundation of the modern theory of nationalism, a nation has a right to a state, and that state has a place in the family of nations. In this sense, the U.N. vote will be unexceptional.

However, when the United Nations votes on Palestinian statehood, it will intersect with other realities and other historical processes. First, it is one thing to declare a Palestinian state; it is quite another thing to create one. The Palestinians are deeply divided between two views of what the Palestinian nation ought to be, a division not easily overcome. Second, this vote will come at a time when two of Israel’s neighbors are coping with their own internal issues. Syria is in chaos, with an extended and significant resistance against the regime having emerged. Meanwhile, Egypt is struggling with internal tension over the fall of President Hosni Mubarak and the future of the military junta that replaced him. Add to this the U.S. withdrawal from Iraq and the potential rise of Iranian power, and the potential recognition of a Palestinian state — while perfectly logical in an abstract sense — becomes an event that can force a regional crisis in the midst of ongoing regional crises. It thus is a vote that could have significant consequences.

European ‘No-Go’ Zones for Non-Muslims Proliferating

Hudson New York (Link) - Soeren Kern (August 22, 2011)

Islamic extremists are stepping up the creation of “no-go” areas in European cities that are off-limits to non-Muslims.

Many of the “no-go” zones function as microstates governed by Islamic Sharia law. Host-country authorities effectively have lost control in these areas and in many instances are unable to provide even basic public aid such as police, fire fighting and ambulance services.

The “no-go” areas are the by-product of decades of multicultural policies that have encouraged Muslim immigrants to create parallel societies and remain segregated rather than become integrated into their European host nations.

In Britain, for example, a Muslim group called Muslims Against the Crusades has launched a campaign to turn twelve British cities – including what it calls “Londonistan” – into independent Islamic states. The so-called Islamic Emirates would function as autonomous enclaves ruled by Islamic Sharia law and operate entirely outside British jurisprudence.

EU—Power to the President!

The Trumpet (Link) - Ron Fraser (August 22, 2011)

There’s a profound leadership gap in Europe.

At a time of increasing crisis, commentators are crying out for someone to step up and take the lead in stemming the spread of the euro crisis:

“Investors have little if any confidence in eurozone leaders’ ability to stick together in the face of mounting calamity …” (Wall Street Journal, August 9; emphasis added throughout). “Markets can adjust to a downgrade of global growth, but they cannot cope with a spiraling loss of confidence in leadership and a growing sense that policymakers are disconnected from reality” (Financial Times, August 8). “In a sane world, the German chancellor and the French president would sack their economic advisers who clearly lack an understanding of basic economics or national accounting principles” (EU Observer, August 17). “A poll released Friday indicates Germans know little about the current euro crisis—but are overwhelmingly opposed to the way it is being handled by German Chancellor Angela Merkel and French President Nicolas Sarkozy, the two leaders spearheading efforts to solve the crisis” (Spiegel Online, August 19).

As the European Union fragments into what will ultimately comprise 10 leading nations, the rest enslaved politically—if not in the fullest sense of the word—to one centralizing power (Revelation 17), the leadership gap is becoming most glaring.

Henry Kissinger during the 1970s famously asked the question, “If I want to call Europe, who do I call?”

EU elites moved to begin solving that dilemma by creating the office of president of the European Council within the Lisbon Treaty/EU constitution ratified in December 2009. Appointments to that presidency are for a period of 2½ years, renewable once. That position is currently held by Belgian Herman Van Rompuy. The European Council comprises all EU member nations’ heads of state. It sets strategy and direction for the European Union.

Syria mobilizing troops for conflict with U.S., NATO

WorldNet Daily (Link) - Aaron Klein (August 21, 2011)

Syrian President Bashar Assad is taking military measures to prepare for a possible U.S.-NATO campaign against his regime, WND has learned.

While Assad struck a conciliatory tone in an interview today with his state-run television network, he also instructed the Syrian military to be prepared for an air or ground campaign if the international community determines his pledges of reform are not enough.

Last week, WND first reported Turkey secretly passed a message to Damascus that if it does not implement major democratic reforms, NATO may attack Assad’s regime, according to Egyptian security officials.

The Egyptian security officials said the message was coordinated with NATO members, specifically with the U.S. and European Union.

Father Of The Euro: It’s “On The Edge Of A Precipice”

Business Insider (Link) - Simone Foxman (August 18, 2011)

Jacques Delors -- one man responsible for ushering in the European Economic and Monetary Union -- told Swiss newspaper Le Temps that Europe and the euro risk falling from “the edge of a precipice.”

“To avoid falling, the choice looks straightforward to me: either member states accept the robust economic partnership I always demanded, or they transfer more powers to the Union,” said Delors, who served as European Commission president from 1985 to 1994.

His voice joins a chorus of experts and leaders who are calling for eurobonds and a more comprehensive economic and political EU.

Delors proposed a part-mutualization of European debt, with nations allowed to harmonize debts worth “up to 60 percent of GDP” and issue joint securities. This is, in his words, “the pump to extinguish the fire.”

Re-Examining the Arab Spring

Stratfor Global Intelligence (Link) - George Friedman (August 15, 2011)

On Dec. 17, 2010, Mohammed Bouazizi, a Tunisian street vendor, set himself on fire in a show of public protest. The self-immolation triggered unrest in Tunisia and ultimately the resignation of President Zine El Abidine Ben Ali. This was followed by unrest in a number of Arab countries that the global press dubbed the “Arab Spring.” The standard analysis of the situation was that oppressive regimes had been sitting on a volcano of liberal democratic discontent. The belief was that the Arab Spring was a political uprising by masses demanding liberal democratic reform and that this uprising, supported by Western democracies, would generate sweeping political change across the Arab world.

It is now more than six months since the beginning of the Arab Spring, and it is important to take stock of what has happened and what has not happened. The reasons for the widespread unrest go beyond the Arab world, although, obviously, the dynamics within that world are important in and of themselves. However, the belief in an Arab Spring helped shape European and American policies in the region and the world. If the assumptions of this past January and February prove insufficient or even wrong, then there will be regional and global consequences.

Palestinians set date for UN statehood bid

YNet News (Link) - AFP (August 13, 2011)

The Palestinians will present their bid for membership of the United Nations on September 20, Palestinian Foreign Minister Riyad Al-Malki told AFP on Saturday.

“Palestinian president Mahmoud Abbas will personally present the request to UN Secretary General Ban Ki-moon... at the opening of the sixty-sixth session,” on September 20, Malki said.

Abbas “will insist on this historic initiative and Ban Ki-moon will present the request to the Security Council,” the foreign minister added.

Malki noted that the Palestinian Authority chose September because Lebanon, which will hold the presidency of the Security Council, would be in a strong position to push the bid forward.

“Lebanon will hold the presidency of the Security Council in September and this will help us because the president of the council has special prerogatives, which is crucial,” he said.

‘Palestinians set date for statehood showdown at UN’

The Jerusalem Post (Link) - Gil Shefler (August 13, 2011)

The Palestinians set September 20th as the date for the much-anticipated vote over Palestinian statehood at the United Nations, according to AFP.

Palestinian Foreign Minister Riyad al-Malki informed UN Secretary-General Ban Ki-Moon that Palestinian Authority President Mahmoud Abbas will ask the international community to recognize Palestine as a sovereign state on the first day of the annual opening gathering at UN headquarters in New York.

“Abbas will personally present the request to UN Secretary General Ban Ki-moon... at the opening of the sixty-sixth session,” he was quoted as saying by the French news wire. “[Abbas] will insist on this historic initiative and Ban Ki-moon will present the request to the Security Council.”

The announcement cast aside speculation that the Palestinians might quietly step back from their bid for statehood in response to mounting international pressure against it.

Weaker euro states could lose local banks

The Telegraph (Link) - Harry Wilson (August 10, 2011)

Equity analysts at Standard & Poor’s, the credit rating agency, said that the problem with the European banking system is that it is “not aligned to the single currency area” and that larger banks with operations across the region were likely to replace smaller single country-focused lenders.

“We envisage that banks operating on a more EU-wide basis, alongside an ECB with appropriate powers, would be an important part of a sustainable euro project,” said Tony Silverman, a financial analyst at S&P.

“This may mean peripheral countries should not necessarily expect to have their own domestic banks,” he added.

Mr Silverman points out that about 50pc of eurozone deposits lent through the European Central Bank and the interbank market are to banks that have loans in excess of their deposits, adding there is a “conspicuous” absence of banks that are net lenders to the market.

“We would question whether this is sustainable and indeed to what extent such funding can meaningfully be regarded as temporary,” said Mr Silverman.

Global Economic Downturn: A Crisis of Political Economy

Stratfor Global Intelligence (Link) - George Friedman (August 9, 2011)

Classical political economists like Adam Smith or David Ricardo never used the term “economy” by itself. They always used the term “political economy.” For classical economists, it was impossible to understand politics without economics or economics without politics. The two fields are certainly different but they are also intimately linked. The use of the term “economy” by itself did not begin until the late 19th century. Smith understood that while an efficient market would emerge from individual choices, those choices were framed by the political system in which they were made, just as the political system was shaped by economic realities. For classical economists, the political and economic systems were intertwined, each dependent on the other for its existence.

The current economic crisis is best understood as a crisis of political economy. Moreover, it has to be understood as a global crisis enveloping the United States, Europe and China that has different details but one overriding theme: the relationship between the political order and economic life. On a global scale, or at least for most of the world’s major economies, there is a crisis of political economy. Let’s consider how it evolved.

The West’s horrible fiscal choice

The Telegraph (Link) - Ambrose Evans-Pritchard (August 3, 2011)

The theoretical model behind the austerity push – known as an “expansionary fiscal contraction” – is based on the work of German theorists, and more recently on studies by Harvard professor Alberto Alesina and a group of brave scholars willing to defy the canonical doctrine of post-war Keynesian economics.

The Alesina view has been embraced by the European Central Bank and the budget cutters of the Eurogroup, but has enraged America’s professoriat and set off a heated argument across the world.

Former US Treasury Secretary Larry Summers said there is now a one-third chance of a full-blown recession next year in the US. Nobel leaureate Paul Krugman said obscurantists had run amok. “What we’re witnessing here is a catastrophe on multiple levels. We are doing a terrible thing. We are repeating all the mistakes of the 1930s, doing our best shot at recreating the Great Depression,” he said.

Fear that a synchronized squeeze in half the global economy may go horribly wrong has seeped into market psychology, explaining why the $2.4 trillion (£1.5 trillion) debt deal agreed in Washington has failed to spark a relief rally. Wall Street is a step ahead, bracing for cuts in an economy that has already slipped to stall speed.

EU demands that Britain admit immigrants intending to go straight on to benefits

The Telegraph (Link) - Daniel Hannan (August 2, 2011)

The European Commission may finally have hit on an issue that jerks Britain from its euro-torpor – an issue that simultaneously presses the buttons of border control, welfare abuse and Brussels intrusiveness. Whether from hubris, power-hunger or from sheer stupidity, Eurocrats are demanding that Britain stop asking immigrants to show that they won’t immediately start accessing the social security system.

As the law stands, people wishing to settle in Britain must demonstrate that they have the means to support themselves, either through work or through an alternative source of income such as a pension. The European Commission claims that this amounts to discrimination against EU citizens, who are supposed to enjoy the same rights as British nationals.

In fact, as so often happens, Eurocrats are disregarding the plain text of their own rules. Article 7(1) of the Free Movement Directive gives EU citizens the right to reside in another member state only if they have “sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State”.

Jim Rickards - Germany’s Fourth Reich Has Conquered Europe

King World News (Link) - Eric King (July 28, 2011)

With fear escalating around the financial world as the US debt ceiling deadline draws near, today King World News interviewed Jim Rickards to get his take on where things stand. One of the things KWN was surprised to learn was that while everyone has been focused on the US’s debt problem, the Germans with the cooperation of their political and financial foot soldiers have essentially conquered Europe.

Jim Rickards explains this extraordinary conquest,

“It became more and more clear that there was no good way out, in other words you could just have an outright Greek default, which would be highly disruptive or Greece could have left the Euro and that’s another bad outcome. Not so much economically, but politically, Germany and France don’t want that because it would lead to the unraveling of the entire Euro project which has been going on since the early ‘50s.”